[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]

Hi everyone, I trust you're all powering through your studies:

I have reached self employment module

Can someone break down these topics from their understanding for me please and how the limits and thresholds are applied:

1) The special rules relating to the rental of a residence or a vacation home.
2) Domestic Production Activities Deduction (DPGR)
3) FICA and FUTA taxes

Thank you

[Reg_Slayer]

@determined
https://www.another71.com/cpa-exam-forum/topic/reg-1040-mnemonics

i say do not worry about memorizing the standard deduction numbers. Just know to take whichever is larger.

re:2 vs 3% agi, i think 3% agi is for wealthy taxpayers only, but i could be wrong.

1) The special rules relating to the rental of a residence or a vacation home.
= i would say most important thing to remember here is 15 days or less and none of the income is GI and none of the expenses are deductible. Also 25,000, reduced by 50% agi over 100.

[ARINDAM JAISWAL]

What is the due date for filing of a federal income tax return for a C corporation with a fiscal year of 6/30/year 2 that has not filed a request for extension?

[ARINDAM JAISWAL]

What is the due date for filing of a federal income tax return for a C corporation with a fiscal year of 6/30/year 2 that has not filed a request for extension?

[thek1d]

I'm confused about the due dates Becker has. Becker says “A calendar year corporate return is due by the 15th day of the FOURTH month after the close of the taxable year.” HOWEVER, the IRS instructions for Form 1120 say “Generally, a corporation must file its income tax return by the 15th day of the THIRD month after the end of its tax year.”

What the heck is going on here?!

[Anonymous]

thek1d I'm also confused about that sentence in Becker. I always thought corporate taxes were due March 15th (for 12/31 year end) because I know my company's return is due on September 15th with the 6 month extension (Becker says it's a 5 month extension until 2025 so that's another thing I'm confused about).

Does anyone know if that's a typo in Becker, or is there a situation where corporate returns are due in the fourth month?

[Anonymous]

Alright so after some googling it looks like the IRS is changing the filing deadlines for next year. They didn't update Form 1120 yet because the changes don't apply until 2017 filing season for 2016 returns. It would be nice if Becker had been more explicit about that.

[Anonymous]

Arindam, the 6/30 C Corp deadline without the extension is still 9/15 until 2025, at which point it will change to 10/15.

[jpowell31]

yep 2016 it's changed so partnerships have also changed from the 4th month to the 3rd and C-corps have changed from the 3rd month to the 4th!

[melody_pinaycpa]

@determined24- the 3% is the phase out for itemized deductions once it reached a certain threshold. The reduction would be lesser of 80% of itemized deductions or 3% of the amount of which AGI exceeds the phase out. While these itemized deductions are not subject to phase out – Medical expenses, Investment interest expense, casualty losses and gambling losses.

Vacation home – a.) minimum rental use is more than 14 days===>>>>allowable expenses cannot exceed gross income of rental property
b.) minimum personal use – taxpayer uses the residence for personal purposes for the greater of more than 14 days or more than 10% of the number of days for which the residence is rented===>>>all deduction may be taken and a loss may occur subject to passive loss limits

You may also refer to Schedules C and E tax forms for these

For your other inquiries, I will check my notes.

FAR (Apr 2015) - 88
AUD (July 2015) - 86
BEC (Oct 2015) - 82
REG - 73, 70, retake Sept 2016

[jonm857]

I've got a question related to one of Becker's questions below. Where exactly does this $50,000 ordinary loss show up on the individual's tax return?

——-
“In the current year, Fitz, a single taxpayer, sustained a $48,000 loss on Code Sec. 1244 stock in JJJ Corp., a qualifying small business corporation, and a $20,000 loss on Code Sec. 1244 stock in MMM Corp., another qualifying small business corporation. What is the maximum amount of loss that Fitz can deduct for the current year?

a.
$50,000 capital loss.

b.
$68,000 capital loss.

c.
$50,000 ordinary loss and $18,000 capital loss.

d.
$18,000 ordinary loss and $50,000 capital loss.

Explanation

Choice “c” is correct. The stock in each corporation is a capital asset. The general rule is that a loss on the sale or exchange of a capital asset will be a capital loss (either a short-term capital loss or a long-term capital loss, depending upon the holding period). However, a special rule applies to “section 1244 small business stock.” When a corporation's stock is sold or becomes worthless, an original stockholder can be treated as having an ordinary loss (fully deductible), instead of a capital loss, up to $50,000 ($100,000 if married filing jointly) for the year. Any loss(es) in excess of this amount is (are) a capital loss.

In this question, the taxpayer, who is not married, during the year has $68,000 of losses from the sale of section 1244 small business stock. As such, the taxpayer will treat as an ordinary loss $50,000 of the total loss; the taxpayer will treat as a capital loss the remaining $18,000 of the total loss.

Choices “a”, “b”, and “d” are incorrect per the above rule.

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

[Reg_Slayer]

@jon

Sale or exchange of section 1244 stock
* Gains treated as capital gains
* Losses treated as ordinary deduction to maximum of $50,000 per year ($100,000 on joint
return). Loss in excess of limitation treated as capital loss.

So I think it would be ABOVE THE LINE adjustment to gross income ?

[Reg_Slayer]

@determined

here is a good thing to know for FICA/FUCA

ninja question 1161
“If Jones files Schedule H, he does not have to file Form 940 or Form 941.”

Form 1040, Schedule H may be used to report federal employment taxes on cash wages paid to household employees. Federal employment taxes that may be paid with Schedule H include Social Security, Medicare, withheld federal income, and federal unemployment (FUTA) taxes.

[WANT2BTXCPA]

REG is the first test I will take, on my journey to become a CPA. I'm expecting to at the end of November or beginning of Dec, as I'm also studying to the EA exam as well. EA exam goes a little deeper into Personal & Business Tax and I'm hoping that by studying for this EA, it will make REG that much easier. (praying)
I think the biggest difference between the two will be the rates. The EA exam is currently using the 2015 rates wile REG is using 2016. I don't expect it to be that much more difficult.

[Determined24]

Hi guys

Thanks @ Reg_Slayer and @melody_pinycpa

1) What do we call “above-the-line” and “below the line” deductions?

2) What do we mean by “phase-out”

[Author]

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