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March 5, 2015 at 8:08 pm #192517jeffKeymaster
Welcome to the Q2 2015 CPA Exam Study Group for REG.
“Death and Taxes” – Individual Tax for the CPA Exam
Posted by Another71 on Monday, November 24, 2014
Free NINJA: https://www.another71.com/cpa-exam-study-plan/
AUD - 79
BEC - 80
FAR - 76
REG - 92
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March 15, 2015 at 11:19 pm #677562HollyParticipant
Here's an update for those of you using Becker. I sent this question to Becker because I was still confused. I asked why the software is saying the answer is $260,000 and not $40,000 or even $300,000 to include the deferred gain and the ordinary income from recapture (even though that would be weird, sometimes they're tricky, and I started going in circles after thinking about it too much). This was their response:
Hi Holly,
Only the $40,000 of recapture is on the tax return. The deferred gain of $260,000 is not on the return, rather affects the basis of new building and will be recognized on final sale/disposal of the building.
The rule is recognize the LOWER of gain (300k) or boot received (40k); thus, only 40k is recognized on the return. See example on page R4-19.
I hope this helps. Good Luck!
Bonnie Mackey, CPA
So I guess it's another simulation that marks the correct answer as incorrect.
Is anyone working on Becker R4 simulation #2? I have a question about task 7, number 14.
Taxpayer traded an old building (purchased 6 years ago) for a new building and fully depreciated personal property. NBV of the old building was $200,000, and FMV was $500,000. The FMV of the new building was $460,000 and the FMV of the fully depreciated personal property received with the new building was $40,000.
The part I'm questioning is when they're wanting the amount to be included on the tax return. It calls for you to fill in the blank on gain, basis, proceeds, long term short term or n/a, and amount to be included on the return.
What would you put for the amount to be included on the return? The answer is $260,000 by the way.
AUD - 76
BEC - 82
FAR - 82
REG - 86BEC - 79
REG - 85
AUD - 5/27/16March 16, 2015 at 11:38 am #677563GabeParticipant@HR that makes sense that just the boot received would be on the tax return. Thanks for checking it out for us!
CPA, CFE
CISA- Experience will be completed by August 2016March 16, 2015 at 11:46 am #677564GabeParticipantA CPA assists a taxpayer in tax planning regarding a transaction that meets the definition of a tax shelter as de-fined in the Internal Revenue Code. Under the AICPA Statements on Standards for Tax Services, the CPA should inform the taxpayer of the penalty risks unless the transaction, at the minimum, meets which of the following standards for being sustained if challenged?
a. More likely than not.
b. Not frivolous.
c. Realistic possibility.
d. Substantial authority
Answer is A. My question: when, if ever, is it appropriate to use “substantial authority” to justify a position?
CPA, CFE
CISA- Experience will be completed by August 2016March 16, 2015 at 11:59 am #677565GabeParticipantJared purchases an apartment building on January 1, 2004 for $500,000. The building is depreciated using Modified Accelerated Cost-Recovery System (MACRS) straight-line depreciation. The apartment building is sold on December 31, 2014 for $620,000, when its adjusted tax basis is $320,000 (assume that $180,000 of depreciation has been claimed). How much gain from the sale of the building is subject to the 25% rate?
A. $0
B. $180,000
C. $300,000
D. $320,000
Here's a fun one…
Answer is $180k. It is a 1250 prop, so the $180k depreciation that is claimed is subject to 25% tax. Remaining $120k gain is taxed as 1231 gain.
So…
1245 recap (dep. equip held > 1 yr)
Depreciation claimed= taxed as ordinary income
Excess= 1231 gain
1250 recap (warehouse/factory/building held > 1 yr)
Depreciation claimed= taxed at 25%
Excess= 1231 gain
Hope this helps some folks.
CPA, CFE
CISA- Experience will be completed by August 2016March 16, 2015 at 12:23 pm #677566jstayParticipantis it 180,000? thought it was whatever is written off for A.D. will be added back at that rate..?
update: haven't really been going too too hard studying (this will change in a week). So far I have wrote index cards for Ch 3, 4, and 5. gonna start 6 later today. Im getting tax experience at work (first year intern, so hopefully that expereince helps.) just scheduled test for 5/15…last day so I can get the results on 5/27. When is a good time to start going hardcore studying, like obsessing over it? ill also probably take the 14-17 days off before the exam. im thinking another week or so.This is a retake and I hope this is my last exam.
March 16, 2015 at 12:28 pm #677567GabeParticipantjstay- correct! I'd say obsessing (for me) starts 2 weeks out- full on review mode, getting details down, etc. This is a re-take for me too and hoping it is my last. Unfortunately, due to other things on my plate, I have to sit at the beginning of the window. 🙁 I hope I remember when scores come out lol
CPA, CFE
CISA- Experience will be completed by August 2016March 16, 2015 at 12:33 pm #677568jstayParticipantalright, sweet so confidence is up with that question lol
yeah obsessing will probably begin 4/16
March 16, 2015 at 12:41 pm #677569GabeParticipantawesome! yeah, my freakout begins now 🙂 haha. happy busy season!
CPA, CFE
CISA- Experience will be completed by August 2016March 16, 2015 at 1:20 pm #677570SandiaMember@ Gabe,
Are you sure that the answer is $180K? According to Yaeger Cram
Real estate – only C Corporation are can take 20% depr ordinary Inc SEc 291 and the difference goes to Sec 1231 LTKG
Real estate – Sole property only LTJG sec 1231.
Personal property tax – Sole propety and C corporation Depr Ordinary gain Sec 1245 and the difference goes to SEc 1231 LTKG.
Thank you,
FAR - 77 x2 Wiley book & no test bank
AUD - 83 x3 NINJA Test bank 3 time
REG - 80 x1 NINJA Test bank
BEC - 78 X2 NINJA Test bank ..done!!promesa cumplida mama -que llege al cielo 🙂
Ethic 100% Licensed VA CPAMarch 16, 2015 at 1:31 pm #677571GabeParticipantSally Markey, who owns a heavy construction company, decided to spend some of her $2,000,000 2014 profit on a heavy-duty diesel truck costing $111,000 for her business. In order to lower her income taxes for the year, she decided to take the maximum Section 179 deduction plus the MACRS depreciation for 7-year property. The ceiling for Section 179 in 2014 is $25,000. No other capital assets were purchased during 2014. What is the total deduction for the truck in 2014?
A.
$25,000
B.
$37,289
C.
$15,862
D.
$40,862
Calculation is $111k- $25k= $86k * .1429= 12.2894 + $25k= $37.2894 (B)
Why are they using .1429 (1/7) and not double declining (2/7)?
CPA, CFE
CISA- Experience will be completed by August 2016March 16, 2015 at 1:35 pm #677572GabeParticipant@sandia that's what I thought too…maybe since it is specified that he is NOT a c-corp, he can take all of it for recapture? I'll do some research and get back to you 🙂 Or if anyone else has the answer.
edit: from wiley:
For Section 1250 property, the portion of the gain that would be recaptured if all depreciation taken was subject to recapture under Section 1245 over the regular Section 1250 recapture is taxed at 25%, rather than as a Section 1231 gain. The amount subject to the 25% rate is usually the straight-line depreciation on the asset.
CPA, CFE
CISA- Experience will be completed by August 2016March 16, 2015 at 1:55 pm #677573SandiaMember@ GABE
7 and half – year convention method assets – 2014.
The year that you have a new asset, you must use half-year convetion or mid quarter first, 2second, third quarter, or quarter. Obviously they do not tell you.
1/7 x 2 / 2 = 14.29%
I did not get until last night… I finally got.
FAR - 77 x2 Wiley book & no test bank
AUD - 83 x3 NINJA Test bank 3 time
REG - 80 x1 NINJA Test bank
BEC - 78 X2 NINJA Test bank ..done!!promesa cumplida mama -que llege al cielo 🙂
Ethic 100% Licensed VA CPAMarch 16, 2015 at 2:11 pm #677574GabeParticipantCan you explain again? How are you getting 2/2?
Thanks!
How are you feeling? We sit around the same time 🙂
CPA, CFE
CISA- Experience will be completed by August 2016March 16, 2015 at 2:25 pm #677575SandiaMemberBecause it is half year convention – half of the depreciation of the year. You take the total deprecion of the year and divided by 2 for the half year convention,
Ready or no here I go….. I want to see how the REG exams are and gain experience. Low expectation x myself but I am sure I will pass one day. I do not care if I have to study x another 12 months but my hubby and kids does….
FAR - 77 x2 Wiley book & no test bank
AUD - 83 x3 NINJA Test bank 3 time
REG - 80 x1 NINJA Test bank
BEC - 78 X2 NINJA Test bank ..done!!promesa cumplida mama -que llege al cielo 🙂
Ethic 100% Licensed VA CPAMarch 16, 2015 at 4:22 pm #677576AnonymousInactiveThis questions has me so confused no wonder it was released!
West and Barton entered into a contract. After receiving valuable consideration from Egan. West assigned its rights under the Barton contract to Egan. In which of the following circumstances would west NOT be liable to Egan?
A. West released Barton
B. Barton paid west
C. Egan released Barton
D. West breached the contract
I'm so confused!
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