[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).

[RE2PECT]

@dtatham10- That's good to know! Hopefully the tax ones are tough. I didn't practice any blaw sims. Have you ever had one on any of your attempts?

FAR: 75 Roger & Ninja (notes/flashcards/audio/MCQ)
AUD: 73, 81
BEC: 71, retake 8/29
REG:

[hasy]

So this group is saying, that EVEN though, I'm going to FINISH ALL the NINJA sims and practically averaging at least 79 on them, the exam will still be much harder? I also am finishing the Roger's SIMs too but I don't know the average of them since it doesn't show the scores.

I'm probably freaking myself out but so what gives? I've taken REG before, not that I remember too much, since I took it for fun, practically (NTS was expiring and might as well sit to see how the exam is).

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

[debitcash]

Sam's Year 2 taxable income was $175,000 with a corresponding tax liability of $30,000. For Year 3, Sam expects taxable income of $250,000 and a tax liability of $50,000. In order to avoid a penalty for underpayment of estimated tax, what is the minimum amount of Year 3 estimated tax payments that Sam can make?

A.
$30,000

B.
$33,000

C.
$45,000

D.
$50,000

I get the rules of 90/100/110% (safe harbor) but don't you use 110% of prior only if AGI is greater than $150,000. This problem states that “taxable income” is xx and nothing about AGI.

I chose A but the right answer is B.

I get the concept just confused on the wording and relation between “taxable income” and “AGI”.

FAR:75!
AUD:69, 63, 73, TBD
BEC:76!
REG:71, TBD

BECKER + NINJA PRODUCTS

keep your cool

[Claudia408]

Can someone please help explain how to calculate Corporate AMT ACE? I know that ACE is: 70% DRD, Life Insurance Proceeds and Muni Bond Interest. But I am confused about how to get to what is ACE with respect to the formula below.

Formula for Corporate AMT Taxable Income
plus
Tax Preferences
plus or minus
AMT Adjustments
and
ACE Adjustment
equals
Alternative Minimum Taxable Income (AMTI)

So how do I get ACE?
1. Total ACE * 75%
2. (AMT pref & Adj – total ACE) = XX * 75%?

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[HoosierCPA]

@Re2pect you want a SIM that will kick your ass go to Gleim Sim “Study Unit 5: Deductions from AGI, Credits, AMT, and Limitations” and try the 2nd SIM…wow! There are so many #'s it's almost impossible to sift through them quickly.

Also, the only 3 attempts isn't as bad as it seems. They don't erase your sim after you are done reviewing it. You can go back as many times as you want and review the answers..You can only reset and start from scratch 3 times–which I would never do anyway. I'm more interested in the answers then actually doing them. But man these are frying my brain!

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

[Anonymous]

@debitcash,

To get to taxable income, you must have already went

Gross income
<FOR AGI adjustments>
=Adjusted Gross Income
<Greater of Standard Deduction or Itemized>
<Personal and Dependency exemptions>
=Taxable Income
<Credits>
<Payments>

So the safe harbor rule is correct. 110% of prior year's tax if AGI> threshold for filing status

[Anonymous]

@Claudia408

How I remember ACE Adjustments is

Muni Bond Interest
Organiational Expenses
Life Insurance Proceeds
Difference between AMT and ACE depreciation
Dividends received deduction ( <less than 20% ownership)

The ACE Adjustment is 75% of the difference( plus or minus) between AMTI(before the ACE calculation) and ACE.

*The total adjustment is limited to past positive adjustment amount.

Clear as mud??

[Claudia408]

@cessna – thank you it helps. so if it cannot be negative, there is no ACE adjustment?

BEC - 75 (3x)
AUD - 78 (3x)
REG - 67, 66, Aug 1
FAR - 54, Sept 8

[Anonymous]

The adjustment can be negative for sure. But say you had a past positive ACE adjustment of $1000 and this year you have ACE adjustment of $-1500, your adjustment for the current year is limited to -$1000.

[tjy49]

RE2PECT-I wouldn't worry about reading the Gleim book. From my experience with FAR, they get bogged in the details and I lost momentum from trying to remember everything. I keep the books now so I can burn them once I'm done 🙂 I think you'll learn faster by practicing questions anyways.

The Gleim SIMS come in sets of 5-7, so it's like working through a real test. If you go over time, there's just an alert that lets you know, but you can keep working. Their DRS seem to be pretty good, but I haven't come across one while testing, so I don't know how they compare.

You don't need to worry about the 3 attempts max, but a counselor can probably reset your progress if you need it. On some of SIMS, I have submitted blank testlets just to review the answers, in an attempt to save myself some time.

FAR-69, 65, 84 (Feb. 2016)
AUD-86 (May 2016)
BEC-TBD (Aug. 2016)
REG-TBD

Gleim didn't work for me, but Ninja did!

[HoosierCPA]

I'm spacing here guys…its MACRS again–my worst nightmare!

Here is the sim, you need to calculate depreciation:

EF, Inc., purchased office furniture in January 2016 for $15,000 and computers in December 2016 for $42,000.

$5,850. Computers have a useful life of 5 years, and office equipment has a useful life of 7 years. Both properties should be depreciated using 200% declining balance. When property purchases in the fourth quarter exceed 40% of the total property purchases for the year, the mid-quarter convention should be used for all property purchased during the year.

$15,000 × (200% ÷ 7) × 87.5% = $3,750
$42,000 × (200% ÷ 5) × 12.5% = $2,100
Total depreciation $5,850

Where is the 87.5% and the 12.5% coming from–about all I can gather from it is it totals 100% lol

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

[HoosierCPA]

Part 2 of my question:

JK, Inc., purchased 5-year property on April 15, 2016, for $88,000.

Depreciation Answer: $17,600

Explanation: Property purchased after 1987 is depreciated using MACRS. MACRS calls for the 200%-declining-balance method and half-year convention. The calculation is $88,000 ÷ 5 = $17,600.

Couple things–it says it uses double declining method but then the calculation doesn't use it. Then its purchased in April 15th but they run an entire 12 months of depreciation for 2016 depreciation expense????

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

[Namstut]

@dtatham10,

https://www.irs.gov/publications/p946/ar02.html

(200% ÷ 5) × 12.5% = 5% – this value is from the MACRS table and it corresponds to the depreciation rate for the recovery period for 5-year asset placed in service in the LAST quarter of the year

I can't get back to the percentage on the office furniture purchase of the $15,000, it would have to calculate to 3.57% so where in the world does (200% ÷ 7) × 87.5% come from I have no idea, it does not make any sense. If you calculate backward 3,750/15,000 = 25%, which corresponds to the depreciation rate for the recovery period for 7-year asset placed in service in the FIRST quarter of the year.

In my mind it should either be half year or mid quarter (values from Mid Quarter Fourth Quarter). Since these assets are not of the same class I think it should be a regular mid-year convention for the furniture.

Does anyone have any other ideas or explanations?

AUD 7/6/16 Passed
BEC 9/3/16
FAR TBD
REG TBD

[Namstut]

@dtatham10

Answer to your Part 2.

In this case the asset is depreciated using half-year convention so let's say it was purchased on 6/30/xx. Full year depreciation is 17,600. Half-year deprecation would be $8,800 BUT we are using the full $17,600 because we DOUBLE the depreciation for the first year. I might be completely off base here but that's how I understand it.

AUD 7/6/16 Passed
BEC 9/3/16
FAR TBD
REG TBD

[HoosierCPA]

@namstut thanks! To follow-up…this table you have now referenced to me 2 times from the IRS, one a couple days ago and now. The first time I exited out of the question and just assumed i missed the table. But this one I pulled back up to make sure I didn't miss the table and sure enough its nowhere to be found. Is this something they just expect us to know? Seems a bit ridiculous.

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

[Author]

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