[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]

During an audit of Trent Realty Corp.'s financial statements, Clark, CPA, reviewed the following instrument:

$300,000 Belle, MD
September 15, 20X1
For value received, ten years after date, I promise to pay to the
order of Dart Finance Co. Three Hundred Thousand and 00/100 dollars
with interest at 9% per annum compounded annually until fully paid.
This instrument arises out of the sale of land located in MD.
It is further agreed that:
1. Maker will pay all costs of collection including reasonable
attorney fees.
2. Maker may prepay the amount outstanding on any anniversary date
of this instrument.
(SIGNED) G. Evans
On March 15, 20X2, Dart indorsed the instrument in blank and sold it to Morton for $275,000. On July 10, 20X2, Evans informed Morton that Dart had fraudulently induced Evans into signing the instrument. On August 15, 20X2, Trent, which knew of Evans' claim against Dart, purchased the instrument from Morton for $50,000. Trent is considered a:

A.
holder.

B.
holder in due course.

C.
holder with rights of a holder in due course under the Shelter Provision.

D.
not a holder.

[sonja90]

@jon yes that's always taxable. Because you don't have to pay 40K it's counted as you have received it although you didn't.
Since the 2008 crisis they have some rules that make no sense but we gotta know them… Like if you have lost house in foreclosure debt forgiven by bank is your income?? Which is F”'up on so many levels in my opinion 😀

[sonja90]

Under the Secured Transactions Article of the U.C.C., for which of the following types of collateral must a financing statement be filed in order to perfect a purchase money security interest?

A.
Stock certificates

B.
Promissory notes

C.
Personal jewelry

D.
Inventory

Why personal jewelry is not included in consumer goods?

[Reg_Slayer]

Is failure-to-pay penalty always:

“half of a percent for each month or fraction of a month up to a maximum 25%”

?

[Reg_Slayer]

this is a c-corp:

“A timely extension was filed for the Year 2 Tax Return on March 13, Year 3 and no additional money was sent with the return.”

when would payment be due?

[jonm857]

March 15, year 3??

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

[sonja90]

West Corp. received a check that was originally made payable to the order of one of its customers, Ted Burns. The following indorsement was written on the back of the check:

Ted Burns, without recourse, for collection only
Which of the following describes the indorsement?

A.
Special

B.
Restrictive

C.
Both special and restrictive

D.
Neither special nor restrictive

[sonja90]

I think the second one is on April 15th if they owed any estimated taxes if they didn't then when extension is due

[jonm857]

@sonja

D. Inventory

I guess jewelry doesn't fall under the category of a consumer good.

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

[sonja90]

@jon yes that's correct but i could argue 😀 LOL

[jonm857]

@sonja what was the answer to the first question about holder in due course??

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

[sonja90]

C. holder with right of holder in due course

that question is so not fair! I don't see why would he have benefit of holder in due course when he actually took advantage of the situation.

[jonm857]

@sonja

I think it's because fraud in the inducement is a personal defense, not a real defense. The guy knew that something was fishy about it (he knew it was a fraudulent inducement), but that's still a personal defense. If it were fraud in the execution, then I think he'd be just a holder because he knew there was a “real defense” that could be used against him.

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

[sonja90]

ohh yeah that way it makes sense

[jonm857]

In a like kind exchange, if you pay cash and also receive cash, do you net them when calculating the recognized gain?

Do you net cash paid with liability relieved of?

Do you net cash received with liability assumed?

I know you net the relief from liabilities when calculating the recognized gain.

I know you do not net cash paid with non-like-kind property received (i.e., trailers).

I wish had a list of all the different options.

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

[Author]

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