[jeff]

Welcome to the Q4 2016 CPA Exam Study Group for REG.

If this is your first post in the study group – please post your target exam date (just the time frame to preserve your anonymity), and your past history with this exam (optional, of course).

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

[aatoural]

@dtatham10

I still don't know the answer, still working on it, Ill keep you posted.

In individual taxation AMT calculation adds/subtracts adjustments (PANIC TIMME I don't know if you remember the mnemonic) and adds back preferences (PPP mnemonic). IRA accounts is not part of those mnemonics which are the items taken into account for AMT calculation for individuals.

BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS

[aatoural]

If somebody give you a draft/check/note as a gift I know you are not an HDC but are you still a holder even though you gave no value?

BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS

[Me!]

@aatoural

Compensatory damages are not taxable but punitive damages are.

Punitive damages are not excludable from gross income under IRC § 104(a)(2).

So b. is the correct answer.

[aatoural]

Thanks pjronsenberg

BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS

[aatoural]

Just got back the result on the question. Is actually all damages are taxable.

BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS

[HoosierCPA]

Sounds like compensatory damages can get a bit tricky…

here is something I pulled online:

“Punitive damages are rarer than compensatory damages, and because they are not awarded as a loss they are always taxable, according to the IRS.

Compensatory damages are more complicated, and whether or not taxes are paid largely has to do with the original reason the lawsuit was filed.

In personal injury cases, such as those from car accidents, compensatory damages awarded for physical injuries are not taxable. However, for the award to be tax-free the IRS maintains that injuries need to be visible. Therefore, in a case with non-visible injuries, such as sexual harassment or defamation, the IRS will likely want their share of the awarded damages.

This is similar to the IRS’s position on damages awarded for emotional distress. There are two types of damages awarded for emotional distress. The first kind are damages awarded for physical symptoms of emotional distress, like a headache. Damages awarded for this reason are taxable.

The second kind of damages that can be awarded for emotional distress are damages awarded for physical injury or sickness that led to emotional distress. Damages awarded for this are treated like damages awarded for physical injury and are not taxed.

No matter what kind of compensatory damage is received, the reasons why they were awarded will determine their tax status. It is recommended that during settlement negotiations the reasons for why the money is being awarded are also clearly defined. This will help define how to treat the award during tax season, as well as provide a written record in case the IRS comes calling.”

FAR - 78
REG - 72,74,71...please just go away REG nobody likes you!
BEC - 82
AUD - Aug 16

[aatoural]

@dtatham10 – It sounds like a nightmare. i hope they don't do that on our exams. Becker really got tricky which what might had seem like an simple (meaning not a paragraph) question.

BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS

[aatoural]

The SIMS in Becker's First Final Exam were a joke. IT is so hard to prepare for those SIMS. I do think they did a great job with the SIMS in chapter 4.

BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS

[Anonymous]

@aatoural thank you!

And yess Practice test 1 sims were not bad at all, research question was the only one I struggled with. But one sim from practice test 2 pretty bit tricky and lengthy.

Regarding the HDC question, Yes the person recieving the gift from an HDC will be a holder but with HDC powers because of the shelter doctrine rule.

[aatoural]

@Annie – I will see that SIM tomorrow. and Thanks!

BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS

[Determined24]

Can anyone explain the difference between a Dividend Paid Deduction (related to accumulated taxable income) and a Dividend Received Deduction for me please ?

[Determined24]

Hi @dtatham10

What materials do you use for study and how ?

Congrats

[HoosierCPA]

@determined24 I don't know if I'm the gold standard to follow as far as studying, you might want to ask @aatoural or @annie what their methods are. But since you asked! haha

I've used Becker material for every exam, AUD and REG I have completely turned to Ninja for my studying. As far as my approach–it's not too complicated. When I was doing Becker I did a chapter a week, tried to work in 2 hours/night on weekdays and 4 hours a day on weekends..roughly 18-20 hours a week. Every Sunday when I finished up a chapter I would do a progress test over the chapter I went over and all the prior chapters..so if I was on chapter 3 I would do a progress test over chapters 1-3 (usually around 100 questions just to keep the material fresh). In the review stage I worked all the sims (never did any sims until the review stage) and made sure I fit in both practice exams.

For my retakes I have used Ninja, AUD was my first time working through Ninja MCQ's 100%–I was able to pick up 16 points–(64 to an 80!). So it's safe to say I'm a believer in Ninja — I'm hoping it can put me over the hump on REG as well.

Ninja studying I keep pretty straight forward, since I Have the foundation laid with Becker I work anywhere from 30-100 questions at a time and always select “new questions”. When I have worked all the questions once I work back through the “troubled questions” and try to get to the review stage. Once I”m there I will work a combo of Sims and MCQ's up until exam date. I didn't find Ninja practice exam to be nearly as helpful as Becker since it had the same questions that were in the MCQ's. When I finished AUD Ninja I was trending 96 and average was around 80

Good luck!

FAR - 78
REG - 72,74,71...please just go away REG nobody likes you!
BEC - 82
AUD - Aug 16

[HoosierCPA]

First question of the day and of course I have questions for you guys!

Freeman, a single individual, reported the following income in the current year:

Guaranteed payment from services rendered to a partnership: $50,000
Ordinary income from an S corporation: $20,000

What amount of Freeman’s income is subject to self-employment tax?

A.$0

B.$20,000

C.$50,000 — CORRECT

D.$70,000

When I read this I was thinking this is a simple concept but for some reason I have always overlooked what actually goes into Self-employment tax. Apparently its guaranteed payments from a partnership but not S Corp income–What all goes into SE Tax? Seems like both Parnership incmoe and S corp are similar in regard to the income passes through directly to the parner/shareholder and is reported on your individual tax return?

FAR - 78
REG - 72,74,71...please just go away REG nobody likes you!
BEC - 82
AUD - Aug 16

[aatoural]

@dtatham10 – At some point I had a bit of an issue with this question as well. I don't think I got this concept a 100% down but guaranteed payments are “like wages” they go into the person's individual income tax. Now, for the corp ordinary income I still get confused sometimes because in some questions with only the ordinary income and other types of distributions, etc (not guaranteed payments) is only the ordinary income. But I do think is something to do between a Partnership and S Corp that makes that difference.

BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS

[Author]

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