[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

[mtaylo24]

Yeah, I think that's only the case whenever its land and land. It also can get dicey when its equipment/inventory and land.

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]

Next Wednesday the 26. Ive not taken any. I am still doing some Ninja MCQ but have completed all of becker's homework and SIMS as well as Ninja SIMS. Wanted to say I was fairly confident until that question lol. Will take practice this weekend

Umm, @mtaylo, any examples? That sounds like hell! Never encounter one single one with that many different items.

BEC- PASS

[mtaylo24]

@Spartans92, I got confused on how to prioritize

The CSU partnership distributed to each partner cash of $4,000, inventory with a basis of $4,000 and a fair market value (FMV) of $6,000, and land with an adjusted basis of $5,000 and a FMV of $3,000 in a liquidating distribution. Partner Chang had an outside basis in Chang’s partnership interest of $12,000. In the second year after receiving the liquidating distribution, Chang sold the inventory for $5,000 and the land for $3,000. What income must Chang report upon the sale of these assets?

A. $0 gain or loss.
B. $0 ordinary gain and $1,000 capital loss.
C. $1,000 ordinary gain and $1,000 capital loss.
D. $1,000 ordinary gain and $0 capital loss.

The correct answer is C

Hierarchy: Cash -> Inventory -> Land
12,000 – 4,000 (Cash) – 4,000 (Inventory) = 4,000 Basis in Land

5,000 (Inv Sold) – 4,000 (Inv Basis) = 1,000 Gain
3,000 (Land Sold) – 4,000 (Land Basis) = 1,000 Loss

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)

[HoosierCPA]

This REG study group is insane. More posts then the other groups combined!

I just finished taking AUD yesterday and am moving back to REG–my nemesis. Hopefully most of you will still be around between now and when I sit on Dec 9th! I could use all the help I can get, this is my 4th attempt prior scores 72,74,71…got to get over that hump!

FAR - 78
REG - 72,74,71...please just go away REG nobody likes you!
BEC - 82
AUD - Aug 16

[Spartans92]

I feel like I post a lot of random stuff on this thread LOL. But I cant recall, are lawsuit settlement taxable?

BEC- PASS

[A1lessio]

Personal reputation awards and punitive damages are always taxable. Not Compensatory

AUD (08/02/2016)

[Spartans92]

Thanks ^^ I just wanna get this pain over with :/ The stress is REAL!

BEC- PASS

[mtaylo24]

Question: 22 Under the terms of a simple trust, all of the income is to be distributed equally to beneficiaries A and B and capital gains are to be allocated to corpus. The trust and both beneficiaries file returns on a calendar-year basis. No provision is made in the governing instrument with respect to depreciation. During the year, the trust had the following items of income and expenses:

Rents $25,000
Dividend of domestic corporations 50,000
Tax-exempt interest on municipal bonds 25,000
Long-term capital gains 15,000
Taxes and expenses directly attributable to rents 5,000
Trustee’s commission allocable to income account 2,600
Trustee’s commission allocable to principal account 1,300
Depreciation 5,000

Compute the distributable net income of the trust.

A. $92,400
B. $91,100
C. $67,075
D. None of the answers are correct.

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]

@mtaylo, A? PLease be correct. On the other hand, little under 500 questions completed trending 72% 🙁

BEC- PASS

[Paydirt123]

mtaylo24: A 92,400.

[mtaylo24]

The correct answer is b, 91,100.. I'll post the solution when I get home

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]

Dang, the 1300 from the commission allocable to principal is included as well because simple trust is suppose to distribute all income even those related to principal but not corpus?

BEC- PASS

[mtaylo24]

Answer (B) is correct.
Distributable net income is taxable income with tax-exempt interest added and no personal exemption allowed. No deduction is allowed for expenses attributable to the production of tax-exempt income. Also, since the capital gains are not included in the computation of distributable net income, no expenses are allocated to capital gains. Therefore, 75% of commissions are deductible [($25,000 rents + $50,000 dividends) ÷ ($25,000 rents + $50,000 dividends + $25,000 tax-exempt interest)]. This trust is not allowed a depreciation deduction because there is no reserve and all the income is distributable to the beneficiaries. Capital gains are not considered as income for depreciation purposes if they are properly allocable to corpus. The income beneficiaries will be entitled to the depreciation deduction in addition to their income from the trust. The trust’s taxable income and distributable income are

Dividends $50,000
Rent 25,000
LTCG 15,000
Less:
Rent expense (5,000)
Commission allocable to income (1,950)
Commission allocable to principal (975)
Personal exemption (300)
———————————-
Taxable income $81,775

Taxable income $81,775
Add back personal exemption 300
Add tax-exempt interest 24,025
Subtract LTCG 15,000
—————————
Distributable net income $91,100

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)

[hasy]

I hope that with this many people studying for REG in the Q4, it means the curve will be skewed.

Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired, and success achieved - Helen Keller

-

BEC 80 (10/23/15)
FAR 72 (4/2/15); 83 (7/11/16)
REG 52 (4/28/15)
AUD (9/9/16)

Roger + NINJA MCQ + WTB

[A1lessio]

mtaylo24 – I'm going to sit down with a notebook and write out all the questions you keep posting. 2 days to go!

AUD (08/02/2016)

[Author]

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