REG Study Group Q4 2016 - Page 7

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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).

Viewing 15 replies - 91 through 105 (of 2,222 total)
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    Replies
  • #843957
    Reg_Slayer
    Participant

    Something that dawned on me is that always knew that “municipal bond income” were tax exempt, [learned this in FAR, and it carries over to REG when doing m-1 reconciliations] but I never really knew what “municipal bonds” actually were. Well, turns out that they are state/local gov’t bonds/obligations, NOT TAXABLE.

    If you know the COMMITT mnemonic [itemized deductions], you can add “HIPPE” for the “I”
    Home mortgage (home mortgage= $1,000,000; home equity = $100,000)
    Investment
    Personal (consumer)
    Pre-paid
    Educational loan ($2,500)

    and “RIPS” for the “T”
    Real estate
    Income
    Personal property
    Sales (sales or income tax)

    Although can someone who is using BECKER confirm for me that HIPPE is below the line, and not above the line?

    #843960
    Reg_Slayer
    Participant

    EDIT: DOUBLE POST

    #843966
    Anonymous
    Inactive

    Reg_Slayer, is HIPPE a Becker mnemonic? I don't remember seeing it. Itemized deductions are deductions from AGI and therefore below the line, so home mortgage and investment are below the line. The $2500 for educational loans is an adjustment, not an itemized deduction, so it's above the line. That seems like a confusing mnemonic since they aren't all the same thing.

    Edit: I went back and looked in my book and I see the HIPPE now. I still think it's not a particularly helpful mnemonic haha

    #843975
    Anonymous
    Inactive

    Also personal (consumer) interest is not deductible.

    #843978
    aatoural
    Participant

    Thanks Guys!!

    Reg_Slayer – are you combining review programs or you also created your own mnemonics. I don't remeber the COMMIT mnemonic in Becker. BTW very helpful.

    Allison – yes HIPPE is the mnemonic for itemized deductions for investmetn interest

    BEC - PASSED
    AUD - 8/29/16
    FAR - TBS
    REG - TBS

    #843981
    aatoural
    Participant

    I think of it as “hippo” lol

    BEC - PASSED
    AUD - 8/29/16
    FAR - TBS
    REG - TBS

    #843993
    Anonymous
    Inactive

    If anyone else is a visual learner and hates using mnemonics, one thing that's been really helpful for me is to get a sheet of paper and write the “above the line” adjustments on the front and the “below the line” deductions on the back, just like they would be on the tax return. I first learned tax by having to fill out 1040s by hand so for me it's easier to picture where each item physically is on the tax return than it is to remember all those convoluted mnemonics.

    #843996
    jpowell31
    Participant

    interest on state and local taxes are tax exempt. interest on treasury bonds is taxable.
    Further you can choose whether to deduct state and local general sales tax OR state and local income taxes so:

    a refund of prior year state or local income taxes is only taxable to the extent that the amount reduced taxable income, which means if you did NOT itemize deductions (took standard deduction instead)in the prior year OR if you chose to deduct sales tax instead of income taxes (state and local), there is no income to report. if you DID itemize then you take the lesser amount of state taxes paid or the amount of your itemized deductions over the standard deduction and that is your tax benefit (taxable).

    #843999
    Reg_Slayer
    Participant

    @aatoural

    Becker had no mnemonics for ABOVE and BELOW the line. So I found “IEMBRACED-EHF, and COMMITT from roger to be very helpful.

    Thanks for confirming for me that HIPPE is the mnemonic for itemized deductions for investment interest.

    #844008
    Anonymous
    Inactive

    jpowell31, but any interest received on the refund is always taxable, correct?

    #844032
    aatoural
    Participant

    allison – I think Im a mix of both visual and non visual. So what i do is that I use the mnemonic but I integrate them as part of my equation for above and below the line when I write it down and that works. Also, interest on refund only taxable when you itemized in prior year.

    Re-Slayer – Thanks Im gonna adds those to my study notes?

    BEC - PASSED
    AUD - 8/29/16
    FAR - TBS
    REG - TBS

    #844035
    aatoural
    Participant

    jpowell -that was a great summary thanks!

    BEC - PASSED
    AUD - 8/29/16
    FAR - TBS
    REG - TBS

    #844038
    Anonymous
    Inactive

    Okay, I'm confused because Tim had us write “interest income is taxable” next to the line about the refund being nontaxable if you took the standard deduction?

    #844041
    jpowell31
    Participant

    yes I think so @allison213 !

    #844050
    Anonymous
    Inactive

    Thanks @jpowell31!

Viewing 15 replies - 91 through 105 (of 2,222 total)
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