[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]

@reg_slayer

generally if it's just a cash distribution (i.e., a dividend) to a shareholder, the corporation won't recognize a gain on that. but don't get this confused with when a corporation “sells an asset” and then “distributes cash” to shareholders. If a corp sells an asset, and then distributes the cash to a shareholder, then they will of course recognize a gain on the sale of the asset, but not on the distribution of cash to the shareholders.

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

[Reg_Slayer]

EXAMPLE OF MY PRIOR QUESTION:

property contributed by shareholder:
70,000 fmv
50,000 basis

distribution to shareholder: 20,000

PROPERTY ON BS: 70,000
TAX BASIS OF PROPERTY: 50,000 + 20,000 = 70,000

now if we had not made the 20,000 distribution, would tax-basis of property only of been 50,000?

[sonja90]

The Jacksons, who file a joint return, actively participate in a solely-owned rental real estate activity that produces a $30,000 loss during the current year. Their adjusted gross income was $120,000 before considering the rental activity. How much of the rental loss, if any, are the Jacksons entitled to deduct?

A.
$0

B.
$15,000

C.
$25,000

D.
$30,000

[Reg_Slayer]

@sonja90

30 – [(-50% of agi over 100 =10], so 20??? wait thats even not a choice !

[jonm857]

@reg_slayer

Okay you're talking about a formation. So yes, that looks right. The $20,000 distribution should be added to the NBV of the property, because the “shareholder” recognized that gain. If there were no distribution, the corp's property basis should be $50,000.

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

[jonm857]

@sonja

answer is B.

20000/50000 = .4

.4 X 25,000 max deduction

= $10,000 phased out

leaving a $15,000 allowable passive loss

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

[jpowell31]

Hello folksss. I'm done my exam and drinking a beer. My consolation prize. My work phone will only allow me to login to this site while roaming (not news or social media for some reason) so I thought I'd check in 🙂 Good to know you're keeping this thread alive!

[sonja90]

@jon that;s correct 🙂

@jp enjoy your beer you deserve it. Hope you did great!!!

[jpowell31]

Thanks I'll post my exam experience later in the other thread but in the meantime goodluck everyone. If you do sit tomorrow, good luck! Otherwise hope its a power weekend for the rest of you. I'm going to enjoy the next 2.5 days before I get into FAR. See you in the other thread @jon and at score release in almost a month from now everyone!

[Reg_Slayer]

[ESTIMATED TAX PAYMENTS]
prior yr method (100%) is NEVER for c-corps ?

[jonm857]

“For individual taxpayers selling Section 1250 property at a gain, the gain is characterized as a section 1231 gain and netted with other Section 1231 gains and losses to determine if the individual taxpayer has an overall net Section 1231 gain or a net Section 1231 loss for the tax year. However, when an individual has sold a Section 1250 asset at a gain and included the gain with other Section 1231 gains, an amount equal to the lesser of 1) the recognized gain on the sale of the section 1250 asset, or 2) the straight-line accumulated depreciation on the Section 1250 asset, is taxed at a maximum rate of 25%. Any gain in excess of the amount that will be taxed at 25% is taxed at the preferential rates of 0, 15, or 20%.”

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

[sonja90]

On January 2, Year 3, Bates Corp. purchased and placed into service 7-year MACRS tangible property costing $100,000. On December 31, Year 5, Bates sold the property for $102,000, after having taken $47,525 in MACRS depreciation deductions. What amount of the gain should Bates recapture as ordinary income?

A.
$0

B.
$2,000

C.
$47,525

D.
$49,525

[sonja90]

@jon that's for your confusion with 1245 and 1231 it's pretty simple
1245 all depreciation taken taxed as ordinary
1231 any leftovers after depreciation taxed as capital

[Reg_Slayer]

@sonja

C

47,525 = 1245 recapture = ordinary income
2,000 gain = 1231 gain [capital?]

[jonm857]

Is it B????

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

[Author]

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