[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

[Teal]

@A1lessio and spartans92

I think you are correct with answer b!

FAR (66,68) Aug 26
REG (66) July 25
AUD (66) December 1st
BEC - October 3rd

[Spartans92]

my bad, yea B is the answer. The first 20,700 is recaptured as 1245 ordinary gain then the excess is 1231 capital gain!

BEC- PASS

[A1lessio]

Teal – 3 weeks is a long time. If you're using Becker why not just write out the outlines, redo all questions and sims and then the last week just do non-stop mcqs and focus on weak areas.

AUD (08/02/2016)

[mtaylo24]

Question: 20

On September 1, 2015, Julie’s basis in her partnership interest was $75,000. In a distribution in liquidation of her entire interest on that date, she received properties A and B, neither of which were inventory or unrealized receivables. On September 1, 2015, property A had an adjusted basis to the partnership of $35,000 and a fair market value of $75,000. Property B had an adjusted basis to the partnership of $15,000 and a fair market value of $25,000. Based on this information, what was Julie’s basis in property A immediately after the distribution?

A. $35,000
B. $52,500
C. $56,250
D. $55,000

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[Spartans92]

@mtaylo24, Property A basis is 35k? That seems to easy tho. IDK. LOL

BEC- PASS

[mtaylo24]

@Spartans, the Correct answer is D.

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[A1lessio]

@mtaylo24 – Great question! Usually the ones I see are cash and property, not property and property. I'm going to go with (b) 52,500

In a complete liquidation we need to reduce the basis to 0. So Property A NBV of 35,000/50,000 = 70%. 70% x 75,0000 partnership interest =52,500

AUD (08/02/2016)

[Spartans92]

OMG. What!! How?? Crap this makes me nervous. I feel like Gleim is so much harder 🙁
Is this where we allocate? I always get confuse when to allocate..theres Built in gain in both property.

BEC- PASS

[A1lessio]

Can you explain why it's D?

@spartan – Relax! my answer was wrong lol.

Built in gains occur when you are a C-corp and you make the election to be treated as an S-corp and you have appreciated property. I believe the increase in FMV(at date of election) – basis x 35% tax rate is your built in gain. Also, probably a capital gain, right?

AUD (08/02/2016)

[mtaylo24]

75000 – 35,000 (Prop a) – 15,000 (Prop b) = 25,000 left to allocate

Appreciation A: 75,000 (FMV) – 35,000 (Basis) = 40,000
Appreciation B: 25,000 (FMV) – 15,000 (Basis) = 10,000

40,000/50,000 = 80% X 25,000 = 20,000

35,000 (Basis A) + 20,000 (share of 25,000 based on appreciation) = 55,000 Basis in Prop A

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[Spartans92]

A1lessio, how did you get 50k?
Wow. Im just freaking out I guess. Cant even get the built in gain part right. :/

BEC- PASS

[mtaylo24]

@Spartans92, I'm getting killed on those as well. This question messed w/ my head, that's why I had to post it LOL!

AUD - 1st - 60 (12/12), 61 (2/13), 61 (8/13), 78! (11/15)
REG - 55 (2/16) 69 (5/16) Retake(8/16)
BEC - 71(5/16) Retake (9/16)
FAR - (8/16)

[Spartans92]

Thanks, @mtaylo24 that makes more sense. So are we suppose to allocate like that only when its property and property? All the ones Ive seen are mostly cash then property as stated by A1lessio.

BEC- PASS

[A1lessio]

I added the two NBV's together. I just guessed.

AUD (08/02/2016)

[A1lessio]

Spartans when is your exam? Did you take any practice exams?

AUD (08/02/2016)

[Author]

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