[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]

@johnm I am 🙂

[jonm857]

Okay let me finish it up and I'll share my google drive account… I think I know how to do that… ><

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

[Reg_Slayer]

just did a sim where Section 1231 gain does not go on Sch C/ Sch F OR Sch K-1.

Ok all you smart people- what is it, and where does it go?

[jpowell31]

well section 1231 gains are treated as ordinary income..so include in gross income in schedule C or K1 or whatever depending on the company?

EDIT – wait LOSSES are ordinary….not gains…

[jpowell31]

if it's a capital gain then surely schedule D?

[jpowell31]

Flowers, a married taxpayer, purchased an annuity for $64,400 that will pay $700 per month over the life of Flowers and Flowers' spouse. At the time of purchase the couple's joint life expectancy was 23 years. Flowers received payment beginning April 1, year 1, amounting to $6,300 in the first year of the annuity contract. How much is includible in Flowers' gross income in the first year?
A.

$0
B.

$2,100
C.

$4,200
D.

$6,300

[jonm857]

@JP

Answer is C. $6300 – $2100 = $4200

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

[Reg_Slayer]

@sonja90

ninja sim 47. The 1231 gain is never used.

Richard Norton is required to pay a self-employment tax based on the net profits of the farm business. He had a net profit of $105,000 from the farm business for Year 3 and $10,000 of Section 1231 gain.

Form 1040, Schedule SE

Net farm profit or (loss) from Schedule F, line 36, and farm partnerships, Schedule K-1 (Form 1065), box 14, code A
= 105,000

Net profit or (loss) from Schedule C, line 31; Schedule C-EZ, line 3; Schedule K-1 (Form 1065), box 14, code A (other than farming); and Schedule K-1 (Form 1065-B), box 9, code J1. Ministers and members of religious orders, see page SE-1 for amounts to report on this line. See page SE-3 for other income to report
= $0

[sonja90]

yes because it's reported on schedule D LTCG

[Reg_Slayer]

@sonja90

great- that answers my question, thank you.

[jpowell31]

An individual taxpayer reports the following items for the current year:

Ordinary income from Partnership A, operating a movie theater
in which the taxpayer materially participates: $70,000
Net loss from Partnership B, operating an equipment rental
business in which the taxpayer does not materially participate: (9,000)
Rental income from building rented to a third party: 7,000
Short-term capital gain from sale of stock: 4,000

What is the taxpayer's adjusted gross income for the year?
A.

$70,000
B.

$72,000
C.

$74,000
D.

$77,000

[Reg_Slayer]

An individual taxpayer reports the following items for the current year:

Ordinary income from Partnership A, operating a movie theater
in which the taxpayer materially participates: $70,000
Net loss from Partnership B, operating an equipment rental
business in which the taxpayer does not materially participate: (9,000)
Rental income from building rented to a third party: 7,000
Short-term capital gain from sale of stock: 4,000

What is the taxpayer’s adjusted gross income for the year?

IEMBRACED-EHF

70 SCH E
-9 SCH passive loss? limited to -7?
+7 SCH passive income?
+4 SCH D?

=
74, C
about 12% confident in my answer.

[jonm857]

C is correct.

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

[jpowell31]

it's 74. you're right. there's a passive loss that can't be taken with the other two items.

[Reg_Slayer]

[Author]

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