[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

[Reg_Slayer]

@A1lessio

this was from a simulation specifically on donated land [gifts to chairty other than by cash/check]

I think you are correct about the 50, 30% rules, but maybe it can get more detailed when LAND is what is being donated?

[jonm857]

@jpowell

Okay I feel like I'm reading Greek.

B - 81
A - 87
R - 73
F - July 5th

[aatoural]

I'm having trouble with the shareholder basis for C corps. Can somebody explain i clearer than Becker please?

Also teh corporation's basis on property received Becker book says is the greater of NBV or debt assumed, but one of the SIMS explains is same basis as shareholder + cash distributed

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

[jonm857]

@aatoural

I know the sim youre talking about. By “cash distributed” do you mean the cash the sharehilder received? Because that would be boot to the shareholder, and that is included in his basis as a gain.

B - 81
A - 87
R - 73
F - July 5th

[jonm857]

The sim is just saying the formula in a very different way, i spent hours thinking that over. But it is essentially the same as the book.

B - 81
A - 87
R - 73
F - July 5th

[jpowell31]

@jon – yeah total WTF really…

@aatoural – ha look at the previous page for debate/thoughts/an example.

[Reg_Slayer]

@jp

That question is a mindful. But why cant we just ignore S.D. and Personal Exemption completely? Im having trouble understanding why “The standard deduction is a nonbusiness expense for this purpose.” I thought it was only for calculating taxes owed. How could SD be an expense?

ALSO:
the “3k/yr” rule that you mention is for capital loss. This is NET OPERATING LOSS [NOL].

5,000 WAGES
+1000 INT ON SAVINGS ACCOUNT does not exeeed the SD, a “nonbusiness expense”
$4,000 Personal exemption No effect on carryback/fwd's

+4,000 Net Rental Income

6,300 SD Used only to compare with nonbusiness income.
-16,000 Net business loss
2,000 Net short-term capital loss DOES NOT EXCEED “nonbusiness gains”

=
7,000 NOL

[jonm857]

Is that ninja question? Because that thing is from another planet.

Definitely not a becker question.

B - 81
A - 87
R - 73
F - July 5th

[jpowell31]

i know. it's confusing. for that piece i'm thinking, okay this is an individual taxpayer and their interest income is not business income so this is included separately but the standard deduction doesn't come into play until AFTER business income/loss from Schedule C (along with all other income!) is also considered…unless it's always considered to the extent the individual has personal expenses/income?

[jpowell31]

yeah #1074. i've memorized the question number (not reasoning) from the LAST time i took the exam because it STILL stumps me. these kind of things trip me up when i see a normal question…i start to overthink them.

[aatoural]

THanks guys.

@jpowell – example in prior page was useful.

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

[jonm857]

@jpowell

Clearly I need to hit NOLs very hard when I put my tax-hat back on.

B - 81
A - 87
R - 73
F - July 5th

[A1lessio]

The only thing I know about NOL is 2 years back and 20 forward… that explanation was extremely confusing. Isn't it just Wages and Rental income of $9000 less the $16,000 loss? Interest income isn't from operating activities, it's portfolio income. I definitely need to review this again!

Also, with personal exemptions and standards deductions, these are all factors used after arriving at AGI (page 2 of 1040). I wouldn't consider them business deductions or say only a portion of a standard deduction is used. Although, I feel like NOL's have specific rules about exemptions and standard deductions I don't know about.

AUD (08/02/2016)

[Reg_Slayer]

I feel like NOL’s have specific rules about exemptions and standard deductions I don’t know about.

– THIS. Even tho they are below the line, we are using them to determine allowable NOL.

But 2 back 20 fwd seems to be the most emphasized thing, and getting an extensive question on NOL would not be likely.

[Reg_Slayer]

“The home mortgage interest is the summation of two components: the mortgage interest amount and the deductible point amount. The “Expenses in Tax Year 5″ table provides the mortgage interest amount as $6,000 and the point payment as $1,500. Since Wai refinanced her home on March 31, Year 5, she is only able to claim $75 in point interest (($1,500 ÷ 180 months) x 9 months). Hence, the total home mortgage interest amount is $6,075 ($6,000 + $75). ”

so we use 180 months to amortize points paid on home mortgage interest. But also 180 months for ORGANIZATIONAL EXPENSES (which is an entirely separate concept, with a 5,000 limit) ?

[Author]

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