REG Study Group Q2 2015 - Page 25

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  • #192517
    jeff
    Keymaster

    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
    Jeff Elliott, CPA (KS)
    NINJA CPA | NINJA CMA | NINJA CPE | Another71
Viewing 15 replies - 361 through 375 (of 3,544 total)
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  • #677562
    Holly
    Participant

    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 - 86
    Becker & Ninja MCQ

     

     

     

    BEC - 79
    REG - 85
    AUD - 5/27/16

    #677563
    Gabe
    Participant

    @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 2016

    #677564
    Gabe
    Participant

    A 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 2016

    #677565
    Gabe
    Participant

    Jared 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 2016

    #677566
    jstay
    Participant

    is 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.

    #677567
    Gabe
    Participant

    jstay- 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 2016

    #677568
    jstay
    Participant

    alright, sweet so confidence is up with that question lol

    yeah obsessing will probably begin 4/16

    #677569
    Gabe
    Participant

    awesome! yeah, my freakout begins now 🙂 haha. happy busy season!

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

    #677570
    Sandia
    Member

    @ 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 CPA

    #677571
    Gabe
    Participant

    Sally 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 2016

    #677572
    Gabe
    Participant

    @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 2016

    #677573
    Sandia
    Member

    @ 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 CPA

    #677574
    Gabe
    Participant

    @Sandia

    Can 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 2016

    #677575
    Sandia
    Member

    Because 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 CPA

    #677576
    Anonymous
    Inactive

    This 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!

Viewing 15 replies - 361 through 375 (of 3,544 total)
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