[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

[sonja90]

@cpamasted D

[Porma Fierles]

AMT. Where does this fit when there is already a standard way to compute federal income tax

QUESTION
A taxpayer reports income from a state tax refund on his tax return for the current tax year. Match the phrase that best describes the status for alternative minimum tax (AMT) computations of this tax item.

A.
Not a preference or an adjustment for the AMT

B.
An AMT preference or adjustment which is a deferral item for the AMT

C.
An AMT preference or adjustment which is an exclusion item for the AMT

D.
An AMT preference or adjustment which is an exemption item for the AMT

ANSWER: on the first sentence of the question, the third last word's first letter where the word is 7 characters long

[Porma Fierles]

My rational cpamaster was that there was no change in activity in years 1, 2 or 3 based on the question's info.

[jpowell31]

@porma. the whole exam is frustrating. people don't memorize ALL of this stuff…they are in certain fields where maybe 15% of almost this entire exam is relevant. companies have/consult with lawyers or other departments/firms more verse in other matters. most of it is SILLYYYY

[Porma Fierles]

Yeah so questions like this where you need to know one specific rule to get it right

Mary From, single, owned rental real estate which generated a tax loss of $60,000. Mary materially participated in the rental activity. Mary's adjusted gross income before considering the $60,000 loss was $130,000. What amount of the loss can offset income from nonpassive sources?

A.
$15,000

B.
$10,000

Incorrect C.
$0

D.
$60,000

You answered C. The correct answer is B.

Rental activities are considered passive activities even if the taxpayer materially participates. However, for rental real estate activities, a loss up to $25,000 may be deducted. However, the $25,000 loss must be reduced by half of the adjusted gross income (before the loss) in excess of $100,000. Thus, the deduction is $10,000 ($25,000 − (0.50 × $30,000)).

[Porma Fierles]

Does anyone understand the relationship between MACRS depreciation and AMT here?

A taxpayer reports a deduction for depreciation of business assets under the MACRS depreciation system on his tax return for the current tax year. Match the phrase that best describes the status for alternative minimum tax (AMT) computations of this tax item.

A.
Not a preference or an adjustment for the AMT

B.
An AMT preference or adjustment which is a deferral item for the AMT

Incorrect C.
An AMT preference or adjustment which is an exclusion item for the AMT

D.
Will always be a preference or deferred item for AMT

You answered C. The correct answer is B.

The difference between depreciation computed under the modified accelerated cost recovery system (MACRS) and the alternative depreciation system (ADS) is an adjustment which is a deferral item. This adjustment reverses when the depreciation computed under the ADS system becomes larger than MACRS depreciation in the later years.

Deferral items are those preferences and adjustments which can be expected to reverse in future years. When a taxpayer pays AMT that is due to deferral items, he or she is allowed an AMT credit in succeeding years against his or her regular tax.

[sonja90]

When the AQR partnership was formed, partner Acre contributed land with a fair market value of $100,000 and a tax basis of $60,000 in exchange for a 1/3rd interest in the partnership. The AQR partnership agreement specifies that each partner will share equally in the partnership's profits and losses. During its first year of operation, AQR sold the land to an unrelated third party for $160,000. What is the proper tax treatment of the sale?

A.
Each partner reports a capital gain of $33,333.

B.
The entire gain of $100,000 must be specifically allocated to Acre.

C.
The first $40,000 of gain is allocated to Acre, and the remaining gain of $60,000 is shared equally by the other two partners.

D.
The first $40,000 of gain is allocated to Acre, and the remaining gain of $60,000 is shared equally by all the partners in the partnership.

[Porma Fierles]

D

[jonm857]

I think it's D also.

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

[sonja90]

D is correct 🙂

you guys are paying attention 🙂

[jonm857]

Has anybody ever used Becker's final review for REG? I failed by 2 points last time and am considering getting it.

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

[Anonymous]

Morris Corporation’s income tax return for 2016 shows deductions exceeding gross income by $75,000. Included in the tax return are the following items:

Net operating loss deduction (carryover from 2015) $13,400
Dividends received deduction 6,600
What is Morris’ net operating loss for 2016?

A) $75,000
B) $68,400
C) $61,600
D) $55,000

[sonja90]

@johnm857 would you share by AICPA CSO category from your experience what was tested the most on your first attempt?
That is not considered act discreditable 🙂 lol

I have not used Becker

[Porma Fierles]

Ummm, B.

[Reg_Slayer]

ninja sim 28

https://reg2016.ninjacpareview.com/Resources/CPA/REG/Instructions/TaxTable.pdf

“subtraction amount” on this form is NOT the same thing as standard deduction?

(std or itemized deduction) is used to get TI, then tax rate along with “subtraction amount” is used to get “tax liab” ?

EDIT:

so % amounts only apply to taxpayers with TI over 100,000. and once %'s are used, “subtraction amounts” are used as well. Just a more accurate way of structuring the tax brackets at higher levels of income ?

[Author]

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