[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

[539Mayor]

In ur first question I believe the key phrase is “Electing no immediate expensing”. Therefore no 5 k. people don't always want the upfront deduction. In example 2 they key word is maximum. Hope it helps.

[539Mayor]

@mtaylo24
Org Expense

In ur first question I believe the key phrase is “Electing no immediate expensing”. Therefore no 5 k. people don’t always want the upfront deduction. In example 2 they key word is maximum. Hope it helps.

[mtaylo24]

@jcberthoud that clears it up. I need to learn how to “rtmfq”. I appreciate it!

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)

[Teal]

is it a bad sign that so many people are taking the test in Q4? Doesn't that mean that the curve will be less than usual?

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

[aatoural]

@Teal – I hope not

Does anybody know where I can find a good summary of all bases calculations per organization for both entity and shareholders? Becker has it very sloppy.

BEC - PASSED
AUD - 8/29/16
FAR - TBS
REG - TBS

[KJ]

What am I missing here? Either I am not understanding the question/answers correct or something is not right in this question.

Which of the following statements would not apply to a written contract governed by the provisions of UCC Sales Article?

A. The contract may involve sale of personal property
B. The obligations of non-merchant may be different from those of a merchant
C. The obligations of the parties must be performed in good faith
D. The contract must be involve with sales of goods for a price of $500 or more.

Correct Answer: D

Explanation: It says A,B & C involves written contract. For D, it says if subject matter of the contract involves sales of goods for a price of $500 or more, then the contract must be in writing. However, sale of goods less than $500 could be subject to a written contract under the UCC.

FAR - August 2016
AUD - September 2016
REG - October 2016
BEC - November 2016

Remember: "Everything should be made as simple as possible, but not simpler." - Albert Einstein

[Anonymous]

@kanwal78 Yes, its true that contracts sale of goods for $500 or more should be in writing under the UCC however there are exceptions to that rule. It need not be in writing if;
-for specially manufactured goods
-there is written confirmation
-admitted in court
-performed to the extent that performance has been accepted.

[pracap]

Porter, the sole shareholder of Preston Corp., transferred property to the corporation as a contribution to
capital. Two years later, Corley transferred property to the corporation in exchange for a 10% interest in
corporate stock. The property transferred was valued as follows:
Porter’s Transfer Corley’s Transfer
Basis $50,000 $250,000
Fair market value 200,000 500,000

What amount represents the corporation's basis in the property received?

A. $700,000
B. $550,000
C. $450,000
D. $300,000

answer is B 550000.

How this can happen? I have read, corporate's basis should be adjusted basis not FMV. But for this particular question, they have taken FMV why?

[mtaylo24]

@pracap. The first transfer was in control, as he was the sole shareholder, so the corporation takes basis to basis. The second was non-controlling (10%), so they take fmv to basis. I was working the same questions yesterday getting frustrated, made me turn off Gleim for the day 🙁

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)

[George]

According to the AICPA Statements on Standards for Tax Services, which of the following identifies the requirements for a tax advisor who believes that a taxpayer penalty might be assessed related to a position on a tax return?
a.
The tax advisor should advise the taxpayer to disclose the position on the tax return, but the taxpayer is responsible for deciding whether and how to disclose.
b.
The tax advisor may not sign a return if the possibility of a penalty exists and the tax position is not disclosed.
c.
The tax advisor is responsible for disclosing the position on the tax return, with or without the taxpayer's permission.
d.
The tax advisor should not recommend a position that could possibly result in a taxpayer penalty.

[pracap]

@mtaylo
thanks for the explanation. Good that you explained to me and others as well.
REG is very tricky exam. I came across another question like the one i wrote before, this is from Gleim:

I don't understand, Option C and D looks both are similar, who did they chose C as correct answer??

Question: 21 The S corporation status would terminate at the beginning of 2017 for which
of the following?

A. Incorporated in 1999. First year of S status was 2011. Passive
investment income equaled 19% of gross receipts in 2014, 34% in
2015, and 35% in 2016.

B. Incorporated in 1997. First year of S status was 2012. Earnings and
profits from C corporation tax years of $10,000. In 2014, passive
investment income equaled 35% of gross receipts. The corporation
had no passive investment income in prior or later years.

C. Incorporated in 1999. First year of S status was 2013. Passive
investment income equaled 27% of gross receipts in 2014, 26% in
2015, and 44% in 2016. Subchapter C earnings and profits were
$10,000 at the end of each year.

D. Incorporated in 1997. First year of S status was 2012. Passive
investment income equaled 29% of gross receipts in 2014, 27% in
2015, and 25% in 2016. Subchapter C earnings and profits were
$10,000 at the end of each year.

Answer (C) is correct.
Sec. 1362(d)(3) provides that S corporation status will be
terminated when passive investment income exceeds 25% of
gross receipts for 3 consecutive taxable years, and the
corporation has Subchapter C earnings and profits at the end of
each year. This answer is the only one that meets both
requirements.

[mtaylo24]

@pracap, you can equal 25% but cant exceed 25%, that is why c is the answer as opposed to d (very tricky!)

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)

[KJ]

Thanks @Annie!!

FAR - August 2016
AUD - September 2016
REG - October 2016
BEC - November 2016

Remember: "Everything should be made as simple as possible, but not simpler." - Albert Einstein

[pracap]

@matylo
If you see option C Average GR works out 32.33% and option D works out 27%.
So how come it is equal to or below 25%

[mtaylo24]

@pracap, its not an average of the three years. Its 26K or more for three years.

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)

[Author]

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