[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]

ill be in tampa for friday…it should stay east but if it doesn't i'm sitting just around the time it'll be the worst…it's going so slow i wish i could just determine now if it'll close my center or not.

[sonja90]

B?

[sonja90]

I don't think it will go that far, so far they are just preparing east coast of FL.. Fingers crossed that everything goes well for you

[jpowell31]

sorry the formatting was bad on that one but you can carry back the capital loss 3 years, with the remainder bringing down the current gain to NIL (remainder carried forward) leaving you with $100k income still. the portion of the loss used in the current year of $20k to offset the capital gain, is the amount “added back” = M-1 adjustment. answer is B.

[jonm857]

carry back a NOL 3 years?? are you talking about a capital loss? So all you have to do is offset the capital gain in year 6 with the capital loss from year 5.

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

[jpowell31]

The CSU partnership distributed to each partner cash of $4,000, inventory with a basis of $4,000 and a fair market value (FMV) of $6,000, and land with an adjusted basis of $5,000 and an FMV of $3,000 in a liquidating distribution. Partner Chang had an outside basis in Chang's partnership interest of $12,000. In the second year after receiving the liquidating distribution, Chang sold the inventory for $5,000 and the land for $3,000. What income must Chang report upon the sale of these assets?

A.

$0 gain or loss
B.

$0 ordinary gain and $1,000 capital loss
C.

$1,000 ordinary gain and $1,000 capital loss
D.

$1,000 ordinary gain and $0 capital loss

[jpowell31]

sorry i edited that too late i guess lol…those are all capital gain/loss transactions. yes. there happens to be enough to carry forward to the current year but you must carry it back 3 years first to see how much is left.

[sonja90]

@jon that q does not make sense to me, the only reason i got B is beacusee you cannot offset ordinary income with capital loses in C corp

[jonm857]

@sonja90

the key was to just remember the capital loss rules. as easy as that sounds, I didn't even think about it haha

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

[jonm857]

118 hours til the exam……………………..

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

[jpowell31]

yeah it's an easy trip up but it makes sense putting it together. what about the last one i posted..

[jonm857]

C.

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

[jpowell31]

yep..hope that was easy 🙂

[jpowell31]

here's a reminder to RTFQ

Bridge, a C corporation, had $15,000 in accumulated earnings and profits at the beginning of the current year. During the current year, Bridge reported earnings and profits of $10,000 and paid $20,000 in cash distributions to its shareholders in both March and July. What amount of the July distribution should be classified as dividend income to Bridge's shareholders?
A.

$20,000
B.

$15,000
C.

$10,000
D.

$5,000

[jonm857]

but I am curious why the land is distributed after the inventory in a liquidation. if it was distributed before the inventory, the answer would be different

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

[Author]

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