[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- So do you think it was worth purchasing? Never thought I'd say I look forward to doing some sims lol. I spoke to one of their personal counselors today and she said if you contact them they'll let you do them more than three times, but I doubt I'll be doing that.

@tjy49- I don't plan on reading the book, but might skim through it. I already read Roger's book twice and most of the Ninja book. I'll be doing mostly mcq's and sims until I can retake it in January.

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

[Namstut]

@dtatham10 these tables are in REG Becker SIMs as supplemental information, it never even crossed my mind to memorize any of the MACRS details, I just studied the basics around actual treatment of the asset and the type of depreciation to be used depending on when the asset was put in place. I hope if this comes up on the actual exam there will be a table. 🙂

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

[Claudia408]

@cessna – ok thanks i think that makes more sense.

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

[Namstut]

@dtatham10, I am looking through my Becker material and I found notes (by the instructor) and I found the explanation to the percentages, which apply to machinery and equipment (computer)! I wish I could forward you the snapshot but unfortunately we can't insert images here.

In this case more than 40% of depreciate personal property is placed in service in the last quarter you have to use mid-quarter convention. MACRS uses 200% declining balance method so we just have to memorize the first part of the formula (200%/live of the asset).

Basically, you start off with 100% depreciation in the beginning of the year. By the end of the first quarter you have 75% depreciation remaining. Since this is a mid-quarter convention you take a mid-point, which is 87.5%.

The same methodology applies to the 12.5% calculation. You have 25% of the depreciation left in the last quarter, you have 0% of the depreciation left at the end of the year so the midpoint (again, because it's mid-quarter), will be 12.5%

I think we can definitely remember how to calculate these!

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

[Namstut]

That should say the “life” not “live”.

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

[HoosierCPA]

@namstut Awesome! I think it's starting to SORT OF click!

So 200%/LIfe * %

% is calculated based on when it was placed into service–if 40% of more of the purchases came into the last year = Mid Quarter IF NOT then its Half Year.

Another question–and hopefully this doesn't require you to look it up (I've taken enough of your time). For the one example:

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

Since these are both personal property assets they get grouped together and fall under mid quarter since >40% of assets fall under last quarter? If you were to apply the same example and the 15k was real property that would be split up to the 42k in computers uses mid quarter and the 15k in real property uses the mid-month???

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

[HoosierCPA]

@Re2pect I would say so. I'm already through 7 of the 20 sims so $200 bucks for material that I may get through before the weekend kind of stinks but the material is awesome. I'm learning a lot so from that regard it was money well spent. Thanks for letting me know about the sale. I think $200 was pretty close to my top dollar I was willing to spend.

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

[alialzoubi]

Jones, an individual taxpayer, must include $1,000 in gross income resulting from a state tax refund he received in the current year. Jones is in an alternative minimum tax situation for the year. Which of the following is the correct statement in regards to the tax refund received by Jones?

A.
The $1,000 tax refund is a positive adjustment in the calculation of alternative minimum taxable income (i.e., will increase alternative minimum taxable income).

Correct B.
The $1,000 tax refund is a negative adjustment in the calculation of alternative minimum taxable income (i.e., will decrease alternative minimum taxable income).

Please help guys as I understood the Tax refund will add back to the AMT and will increase the AMT

[alialzoubi]

Jones, an individual taxpayer, must include $1,000 in gross income resulting from a state tax refund he received in the current year. Jones is in an alternative minimum tax situation for the year. Which of the following is the correct statement in regards to the tax refund received by Jones?

A.
The $1,000 tax refund is a positive adjustment in the calculation of alternative minimum taxable income (i.e., will increase alternative minimum taxable income).

Correct B.
The $1,000 tax refund is a negative adjustment in the calculation of alternative minimum taxable income (i.e., will decrease alternative minimum taxable income).

Please help guys as I understood the Tax refund will add back to the AMT and will increase the AMT

Reg exam on 9 Dec
Ali Al Zoubi

[HoosierCPA]

Ali…straight from the becker book

“Taxes REDUCED by taxable refunds (IF refunds meet the tax benefit rule) are added back”

So yes–tax expense is ADDED BACK…however if don't have an expense and just a refund then its REDUCES AMT.

If you have both a tax expense and a tax refund–like becker says, it's netted and if the net amount is an expense then its an add back…if its a refund then its a negative adjustment.

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

[alialzoubi]

3. Positive adjustment item
The state income tax deduction for regular income tax is not allowed for AMT. The deduction is
an addback to net income to calculate AMTI.

[RE2PECT]

@dtatham10- Glad to hear you think it was worth it. I feel the same way and didn't want to drop another $250 after already spending over 2k on review courses, but at this point I'll do or spend almost anything to get this last pass! Good luck on your exam. Hopefully it was money well spent!

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

[Namstut]

@dtatham10, yes, computers and furniture will both be using mid quarter if more than 40% was added in the last quarter since they are the same asset class.

If you were to throw a building in the mix it would not apply to the building.

There is a good SIM on the topic in Becker, I will triple check it tonight but I am 99.9% positive this is the correct answer (reasonable assurance! Lol!)

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

[HoosierCPA]

thanks @namstut

So anyone who can simplify this would really make my day…This sim calls for you to calculate the Gain/Loss and the Basis assumed

Scenario:
“Maria and Kim started Grand Slam, Inc., in 2016. Kim transferred a building with a basis of $250,000 and a FMV of $330,000 for 75% of the stock. Maria agreed to perform advertising services in exchange for her stock.”

Explanation:
“Gain $80,000 and Basis $440,000. Stock exchanged for services is not counted toward the 80% control threshold. The FMV of the stock received in exchange for services is gross income to the shareholder ($330,000 ÷ 3). Any other shareholders involved in the transaction must recognize any gain on the transfer of property. A control group shareholder’s basis in the stock of the corporation is the adjusted basis in the contributed property minus boot received (including liabilities assumed by the corporation) plus any gain recognized. Kim would have a recognized gain of $80,000 ($330,000 FMV – $250,000 adjusted basis), and her basis in Grand Slam would be $330,000 ($250,000 adjusted basis + $80,000 recognized gain). Maria’s basis in Grand Slam is $110,000 [($330,000 ÷ 75%) – $330,000]. This amount will be gross income for Maria. Total gain is Kim’s $80,000 gain, and Kim and Maria have a combined $440,000 ($330,000 + $110,000) basis in Grand Slam.”

I am brain dead from trying to sort through that explanation!!!! I understand the Gain (I actually got that part correct)…the basis and the 330k/3 are where I start to get lost.

**NEVERMIND — once I stepped away for an hour and came back this all made sense. No need for help.**

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

[JMG]

RE:

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.

According to the Becker Textbook: “Under the UCC, a shipment of nonconfroming goods is both an acceptance and a breach of contract” So since breach of contract is not one of the options, it must be A. I can see that now, but it would have helped if this was given in the explanation.

[Author]

Replies