[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

[jpowell31]

this may assist a bit with your earlier question @reg_slayer:

Green is self-employed as a human resources consultant and reports on the cash basis for income tax purposes. Select the appropriate tax treatment on Form 1040 (U.S. Individual Income Tax Return) for qualifying contributions to a simplified employee pension plan.
Correct A.

Fully deductible on Form 1040 to arrive at adjusted gross income
B.

Reported in Schedule A—Itemized Deductions (deductibility subject to threshold of 2% of adjusted gross income)
C.

Fully deductible in Schedule C—Profit or Loss From Business
D.

Partially deductible in Schedule C—Profit or Loss From Business

Qualifying contributions to a simplified employee pension plan (SEP) are fully deductible on Form 1040 to arrive at adjusted gross income. Annual contributions of an employer under a SEP are excluded from the participant's gross income to the extent that they do not exceed the lesser of 25% of the participant's compensation (not exceeding $265,000) or $53,000 for 2016. (IRC Section 408(k))

If the employer exceeds this limit, the participant must withdraw the excess amount before the date for filing his tax return. If he does not, he will be liable for the 6% excise tax on excess contributions.

[Reg_Slayer]

@jpowell31

yes thanks that does help in that they are usually deducted above the line. But some question comes up when they are made by the individual themselves, vs. by the employer on behalf of the individual. You will know what I am talking about when you do the Ninja sims.

[jpowell31]

ahh ok. will get there by monday. i know that premiums over $50k ARE included in other income on 1040 (gross income) if paid by the employer…but that's all i got for now.

[sonja90]

Parent company X and subsidiary company Y file a calendar-year consolidated federal income tax return. Company X reported a $120,000 tax loss, which included a $10,000 dividend from Y. Company Y reported $140,000 of taxable income, which included $30,000 of dividends received from less than 20%-owned stock investments. Neither company took into account any applicable dividends-received deduction. What is the group's consolidated tax loss for the year?
A.
$(1,000)

B.
$(4,000)

C.
$(11,000)

D.
$(20,000)

[jonm857]

I get A

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

[jonm857]

My new answer is C.

Net the 130,000 loss with with the 119,000 income

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

[jpowell31]

C

[sonja90]

It's C. I got A too. 10,000 taken out of 120,000 because that is inter-company DRD which is eliminated in consolidated return.

[Reg_Slayer]

HIYA!

[jpowell31]

i'm at 260 MCQ. brain. shutting. down.

[Reg_Slayer]

i have moved on to non math type things.

[jonm857]

What are we all working on tonight?

I am reading Ch. 5 and taking notes and will try to complete all Ch. 5 MCQs. I'll probably skip the sarbanes oxley.

Tomorrow… I will be putting on my tax-hat.

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

[Reg_Slayer]

wtf i just started 16 mcqs on SOX

[jonm857]

well finally we can work in the same chapter slayer man

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

[jpowell31]

this is always a good MCQ:

Dart, Inc., a closely held corporation, was petitioned involuntarily into bankruptcy under the liquidation provisions of Chapter 7 of the Federal Bankruptcy Code. Dart contested the petition.

Dart has not been paying its business debts as they became due, has defaulted on its mortgage loan payments, and owes back taxes to the IRS. The total cash value of Dart's bankruptcy estate after the sale of all assets and payment of administration expenses is $100,000.

Dart has the following creditors:

Fracon Bank is owed $75,000 principal and accrued interest on a mortgage loan secured by Dart's real property. The property was valued at and sold, in bankruptcy, for $70,000.
The IRS has a $12,000 recorded judgment for unpaid corporate income tax.
JOG Office Supplies has an unsecured claim of $3,000, which was timely filed.
Nanstar Electric Co. has an unsecured claim of $1,200, which was not timely filed.
Decoy Publications has a claim of $18,000, of which $2,000 is secured by Dart's inventory, which was valued and sold, in bankruptcy, for $2,000. The claim was timely filed.

What total dollar amount would Fracon Bank receive on its secured and unsecured claims?

A. $70,000
B. $72,000
Correct C. $73,335
D. $75,000

[Author]

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