[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

[leglock]

sadly, i was never presented nor taught any material on alimony recapture, in my college tax class nor in Becker review. Some poeple say writing about a topic helps crystallize it for them. If you or someone else wouldn't mind explaining it, it would be great.

I'm recently done with all 4 parts, but have seen a few posts on this and am curious.

[Tax lady]

Sure! I love explaining it because it really helps to re-enforce the topics in my mind. I'll show you by example:

Year 1 alimony paid = $100,000, Year 2 alimony paid = $80,000, Year 3 alimony paid = $45,000

1st step: Take year 2 (80k) and subtract year 3 (45k), then subtract 15k (floor amount) = 80-45-15 = 20k

2nd step: Average year 2 and 3, but first subtract the step 1 amount: = ((80-20=60) +45)/2 = 52,500

Then take year 1 amount and deduct amount from step above and then deduct the floor amount of 15k =

100k – 52,500-15k = 32,500

Total recapture is $32,500 plus 20k (step 1) = $52,500

REG 8/15/14 (73); 11/13/14 (82)-expired 🙁
AUD 5/30/15 (80)
BEC 11/28/15 (75)
FAR 7/30/16

Studying with CPAexcel and Ninja notes/MCQ's/Flashcards

[leglock]

Thanks tax lady.

[Shannon]

Re-taking REG on Nov. 10th, I'm off this week reviewing. I am sinking in Business Law, any advice on how to understand this part?

Using Ninja MCQ and Ninja Notes this time

AUD - 75 - 11/22/13
FAR - 78 - 1/6/14
BEC - 76 - 5/29/14
REG - Retake 11/10/14

[Anonymous]

Shannon, you're not alone as business law is killing me as well.

Tax Lady that was great, I think I finally understand the alimony recapture rule now lol.

Can anyone tell me how the preferential creditor payments work?

[Kidd23]

Im Confused about the Sim. I'm using becker 2014. R-3 sim 1 question 1… The directions says that we need to put “none” if the answer applies. Well how come on the answer.,They left multiple blanks rather than putting none. Would I get penalized if I put “none” rather than leave it blank?? Or if I left it blank, would I get penalized for leaving it blank? What if the amount is zero??

[kappa1032]

A taxpayer is trading in an automobile used solely for business purposes for another automobile to be used in his business. The automobile originally cost $35,000 and he has taken $18,000 in depreciation. The old automobile is currently worth $20,000 and the new automobile the taxpayer wants in exchange is only worth $17,500. The other party agrees to give the taxpayer a trailer worth $3,500 in addition to the new auto, and the taxpayer agrees to pay $1,000 cash in addition to the trade-in. What is the taxpayer's basis in the new automobile received?

a.

$14,500

b.

$17,000

c.

$17,500

d.

$19,500

FAR - 81
REG - 74, 87
AUD - 88
BEC - 88

Finally.

“The only guarantee for failure is to stop trying”
― John C. Maxwell

[Mamabear]

I suck at basis, but I'm going with B.

CPA Exam - Finally DONE (November 2014)
BEC (08/10/13) 80
AUD (08/24/13) 65 (11/13/13) 85
FAR (04/12/14) 81
REG (07/19/14) 69 (11/29/14) 87!!

[kappa1032]

Answer is C

Calculations for “New Basis on Like-Kind Property with Boot Received and Paid”

Gain/Loss Realized:

Amount realized

=

Fair market value of new auto + Boot received – Adjusted basis of auto given up

=

$17,500 fair market value new auto + $3,500 fair market value of trailer received –

$1,000 cash boot paid – $17,000 adjusted basis of the old auto ($35,000 cost –

$18,000 accumulated depreciation)

=

$3,000 gain

Gain/Loss Recognized:

Gain recognized

=

$3,000 (the lesser of realized gain of $3,000 or boot received of $3,500)

Basis of New Property:

New basis

=

Adjusted basis of property given up + Gain recognized – Boot received + Boot paid

=

$17,000 + $3,000 – $3,500 + $1,000

=

$17,500

Alternate calculation: $17,500 FMV new property + $0 deferred loss – $0 deferred gain = $17,500 basis of new property.

Choice “c” is correct. $17,500 is the substituted basis of the new auto [$17,000 adjusted basis of the old auto ($35,000 cost – $12,000 accumulated depreciation) + $3,000 gain recognized – $3,500 boot received + $1,000 boot paid].

Choice “a” is incorrect. A substituted basis of $14,500 ignores the $3,000 gain recognized.

Choice “b” is incorrect. $17,000 is the adjusted basis of the old auto.

Choice “d” is incorrect. A $19,500 basis adds the net value of the boots received and paid, rather than subtracts and also ignores the gain recognized

FAR - 81
REG - 74, 87
AUD - 88
BEC - 88

Finally.

“The only guarantee for failure is to stop trying”
― John C. Maxwell

[Mamabear]

Yeah–I need to review that chapter. 🙁

CPA Exam - Finally DONE (November 2014)
BEC (08/10/13) 80
AUD (08/24/13) 65 (11/13/13) 85
FAR (04/12/14) 81
REG (07/19/14) 69 (11/29/14) 87!!

[kappa1032]

I got B as well… I calculated the recognized gain to be $2,500, which would be the lesser of $3,000 (realized gain) and $2,500 (net boot received = $3,500 trailer – $1,000 cash paid)

The basis of the new property would then be $17,000 = $17,500 (FMV new property) – $500 (deferred gain)…but apparently i was wrong…

FAR - 81
REG - 74, 87
AUD - 88
BEC - 88

Finally.

“The only guarantee for failure is to stop trying”
― John C. Maxwell

[leglock]

for calculating basis of new item rec'd, i recommend knowing both formulas stated above. the one that begins with fmv of item rec'd and the other that begins with ab of item given up.

the gain realized is the difference between the fmv of the item u gave up and the ab of the item u gave up.

the realized gain is only recognized to the extent of boot rec'd. so if realized gain is 3 and u recieved 2 boot, recognize 2 and defer 1. if realized gain is 3 and u recieved 4 boot, recognize 3 and defer 0

[kappa1032]

Maybe I'm going crazy but I totally remember another problem where the taxpayer assumed the liability of the new asset (boot paid, let's say that is $2) as well as the other party assuming the liability of the taxpayer's old asset (boot received, let's say that is $5).

So if for example the realized gain is $10, the recognized gain would be the lesser of $10 or

a. boot received of $5

b. Net boot received of $3 (boot received of $5 less boot paid of $2)

FAR - 81
REG - 74, 87
AUD - 88
BEC - 88

Finally.

“The only guarantee for failure is to stop trying”
― John C. Maxwell

[kappa1032]

Found it:

A taxpayer is trading in an automobile used solely for business purposes for another automobile to be used in his business. The automobile originally cost $35,000 and he has taken $18,000 in depreciation. The old automobile is currently worth $20,000 and the new automobile the taxpayer wants in exchange is only worth $17,500. The taxpayer agrees to assume a liability secured by the new auto of $1,000. The other party also agrees to assume a liability secured by the taxpayer's old auto of $3,500. What is the gain or loss realized by the taxpayer on this transaction?

a.

$500 gain

b.

$3,000 gain

c.

$2,500 gain

d.

$2,000 loss

FAR - 81
REG - 74, 87
AUD - 88
BEC - 88

Finally.

“The only guarantee for failure is to stop trying”
― John C. Maxwell

[kappa1032]

sorry, I mean to post this question instead – same fact pattern but is asking the right question

A taxpayer is trading in an automobile used solely for business purposes for another automobile to be used in his business. The automobile originally cost $35,000 and he has taken $18,000 in depreciation. The old automobile is currently worth $20,000 and the new automobile the taxpayer wants in exchange is only worth $17,500. The taxpayer agrees to assume a liability secured by the new auto of $1,000. The other party also agrees to assume a liability secured by the taxpayer's old auto of $3,500. What is the taxpayer's basis in the new automobile received?

a.

$17,500

b.

$17,000

c.

$14,500

d.

$19,500

FAR - 81
REG - 74, 87
AUD - 88
BEC - 88

Finally.

“The only guarantee for failure is to stop trying”
― John C. Maxwell

[Author]

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