REG Study Group Q4 2016 - Page 37

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    Topic
  • #836140
    jeff
    Keymaster

    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

Viewing 15 replies - 541 through 555 (of 2,222 total)
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    Replies
  • #850275
    sonja90
    Participant

    S Corp
    AAA-non taxable
    If exceeds after AAA S/H basis than is taxable return of capital

    C-Corp
    1st E&P taxable
    2nd Acc E&P taxable
    3rd in excess return of capital taxable

    that's what i had in my notes but it could be completely wrong???

    #850278
    jpowell31
    Participant

    return on capital is not considered taxable for either… but please let me know if you see otherwise. i think everyone in this group keeps getting tripped up on the different contributions/distributions rules etc. for partnership vs. c corp vs. s corp. i was hoping to make a summary of just this thing but it keeps getting away from me…. hopefully i'll still be able to but maybe not until tomorrow.

    #850279
    sonja90
    Participant

    from top of my head 1000?

    #850281
    jpowell31
    Participant

    i think maybe your notes should be excess of return of capital is taxable…so if basis is reduced to zero then that excess is taxable as a capital gain

    #850284
    jpowell31
    Participant

    yes it's $1k

    #850293
    sonja90
    Participant

    yes you are right with the excess. but before you hit excess is not taxable distribution i think.

    I'm looking for example now to share to not confuse everyone 🙂

    #850303
    jpowell31
    Participant

    On May 1, Year 5, two months after becoming insolvent, Quick Corp., an appliance wholesaler, filed a voluntary petition for bankruptcy under the provisions of Chapter 7 of the Federal Bankruptcy Code. On October 15, Year 4, Quick’s board of directors had authorized and paid Erly $50,000 to repay Erly’s April 1, Year 4, loan to the corporation. Erly is a sibling of Quick’s president. On March 15, Year 5, Quick paid Kray $100,000 for inven­tory delivered that day.

    Quick’s payment to Kray would:
    A. not be voidable, because it was a contemporaneous exchange.
    B. not be voidable, unless Kray knew about Quick’s insolvency.
    C. be voidable, because it was made within 90 days of the bankruptcy filing.
    D. be voidable, because it enabled Kray to receive more than it otherwise would receive from the bankruptcy estate.

    #850305
    jpowell31
    Participant

    sorry i thought that question was different…. that one should be very easy 🙂

    #850306
    jonm857
    Participant

    1934 act registration requirements:

    1) companies whose shares are traded on a national stock exchange; OR

    2) companies that have more than i) $10 million in assets and ii) at least 2,000 shareholders, or ii) 500 unaccredited shareholders.

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

    #850308
    jonm857
    Participant

    answer is A!

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

    #850314
    sonja90
    Participant

    it should be a

    #850315
    sonja90
    Participant

    Here is for my prior confusion.

    Dahl Corp. Earnings and Profits (E&P) prior to its cash distributions in the current year:

    The following information pertains to Dahl Corp.:

    Accumulated earnings and profits $120,000
    Earnings and profits for the current year 160,000
    Cash distributions to individual stockholders during the year 360,000

    What is the total amount of distributions taxable as ordinary dividend income to Dahl's stockholders in the current year?

    A.
    $0

    B.
    $160,000

    Correct C.
    $280,000

    D.
    $360,000

    Explanation:
    Accumulated earnings and profits $120,000
    Earnings and profits for the current year 160,000
    Total E&P $280,000

    Wherever a C corporation makes a distribution to its shareholders, the maximum amount of distributions taxable as ordinary dividend income to its stockholders is the total E&P.

    Result:

    Dividend income $280,000
    Then return of basis of stock to the extent of basis-not taxable
    Capital gains for any distribution in excess of basis-taxable

    #850320
    jpowell31
    Participant

    you're right. thanks @jon i saw a question earlier i should've shared where they had 400 shareholders so didn't have to register…a tiny fact that doesn't come up that often (other answers were clearly not right but i didn't remember this per se).

    @sonja, maybe i'm confusing what you said. i thought that you thought that return of capital (basis) was taxable per your earlier message, which i was trying to say was wrong and the but the above says it's not either.. can you clarify the issue?

    #850330
    sonja90
    Participant

    i was thinking more of the distribution after accumulated E&P to the extent of s/h basis that is not taxable, sorry for confusion. I did not word it right.

    #850335
    Reg_Slayer
    Participant

    anyone have a quick explanation of AEP vs AAA ?

Viewing 15 replies - 541 through 555 (of 2,222 total)
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