[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

[Determined24]

@aatoural are you referring to the Document Review Simulations ?

[HoosierCPA]

Hopefully I can ask this without providing the entire sim. For a MACRS depreciation sim there was a half year convention and you were trying to find its year 2 depreciation expense. Here is the formula to calculate the answer:

“Old truck depreciation:
$44,000 × 25.5% × 50% = $5,610 half-year convention, 150% declining balance”

The 25.5% came straight off the table they provided, however, I'm a little confused on the multiplying by 50%–whats the reason for this…when calculating the year 1 depreciation for this same asset you did not multiply by 50%.

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

[aatoural]

@Determined24 – Yes that is the one.

@dtatham10 – I am just wild guessing here, but since those tables are already pre-set up doesn't the % in year one already accounts for the half year convention part?

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

[aatoural]

@dtatham10 – did by any chance they got rid of the truck in year 2?

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

[HoosierCPA]

@aatoural I'll have to repull the sim back up. Right when I get through the one I'm on I will pull it back up. Do you have Ninja MCQ's? I may just be able to reference the sim # and you can pull it up….that is if you want to 😉

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

[HoosierCPA]

Ahhh @aatoural what a genius you are! They sold the truck in November year 2!

I'm still not sure I understand why you take 50% when they owned the asset for 10/12ths of the year. Does it have to do with one of those rules where you acquire or sell an asset in the final quarter of the year?

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

[JMG]

First MCQ I've come across that totally stumped me, even with the answer and explanation (which wasn't very detailed):

On May 2, Handy hardware sent Ram Industries a signed purchase order that stated, in part, as follows:

• “Ship for May 8 delivery 300 Model A-X socket sets at current dealer price. Terms 2/10/net30.”

Ram received Handy’s purchase order on May 4. On May 5, Ram discovered that it had only 200 Model A-X socket sets and 100 Model W-Z socket sets in stock. Ram shipped the Model A-X and Model W-Z sets to Handy without any explanation concerning the shipment. The socket sets were received by Handy on May 8.
Which of the following statements concerning the shipment is correct?

A. Ram’s shipment is an acceptance of Handy’s offer.
B. Ram’s shipment is a counteroffer.
C. Handy’s order must be accepted by Ram in writing before Ram ships the socket sets.
D. Handy’s order can only be accepted by Ram shipping conforming goods.

I might be missing something obvious here, but can anyone explain this to me?

[HoosierCPA]

@jmg well the first answer I wanted to look for was Ram breached the contract. When I didn't see that I'm not as sure lol.

-A doesn't appear to be correct as the question doesn't state that Handy accepted the non conforming goods. Plus what Ram shipped was not what was contractually agreed upon.
-B sounds the best to me??? Since they didn't send what was contractually agreed upon this may constitute as a counter?? Somewhat guessing here.
-C possibly but doesn't sound right, ‘MUST' be accepted — I think they can ship and accept upon arrival.
-D also doesn't sound right, I believe you can ship non conforming goods as long as the buyer agrees to it.

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

[Determined24]

A partnership terminates when 50% or more of the partnership interests are sold within a 12-month period.

Is this true?

What about if a partner is dead and he did not have 50% ownership, let’s say he had less upon his death?

What happens then?

[HoosierCPA]

First sentence is correct.

Death also causes dissolution– 50% test is not relevant when death occurs.

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

[Determined24]

Also for my experienced Q4 test takers:

If I had 100 hours to study for REG (hypothesis):

Between:
1. Individual Tax,
2. Corporate Tax,
3. Partnership,
4. Property Tax
5. Sales Transactions

How would you allocate those 100 hours across these topics?

[hasy]

Susan inherits her father's house upon his death. At the time of the inheritance, the father's basis in the property was $100,000. The fair market value of the house at the time of the inheritance was $90,000. The alternative valuation method was not elected in regard to the father's estate. Susan does not use the house as her principal residence and subsequently sells the house for $95,000. Susan will include a capital gain/loss of what amount on her individual tax return in the year she sells the house?

A.
$5,000 gain

B.
$5,000 loss

Incorrect C.
$0 gain

D.
$95,000 gain
—–
I need to know this. How is it a gain? When the devalued basis rules say that there is no gain or loss when the selling price is between the Carryover basis and lower FMV? >.<

Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired, and success achieved - Helen Keller

-

BEC 80 (10/23/15)
FAR 72 (4/2/15); 83 (7/11/16)
REG 52 (4/28/15)
AUD (9/9/16)

Roger + NINJA MCQ + WTB

[HoosierCPA]

@hasy I believe the rule you are referring to is when the property is an non-arms length transaction. When a gift is INHERITED your basis in the property is the FMV…so in this case Susan assumed a $90K basis on the property subsequently sold it for $95K and as a result took a $5K gain.

If you re-worded the problem and her father sold Susan the property for 90K and Susan subsequently sold it for $95K you are correct there is no gain or loss since the sales price is between the fathers basis and Susan's purchase price.

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

[hasy]

@dtatham10

Thank you. But I am still annoyed at ALL these tricks!! OMG….

Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired, and success achieved - Helen Keller

-

BEC 80 (10/23/15)
FAR 72 (4/2/15); 83 (7/11/16)
REG 52 (4/28/15)
AUD (9/9/16)

Roger + NINJA MCQ + WTB

[HoosierCPA]

@hasy believe me I understand! REG drives me crazy!

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

[Author]

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