[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/

[Mary 2496]

aspiring is right on the time limits. Three years if under 25% omission, six years if over 25% and no time limit for fraud.

[Windel]

@aspiringcpa2014

Thanks. It's good to know that I'm not crazy…just wrong more often that I'm right (which I've discovered about myself ever since I started studying for the CPA).

This is what the publication states:

How long we have to collect taxes

We can attempt to collect your taxes up to 10 years from the date

they were assessed. However, there are exceptions to this time frame.

For example, by law, we’ll suspend and extend collection while:

• We’re considering your request for an Installment Agreement or Offer

in Compromise. If your request is rejected, we’ll suspend collection

for another 30 days, and during any period the Appeals Office is

considering your appeal request.

Seriously, The IRS should just say “don't evade us or try hide any of your taxes because we (REALLY) don't have a statute of limitation, we only say that to confuse REG test-takers and criminally minded taxpayers.

[Windel]

@ Mary & aspiringcpa2014

Thanks for the “6yrs-over/3yrs-under” clarification. You 2 may have single-handed gotten me that 75 instead of 74 when I test on monday. Every little counts at this point.

[Anonymous]

testing on Friday!! we got this 🙂

[Anonymous]

Stone owns 100% of an S corporation and materially participates in its operations. The stock basis at the beginning of the year is $5,000. During the year, the corporation makes a distribution of $3,500 and passes through a loss from operations of $2,000 for the year. What loss can Stone deduct on Stone's personal tax return?

Incorrect A.

$0

B.

$1,500

C.

$2,000

D.

$5,500

You answered A. The correct answer is B.

A taxpayer's loss deduction from an S corporation is limited to amounts “at risk” in a trade or business or income-producing activity under IRC Section 465 losses. The amount at risk is the total of the taxpayer's basis in the S corporation plus any loans that the taxpayer has made to the S corporation. In this case, the basis begins as $5,000. The basis is reduced by the $3,500 distribution, leaving a final basis of $1,500. Therefore, the allowed loss is $1,500.

Still don't understand why it's not 0 taxpayer is 100% owner…shouldn't he take the loss from operations?

[Mary 2496]

@ King Coffee — you got that right! Every single point is a point towards 75!!!

[Mary 2496]

In regards to the MCQ above, no, you have to consider loans and distributions. If there were no distributions, the same rule wouldn't apply. The basis less any distribution would be the loss. Since the basis minus distr. equals 1,500, he can't take the full loss of 2,000. (Because he's pulling money out through the distribution, which has essentially limited his amount of loss that he can take.)

That's how I understand it, anyway.

[Anonymous]

A.

$0

Incorrect B.

$1,100

C.

$1,300

D.

$2,500

You answered B. The correct answer is C.

The basis in property acquired by gift is determined by reference to the basis in the hands of the transferor. Generally the basis is the same as the basis of the transferor (special rules apply if that basis is greater than the fair market value at the time of the gift).

In this case, the fair market value at the time of the gift ($1,400) is greater than Smith's basis ($1,200) so Thompson's basis is $1,200.

Thompson's gain on the disposition is computed as follows:

Sales price $2,500

Less basis 1,200

---

Gain $1,300

Per @rzr explanation earlier on pg.10 shouldn't thompson use the FMV in calculating the gain since it sold for above FMV? this is getting confusing!

[Mary 2496]

What was the question?

[Amay]

Having a really de-motivating day…I just feel sometimes like I just can't study anymore. I am so close yet so far away. Ugh!! Needing to vent 🙁

BEC: 73, 81
AUD: 85
FAR: 71, 77
REG: 74, 75...finally DONE! 😀

*This is my 2nd attempt at the CPA exam. For all of you who have failed this exam many times, given up on it, or taken a break like me, remember that it is still possible to finish what you started...failure is the opportunity to begin again more intelligently 🙂

[Amay]

Trying to learn from this bad study sesh…can someone please tell me if I am missing anything here?

The most important thing to remember when comparing a liquidating vs. a non-liquidating partnership distribution is that in both you grab the partner's basis in the partnership interest and first subtract any cash received in the distribution. In a liquidating one you then subtract any hot assets and in a non-liquidating one you then subtract the adjusted basis of any property distributed but only if it does not get your basis below zero. Is this correct?

BEC: 73, 81
AUD: 85
FAR: 71, 77
REG: 74, 75...finally DONE! 😀

*This is my 2nd attempt at the CPA exam. For all of you who have failed this exam many times, given up on it, or taken a break like me, remember that it is still possible to finish what you started...failure is the opportunity to begin again more intelligently 🙂

[Anonymous]

@mary my question is after the actual question…last sentence

[Anonymous]

Hi Amay.

I am sure you will be done this quarter.

When are you testing BTW?

I am testing on 10/20.

[Anonymous]

Amor, is that a English Mastiff?

[Anonymous]

Yes, 7-year old English Mastiff. His name is Alvin and he weighs about 175 lbs. Do you also have one like him?

[Author]

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