[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

[jonm857]

I love sentences like these with the double negatives.

A practitioner CANNOT advise a client to take a tax return position UNLESS the position is NOT frivolous.

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

[Anonymous]

REG by Age:

13===>To qualify for the child and dependent care credit [CADCC], the qualifying child must be under the age of 13. The child must be a dependent of the taxpayer but is not required to be a direct descendant
18===>A Coverdell ESA is a trust or custodial account created or organized in the United States only for the purpose of paying the qualified education expenses of the Designated beneficiary (defined later) of the account. When the account is established, the designated beneficiary must be under age 18 or a special needs beneficiary.
19===>Earned Income Credit [EIC] – To be eligible, parents must have children under 19 and 24 if a full-time student.
24===>Earned Income Credit [EIC] – To be eligible, parents must have children under 19 and 24 if a full-time student.
25===>Earned Income Credit [EIC] – To be eligible, individuals without qualifying children may be eligible if they or their spouse) are at least 25 years old, but not more than 64 at the end of the year and they cannot be claimed as a dependent by another TP.
“30===>Coverdell ESA [Education Savings Account] The balance in the account generally must be distributed within 30 days after the earlier of the following events. a.The beneficiary reaches age 30, unless the beneficiary is a special needs beneficiary. b.The beneficiary's death.
50===>Deductible Contributions to Traditional IRAs – An individual over age 50 can make a $1,000 catch-up contribution in 2014
59.5===>Distributions from a qualified Roth IRA will be tax-free and penalty-free if the distributions are made:(1) five years or more after the first contribution was made, and (2) on or after the date the taxpayer attains age 59-1/2, or (3) to a beneficiary as a result of the taxpayer's death, or (4) on account of the taxpayer's disability, or (5) for first-time homebuyer expenses ($10,000 limit).
59.5===>Distributions from a qualified Roth IRA will be tax-free and penalty-free if the distributions are made:(1) five years or more after the first contribution was made, and (2) on or after the date the taxpayer attains age 59-1/2, or (3) to a beneficiary as a result of the taxpayer's death, or (4) on account of the taxpayer's disability, or (5) for first-time homebuyer expenses ($10,000 limit).
62===>The law allows the IRS to waive the penalty for underpayment of estimated tax if: 1.You did not make a required payment because of a casualty, disaster, or other unusual circumstance and it would be inequitable to impose the penalty, or 2.You retired (after reaching age 62) or became disabled during the tax year for which you should have made estimated payments or in the preceding tax year, and the underpayment was due to reasonable cause and not willful neglect.
64===>Earned Income Credit [EIC] – To be eligible, individuals without qualifying children may be eligible if they or their spouse) are at least 25 years old, but not more than 64 at the end of the year and they cannot be claimed as a dependent by another TP.
70.5===>No IRA deduction or contribution is allowed after age 70-1/2.
70.5===>Roth IRAs are not subject to the minimum distribution rules of deductible IRAs, which apply once the individual reaches age 70 ½.

[jonm857]

Wow, thanks. That's a lot of good info

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

[jonm857]

What are the 3 broad categories of misconduct regarding state boards of accountancy…

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

[Anonymous]

You're welcome.

You'll more likely to get one or two question out of that age info in your actual REG exam so you can score a 95 instead of a 94.

[jpowell31]

doesn't this answer explanation contradict?

On February 28, Master, Inc., had total assets with a fair market value of $1,200,000 and total liabilities of $990,000. On January 15, Master made a monthly installment note payment to Acme Distributors Corp., a creditor holding a properly perfected security interest in equipment having a fair market value greater than the balance due on the note. On March 15, Master voluntarily filed a petition in bankruptcy under the liquidation provisions of Chapter 7 of the Federal Bankruptcy Code. One year later, the equipment was sold for less than the balance due on the note to Acme. Master’s payment to Acme could:
A. be set aside as a preferential transfer because the fair market value of the collateral was greater than the installment note balance.
B. be set aside as a preferential transfer unless Acme showed that Master was solvent on January 15.
C. not be set aside as a preferential transfer because Acme was oversecured.
D. not be set aside as a preferential transfer if Acme showed that Master was solvent on March 15.

A preferential transfer is a transfer of an interest by a debtor to any party within 90 days of filing the petition or with an insider (or family member) between 90 days and one year of filing the petition. The debtor was insolvent at the time of the transfer, the payment made allowed the creditor more than what the creditor would have received from the Chapter 7 bankruptcy, the payment was made on debt the debtor already owed, and the debtor paid more than $6,225 to one creditor. Therefore, since Master’s assets exceeded its liabilities at the time of the transfer, Masters was not insolvent and the payment to Acme could not be set aside.

[A1lessio]

@ JONM857
1) Within the profession,
2) outside the profession ~drugs and alcohol outside of work
3) Something to do with Crime or felony. ~having to do with dishonestly.

AUD (08/02/2016)

[jpowell31]

oh thanks for the age sum! that's a good one to read over a couple days before the exam for sure.

[jonm857]

@jpowell

I remember that question and it pissed me off to no end. But here's how I look at it and is the only way I could get my head around it.

Recall this from your post: “the payment made allowed the creditor more than what the creditor would have received from the Chapter 7 bankruptcy”

Since the note payment to Acme was less than the FMV of Acme's security interest, then in a way he received less than what he would've received from the bankruptcy estate, in which case Acme would be oversecured.

Does that make sense? What do you think.

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

[jonm857]

@A1lessio

You got it

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

[Anonymous]

Carry Back/Carry Forward Rules:
Indefinitely – 6 [SPACES]
S – S Corporation =>Any losses disallowed may be carried forward indefinitely and will be deductible as the shareholder’s basis is increased.
P – Passive Activity Loss [PAL] => In excess of passive activity income, forward indefinitely
A – Alternative Minimum Tax [AMT] => Forward indefinitely against future “regular” income tax; At-Risk Amount [ARA] ==> Any losses in excess of the at-risk amount are suspended and carried forward without expiration and are deductible against income in future years from that activity. The at-risk amount is also referred to as basis. Note that although we discuss this in the textbook for partnerships, the concept applies to all activities that have flow through income and losses.
C – Capital Loss => Individual only, NOT applicable to corporations => After $3,000 against ordinary income and $50,000 against capital gains, forward indefinitely (ST or LT)
E – Excess investment expense over income => Forward indefinitely; Excess of any losses from at-risk amount
S – Section 179 Deductions => Amount expensed cannot exceed the TP’s aggregate taxable income from trade or business activities, excess that’s disallowed is carried forward indefinitely.

0/5——–Charitable Contributions (OVER 10% AGI Limit) –Forward 5 years
1/10——-Carryover of Excess (Disallowed foreign tax credit)
1/20——-(a) General Business Credit => Unused Credit Carryover; (b) Small Business Health Care Tax Credit
2/20——-Corporations NOL
3/5——–(a) Corporate Capital Loss; (b) Net LT Capital Loss

[jpowell31]

i agree! but the last sentence of the explanation makes it sound like it could be D) as well…? my brains' getting fuzzy and i want to put in more timeeee. ugh.

is this also contradicting…WTH…is it me? do i need a break?
_____

Pulse Corp. maintained a warehouse where it stored its manufactured goods. Pulse received an order from Star. Shortly after Pulse identified the goods to be shipped to Star, but before moving them to the loading dock, a fire destroyed the warehouse and its contents. With respect to the goods, which of the following statements is correct?
A. Pulse has title but no insurable interest.
Incorrect B. Star has title and an insurable interest.
C. Pulse has title and an insurable interest.
D. Star has title but no insurable interest.

Title passes from the seller to the buyer only if the goods are identified in the sales contract. A buyer has an insurable interest from the time the goods are identified in the contract.

[Reg_Slayer]

SIMPLE PLAN:

On SCH C:
only the contribution made BY THE COMPANY on behalf of the employee is a deductible.

on 1040, above the line:
Contribution to the SIMPLE plan 1) made by company 2) made by individual are both recorded.

am i correct?

[jonm857]

@Jpowell

Okay I'm going to go on a limb here and say that, in this problem, there was really no agreement b/w the parties as to when title will pass.

In my text, it says that title passes at the point when the parties agree it will pass. If there is no agreement, then title passes at delivery.

Since those goods were never delivered, title remained with Pulse as well as the insurable interest.

In summary, I have no idea.

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

[jonm857]

@reg_slayer

Wish I could help on that one but I cannot! Shame!!!

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

[Author]

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