[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

[jonm857]

taking a leap of faith here and shutting down MCQs for good. Sims and textbook only for the last 72 hours.

Goooooodnight!

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

[A1lessio]

time to bang out a 2.5 hour study sesh before work starts!

AUD (08/02/2016)

[Reg_Slayer]

as we (c-corp) start to distribute cash to shareholder, we can start to RECOGNIZE and gains that has thus far only been REALIZED ?

[jonm857]

I'm confused about estate deductions. If you look at pg R4-71 in the becker book, it says you can deduct administrative expenses on either: 1) the income tax return, or 2) the estate return.

Now I'm assuming they're talking about Form 1041 when they say “income tax return” because how could you deduct administrative expenses on the 1040? Where would that even go??

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

[jonm857]

“For decedent’s dying in 2016, the estate of a surviving spouse may be able to use, in addition to the $2,125,800 unified estate and gift tax credit (based upon the $5,450,000 applicable exclusion amount), an additional credit based upon the unused exclusion amount of the surviving spouses’ predeceased spouse. The unused exclusion amount is generally the predeceased spouse’s applicable exclusion amount minus the portion of that exclusion amount that the predeceased spouse’s estate used to offset estate tax otherwise due.”

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

[Reg_Slayer]

@jon

1) yes 1041 because 1041 = estates (r4). 1040 = individual (r1,r2) ?
2) LOL

[jonm857]

@reg_slayer

That might be the craziest fking paragraph I have ever read IN MY LIFE!!

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

[So FAR So Good]

@JonM – that took me forever to decipher! Am I understanding this correctly? If you have $5,450,000 or less, you basically don't pay any taxes because the credit of $2,125,800 is the exact amount to wipe out the tax obligation on $5,450,000. Anything over that and you're taxed. That's PER spouse, so if one spouse doesn't use the entire credit, whatever's left over from that spouse can be taken by the next spouse (in addition to that spouse's own $2MM credit).

F - 91 (6/5/2016)
A - 7/30/2016
R - 10/8/2016
B - 12/10/2016

[ChristieF]

All I could think of was “Do you understand the words that are coming out of my mouth?!”

@So Far So Good, that's how I took it as well – I've had a few MCQs on that actually in Ninja.

[Anonymous]

Yes, the 706 is the federal estate tax return and the 1041 is the fiduciary income tax return. And So FAR So Good nailed the meaning of that paragraph.

And yes, I found the Becker presentation of this chapter so confusing that I broke out my old textbook yesterday to gain a better understanding. I have found Becker to be very helpful for AUD and BEC, but I do not like them for FAR or REG. They try to squish a whole lot of information down into fewer pages, but I can't understand it unless I already understand it. For me, Becker is good if I know the material and I am reviewing, but not if I am learning it for the first time.

[jonm857]

@so far so good

I soon as I read that I moved past it and didn't look back. When I finish up these notes I'll be sure to revisit it, but your explanation sounds right to me!

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

[DMoneyBags]

@jonm857 & jpowell31 – Thank you for the explanation!!!!

FAR - MAY 2015 PASSED
AUD - NOV 2015 PASSED
BEC - JUNE 2016 PASSED
REG - SEPT 2016

[Reg_Slayer]

as I (c-corp) make a cash distribution to my shareholders, I got start to RECOGNIZE gains that have only been REALIZED.

does that sound right ?

[sonja90]

Corporation
Shareholder Basis of Asset
+Gain Recognized by Shareholder
=Basis of property to company

Corporation
-Dividend
+Gain on Distribution (of Property)

I don't think that that sounds right? If it's cash you distribution you would not recognize/realize G/L?

[Anonymous]

@Reg_Slayer – As a C-Corp, aren't dividends the only way to make non-liquidating distibutions? I don't think you can just make cash distributions. And I think you can only declare dividends up to the accumulated + current E&P, which means the gains have already been recognized. <- Pretty sure that last part is right, but now I have a mental note to review E&P.

But regardless of what type of entity, cash itself never has unrecognized gain. The basis is always the same as the FMV. And you can distribute cash without recognizing gain on other assets.

[Author]

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