[jeff]

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AUD - 79
BEC - 80
FAR - 76
REG - 92

Jeff Elliott, CPA (KS)
NINJA CPA | NINJA CMA | NINJA CPE | Another71

[MrCPA511]

Gabe:

I'm not sure how to do this without the tables.. but since this is the only asset placed in the last quarter of the year, the mid quarter convention is used. Using the MACRs table for mid quarter convention in the 4th quarter, the value comes out to 3.57%. 25,000 x .0357 = $893 (approx)

_____________________

Can anyone explain the calculation for this one?

On December 1, 2014, Jeff Weber placed in service office furniture (7-year life), which cost $25,000. Jeff did not elect Section 179 expensing. The office furniture was the only asset purchased during the year. What amount can Jeff claim as depreciation under MACRS for 2014?

Correct A.

$893

B.

$7,000

C.

$1,000

D.

$4,000

FAR - 86 7/2014
AUD - 95 10/2014
REG - 87 1/22/15
BEC - 84 7/2015

[Mika]

Test your knowledge – Tax impact between C-Corp and S-Corp

______________________________

Venus owns 30 percent of a corporation. Serena owns 30 percent of a different corporation. Both of these corporations reported operating income this year (sales minus cost of goods sold and other operating expenses) of $200,000. Both corporations made a total cash distribution to the owners of $80,000. The company that Venus owns an interest in is a C corporation. The company that Serena owns an interest in is an S corporation. Which of the following statements is true?

A. Serena will report $36,000 more in taxable income this year from this ownership than Venus will report.

B. Serena will report $60,000 more in taxable income this year from this ownership than Venus will report.

C. Serena and Venus will report the same amount of taxable income this year from their ownership.

D. Venus will report $24,000 more in taxable income this year from this ownership than Serena will report

REG - 80 (02/13/2015) Roger + Ninja Flash Card + Ninja MCQ + Becker's Note
FAR - 84 (05/29/2015) Roger + Ninja MCQ + Some Wiley book questions
BEC - 77 (08/27/2015) Roger + Ninja MCQ + Half Wiley book questions
AUD - 87 (08/28/2015) Roger + Ninja MCQ + Half Wiley book questions

[Mika]

Ans. A

Most corporations are C corporations. They pay an income tax on their own taxable income and owners are only taxed when dividends are distributed. Venus owns part of a C corporation so that she must report dividend income this year of $24,000 ($80,000 distribution times 30 percent ownership. Some companies qualify as S corporations. They pay no income taxes but allocate pass through items and ordinary income to their partners. Serena will report $60,000 based on her ownership of this S corporation ($200,000 ordinary income times 30 percent ownership). Serena’s taxable income is $36,000 higher than that of Venus ($60,000 less $24,000).

REG - 80 (02/13/2015) Roger + Ninja Flash Card + Ninja MCQ + Becker's Note
FAR - 84 (05/29/2015) Roger + Ninja MCQ + Some Wiley book questions
BEC - 77 (08/27/2015) Roger + Ninja MCQ + Half Wiley book questions
AUD - 87 (08/28/2015) Roger + Ninja MCQ + Half Wiley book questions

[Mika]

The Regostino Company is an S Corporation. During the current year, it reported the following results: $25,000 ordinary income (revenues minus cost of goods sold and other operating expenses), $1,100 in tax-exempt interest income, $100 interest expense, $800 in charitable contributions, and a section 179 deduction of $3,400. What is the income tax expense for Regostino? Assume a corporate tax rate of 20 percent.

A. Zero

B. $4,040

C. $4,320

D. $5,000

REG - 80 (02/13/2015) Roger + Ninja Flash Card + Ninja MCQ + Becker's Note
FAR - 84 (05/29/2015) Roger + Ninja MCQ + Some Wiley book questions
BEC - 77 (08/27/2015) Roger + Ninja MCQ + Half Wiley book questions
AUD - 87 (08/28/2015) Roger + Ninja MCQ + Half Wiley book questions

[Mika]

Ans. A

S Corporations (like partnerships) are flow-through entities. This term means that the shareholders of the S-Corporation report and pay individual income tax rates on their portion of income, deductions, and credits reported by the company. Some items such as charitable contributions, interest expense, and Section 179 deductions are assigned to the owners individually and reported directly by them. All remaining taxable income items are lumped together and reported as a single operating income figure to be allocated among the owners for their returns. However, the S corporation itself does not pay income taxes.

REG - 80 (02/13/2015) Roger + Ninja Flash Card + Ninja MCQ + Becker's Note
FAR - 84 (05/29/2015) Roger + Ninja MCQ + Some Wiley book questions
BEC - 77 (08/27/2015) Roger + Ninja MCQ + Half Wiley book questions
AUD - 87 (08/28/2015) Roger + Ninja MCQ + Half Wiley book questions

[The_AmYam]

gabe –

25,000/7 = 3571 annual amount

3571 * .125 (the mid quarter % for Q4) = 446

446 * 2 = 892

not sure why you multiply by 2 but that gets you there.

Mid-Q percentages:

Q1 – 87.5

Q2 – 62.5

Q3 – 37.5

Q4 – 12.5

REG - 81
FAR - 79
AUD - 94
BEC - OCT 15

[Gabe]

Am yeah I got to the 446, I just didn't see a reason to multiply by 2. I chose the right answer, but still.

Also, are we supposed to know all the quarterly percentages?!

CPA, CFE
CISA- Experience will be completed by August 2016

[The_AmYam]

this is a somewhat good explanation – I think you multiply by 2 b/c it is double declining balance.

that is also what my tax director here at work said…

REG – Depreciation Mid-quarter Convention

I would know them. I vaguely remember that I memorized them the last time I took it – I cant remember if I actually needed it or not, but I definitely studied it. It's what I'm working on memorizing today.

I am going to be checking in throughout the day today, but I will be offline tonight until after my exam tomorrow. not sure about the rest of the weekend after that – will plan on checking in with you Monday to see if you need help on anything.

REG - 81
FAR - 79
AUD - 94
BEC - OCT 15

[s2sylvir]

I've got a SIM question,

On some of the sims, for example one where we list out the “Deductions on this return not charged against book income”, I noticed the answer key had the answers as negative numbers (which makes sense, I guess).

But in another example, where it had us add up nonseparately stated expenses, the answer key had positive numbers for the expenses…..

Like how are we supposed to know if the exam wants the numbers written as positives or negatives? -.-

BEC - PASS (79)
AUD - PASS (63, 71, 74, 74, 83)
REG - PASS (88)
FAR - PASS (58, 89)

Becker for all + FAR 10 Point Combo

[The_AmYam]

in some of the SIMS, subtotals calculate for you, so I use that to gauge how to input the #'s… to get the correct subtotal.

In others, I go with absolute values unless it clearly says something input as a credit () or N/A or input zero or those special instructions. I don't know if that's the “right” way to do it or not…

REG - 81
FAR - 79
AUD - 94
BEC - OCT 15

[omalloy]

A perfect question to take M-1 notes from:

For tax year 2014, Oaktree Corporation's books and records reflect the following:

Net income per books (after tax) $52,800

Tax-exempt interest 500

Excess book depreciation 7,222

Capital losses 3,000

Federal income tax 8,478

Excess contributions 1,710

Premiums on officer life insurance (payable to corp.) 1,500

Meals in excess of 50% limitation 400

What is the amount of Oaktree's taxable income as it would be shown on Schedule M-1 of its corporate income tax return?

Correct A.

$74,610

B.

$77,110

C.

$76,610

D.

$75,110

You are correct, the answer is A.

Net income per books $52,800

Add back:

Federal income tax + 8,478

Capital losses + 3,000

Depreciation + 7,222

Officer life insurance + 1,500

Meals in excess of 50% limitation + 400

Excess contributions + 1,710

---

Total $75,110

Deduct: Nontaxable interest 500

---

Taxable income $74,610

========

Corporations are not allowed a deduction for capital losses. Corporate capital losses are only deductible against capital gains.

Contributions are limited to 10% of taxable income.

FAR 65, 70, 78
REG 64, 76
BEC 70, 80
AUD 81

Ethics 96

Péter un plomb

[s2sylvir]

@The_AmYam

Yeah, that is definitely something I should use to my advantage! But both of these were just a simple table and a subtotal cell, it didn't flow to the return so I had no idea…

But I think I will do what you said about the absolute values :O Thank you!

BEC - PASS (79)
AUD - PASS (63, 71, 74, 74, 83)
REG - PASS (88)
FAR - PASS (58, 89)

Becker for all + FAR 10 Point Combo

[Jenny]

25,000/7=3571.43

3571.43/4 (4 qtrs)= 892.86

That is how I calculated for the Mid Qtr

AUD - 76
BEC - 86
FAR - 76
REG - 76

Oklahoma CPA

 

Oklahoma Candidate
AUD - Pass (8/14)
FAR - Pass (11/14)
REG - Pass (2/15)
BEC - Pass (11/15)
Ethics Exam - Pass (12/15)

[teamryan15]

I ve got a question from the first set of Sims in ch2 of Becker Question 2.

From this information below how can we tell that the TP itemized in the previous year?

“The Romans received a $200 state income tax refund on the prior years tax. The Romans had deducted $2,000 of state income taxes in the prior year, all of which resulted in federal tax savings”

[Anonymous]

hey so if i was a C Corp and wanted to elect S Corp status and it was Year 2 say March 1, would i be considered S Corp for Year 1 because i declared before March 15 or would it be starting January Year 2?

[Author]

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