[jeff]

Free Study Planner, Notes, Audio, Flashcards: https://www.another71.com/cpa-exam-study-plan/

Free CPA Exam Survival Guide: https://www.another71.com/cpa-exam-survival-guide/

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[CPAfit]

@bucky thanks for the explanation

[Anonymous]

I agree MommyBear – I have those on my list to review again too (my list is really long).

No problem @zubairs! Hope that helps.

[MommyBear]

6-In January 2003, Brown sold land he had owned for many years on the installment basis. Installments are to be made semi-annually on the first day of March and September. $30,000 of each installment represents Brown's profit. Brown is in the 33% bracket for 2014. How much capital gains tax must Brown pay on the two installments he receives in 2014?

A 9K

B 12K

C 19,800

D 21K

[MommyBear]

My list is long too. Sometimes I wonder if I should get off the forum and focus on review only for a day or two. I have no idea what is more helpful because I learn a lot when we quiz.

[Anonymous]

6 – C??

[CPAfit]

@mommy C. $19,800

[Anonymous]

I agree @MommyBear. My husband is working today, so it's easier to be on the forum quizzing, but once he gets home later, I plan on going over my stuff I need to review.

[MommyBear]

That's what I picked too, but it's A

Since both of the installments were received after May 5, 2004, and the property sold was held more than 12 months, both installments are taxed at the 15% capital gains rate. Thus, the capital gains tax is $9,000 ($60,000 × 0.15).

The current capital gains rates apply to installment sale proceeds collected after the effective date of the current rates (after May 5, 2004), even if the installment sale occurred before the effective date of the current rates.

[Anonymous]

Do we have to know all the cap gains rate and when they were in place?? Oh my

[Anonymous]

7– Mr. N's business building is destroyed by a hurricane. The building had an adjusted basis to Mr. N of $200,000 and a fair market value immediately before the hurricane of $300,000. Mr. N receives a reimbursement of $270,000 from his insurance company and immediately spends $268,000 on a new business building. What amount must Mr. N include in his gross income?

A. $(32,000) loss.

B. $(30,000) loss.

C. $2,000 gain.

D. $70,000 gain.

[MommyBear]

Sadly, I think we do Bucky and I don't know any of them.

7-C?

[Anonymous]

C is correct!

[Anonymous]

8–Which of the following is not a miscellaneous itemized deduction?

A. An individual's tax return preparation fee.

B. Education expense to meet minimum entry level education requirements at an individual's place of employment.

C. An individual's subscription to professional journals.

D. Custodial fees for a brokerage account.

[MommyBear]

B

[MommyBear]

9-Hark, CPA, failed to follow generally accepted auditing standards in auditing Long Corp.'s financial statements. Long's management had told Hark that the audited statements would be submitted to several banks to obtain financing. Relying on the statements, Third Bank gave Long a loan. Long defaulted on the loan. In a jurisdiction applying the Ultramares decision, if Third sues Hark, Hark will:

A. win because there was no privity of contract between Hark and Third.

B. lose because Hark knew that banks would be relying on the financial statements.

C. win because Third was contributorily negligent in granting the loan.

D. lose because Hark was negligent in performing the audit.

[Author]

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