[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

[HoosierCPA]

For some reason my post earlier isn't appearing. So I will re-post.

If you get a stock option bonus is it taxable as wages? For some reason in prior questions I thought it mentioned that you must have the option to receive cash OR stocks and if you elected stocks then its taxable. However, earlier I passed a question which just mentioned stocks and not having the option of cash and it was still taxable.

So my question–are stock bonuses taxable regardless of the option to receive cash?

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

[Ryan]

Why is the answer A, and not C? I thought all contracts that can't be performed within 1 year must be in writing??

Sand orally promised Frost a $10,000 bonus, in addition to a monthly salary, if Frost would work two years for Sand. If Frost works for the two years, will the statute of frauds prevent Frost from collecting the bonus?

A.
No, because Frost fully performed

B.
No, because the contract did not involve an interest in real estate

Incorrect C.
Yes, because the contract could not be performed within one year

D.
Yes, because the monthly salary was the consideration of the contract

[Sticky Nicky]

@dtatham…stock options depend on whether they are qualified or non qualified…if they are qualified then they are taxed when excercised…if they are non-qualified they are taxed when the stock is sold…nonqualified are incentive based stock options….i would think that if you received cash then its taxed.

@ryan…idk that question got me confused as well

[FARISFUN]

@ryan a contract must be in writing if it can't be performed within one year. If it is for employment issues where the employee promises to work for the employer it does not have to be in writing because the employee could die the next day. This is an exception to this rule

[Ryan]

Thank you. I hate business law lol.

[FARISFUN]

@ryan are you using Becker?

[LIZZ]

Lost focus.. so my exam was Dec 9th and the apartment complex next to me literally caught on fire. About 20 families lost their home today. I'm so emotionality exhausted I rescheduled my exam till the first week in January. CPA sucks..

FAR - 05/2015
AUD - 75,11/2014
REG - 07/2015
BEC - 09/2015

[Namstut]

Geez, I just took Becker practice exam #2 and I want to cry! I have no business taking this test on the 8th! I am not a dumb person and people consider me to be a smart one, it sure does not feel that way, I've never felt dumber than while studying for a CPA and I did a LOT better on my practice exams before I took AUD and BEC.

I hope everyone else is doing MUCH MUCH better than me!

Testlet #1 58%
Testlet #2 75%
Testlet #3 67%

Sims
1 – 67%
2 – 50%
3 – 83%
4 – 50%
5 – 20% (I started but skipped because I was running of time)
6 – 67% (I was 100% positive I got that one right)

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

[demarcon]

@Namstut

Don't get discouraged! I've seen a post floating around that generally people score 12 points higher on the real exam than they do on Becker. Keep your head up, you can do it!

[George]

Partnership JKL has decided to liquidate. Partner J’s adjusted basis in the partnership is $55,000 and he received only equipment (FMV $55,000, adjusted basis to the partnership of $40,000) in complete liquidation of his share of the partnership. What is the amount of gain or loss Partner J will recognize on his personal tax return?

A. Gain of $15,000

B. Partner J may not recognize a loss on the liquidation of the partnership.

C. Loss of $15,000

D. Partner J will not recognize a gain on the liquidation of the partnership.

B is correct.

The rules for liquidating distributions for a partnership are as follows:

* If a partner receives cash or marketable securities (cash equivalents) in excess of the partner’s adjusted basis, then gain is recognized on that excess.

* If no cash equivalents are distributed, no gain is recognized.

* If a partner receives cash, unrealized receivables, or inventory in a liquidating distribution, a loss may be recognized by the partner equal to the difference between FMV and the partner’s basis.

* If only other property is received, then no loss may be recognized.

How is D not right ?

[demarcon]

@dtatham10

Stock options are taxed as ordinary income if they are non-qualified stock options and they are exercised. The amount taxed is the FMV – option price when they are exercised. They don't have to have the option of receiving money instead.

@CPAWarrior

It's just wording, since it's only property he's not even allowed to recognize a gain or loss if there was one. There isn't one anyway, but even if there were he can't. It's just knowing that a property distribution can NEVER qualify as a gain or loss on the liquidation of a partnership. You get the property at whatever would bring your outside basis to $0

[Namstut]

@Ryan, here is the answer directly from Becker practice final exam:

Although under the Statue of Frauds most contracts that by their terms are impossible to perfomr within one year must be evidenced by a writing signed by the party thought to be held liable and containing the material terms of the contract, there is an exception if one party has fully performed his/her part of the contract. In such a case, the contract can be enforced despite the lack of a sufficient writing if the aggrieved party can convince the court that the oral term was indeed part of the contract. Here, Frost had fully performed by working for the two-year period and so he has a chance to enforce the bonus provision despite the absence of a sufficient writing.

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

[Namstut]

@demarcon, thank you for the encouragement!

@financelady, that is terrible!! I hope everyone is ok! And yes, CPA sucks, until we finally have it! 😉

I am reviewing my answers and I feel like SIMs are designed to trip you! How do you decide whether or not to put zero values in SIMs tables? I got 50% on one when technically I had 80% correct because I was not supposed to enter zeros. The other SIM was fine with zeroes entered. What is the logic to this?

Also, positive/negative values. I am guessing the values should be entered using the same sign as it is on the financials that are part of the SIM.

Anyone?

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

[HoosierCPA]

@namstut seriously don't stress the becker practice exam. I've heard many people that won't even do them simply because they are so hard that they get discouraged going into the exam. Doing poorly is perfectly normal and like @demarcon said typically people score quite a bit higher on the actual exam.

I personally have never skipped the practice exams just because I get too much anxiety knowing I might not see a question that may help me pass the exam. I'm not sure I have ever passed a becker practice exam come to think of it–most important thing to do is go back and make sure you learned from your missed questions.

Good luck!

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

[Namstut]

@dtatham10 thank you for the encouragement!

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

[Author]

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