Well. That was enlightening. On the real exam I take the full 3 hours, but I try to go through the practice exam without researching AL or second guessing myself. I scored 78%. I don't like that you can't go back to previous questions in Ninja. I knew immediately of hitting submit that I chose the wrong answer on 1 MCQ and 1 research question (I put the subparagraph and it only asked for paragraph) so not including those mistakes I missed 15 MCQ and only a portion of 1 SIM. So here is my synopsis after going through all the ones I missed:
–Negotiable Instruments–I missed all 3 of the questions they gave me on that
–Transactions between partner and the p-ship: Investment in the p-ship is a CAPITAL ASSET! Gain from selling the interest reduces the basis to zero and the excess is taken as a capital gain
–Common law Duties and Liability to Clients/3rd Parties: Prevailing in a common law NEGLIGENT misrepresentation suit requires proof that they justifiably relied on the misrepresentations
–Financial Structure, Capitalization, etc: • Common shares represent an ownership interest in the corporation, but debt holders do NOT have an ownership interest. Debt does not represent an interest in the corporation. It has a fixed maturity date, and creditors have the highest priority upon liquidation of the corporation.
–Rights, duties, authority of owners/mgmt: • A corporation is a separate, legal entity that is separate from its shareholders, directors, officers, and employees. Thus, owners have liability for the organization limited to their investment in the organization. Piercing the corporate veil means that a shareholder, director, or officer can be held personally liable for corporate obligations. In order for the “lifting” of the corporate veil to occur, two elements must be present
o A shareholder, director, or officer must have controlled the corporation for his or her own benefit in an attempt to protect himself or herself from legal liability.
o A shareholder, director, or officer must have used the corporation in an improper manner, doing such things as perpetuating fraud, not capitalizing the organization adequately, or looting the corporation of assets.
–Characterization of Income: • Charitable contributions are an itemized deduction on Schedule A of IRS Form 1040 and not considered in determining self-employment income. (I know–that was me going to fast)
–Adjustments arriving at taxable income: Education loan interst is deductible up to $2,500 ABOVE THE LINE
–Sales Contracts: Need to review everything
–Formation, Operation, and Termination: Partnerships that are to be longer than 1 year, must be in writing because of the statute of frauds
–Income and deductions: The remaindermen (or principal beneficiaries) receive the assets of a terminated trust.
–Loss limitation: Rental real estate phaseout over $100,000–Need to remember 4 step calculation.
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