[jeff]

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

[Gabe]

@HR thanks for the clarification 🙂 Seems like it's a sore point for everyone.

So, just to reiterate: you CAN take medical expenses for non dependents as long as they pass every dependent test (not including gross income).

Got through all the Ninja SIMS for a second time yesterday. Going to work on trouble MCQs in Ninja and Wiley.

Trending in the upper 90's

Average at a solid 80%

Happy studying 🙂 I'll be sure to post any good questions I find

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

[OnlyBelieve]

How many years is an organization required to deduct business start up/organization costs? Sim #42- Ninja, the second year org cost is given as $72. Why is the company still deducting org costs in year 2.I thought they are only allowed a deduction in the first year?

AUD - DONE
BEC - DONE
REG - 04/04
FAR - 05/30

[Gabe]

@only I don't have the SIM in front of me, but I am assuming it is amortization of organization costs that is the $72, in that case, organizational costs are amortized over 15 years or 180 months

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

[OnlyBelieve]

But why are we taking amortization in year 2? Wouldn't it be just the first year of incorporating and that if not taken in the first year, can never be taken?

AUD - DONE
BEC - DONE
REG - 04/04
FAR - 05/30

[Gabe]

Pretty sure you took it in yr 1 as well…let me pull up the SIM…

Yep…so 1st yr

eligible org exp= $6,080

org exp= $5,000

amt to be amort= $1,080/180

= $6 * 4 months (sept-dec)

= $24 + $5,000

= $5,024

2nd yr= $6 * 12= $72

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

[OnlyBelieve]

does that mean we can take org cost in year 3 and beyond as well?

AUD - DONE
BEC - DONE
REG - 04/04
FAR - 05/30

[OnlyBelieve]

so for every year after year 1, $72?

AUD - DONE
BEC - DONE
REG - 04/04
FAR - 05/30

[Gabe]

@only correct, for 15 yrs…

edit: usually, with org expenses they make the number bigger so you're not expensing $72/yr for 15 yrs lol. Most questions I have seen show org expenses of $50k or something, not $6k

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

[Anonymous]

Yes.

General rule with the Amortization period on REG. It's 15 years or 180 months (15 * 12 = 180).

You also get to amortize things in REG that you wouldn't get to amortize in FAR. Such as Goodwill.

[OnlyBelieve]

thanks guys!

AUD - DONE
BEC - DONE
REG - 04/04
FAR - 05/30

[Anonymous]

I have a simple question that i hope someone can clarify for me.

Under the common contracts and sales contracts, what does “consideration” mean?

I see the terminology, without consideration/added consideration and I can't comprehend the concept.

[Gabe]

@CPAer did some googling…came up with this “law” definition of consideration:

In order for consideration to provide a valid basis for a contract — and remember that every valid contract must have consideration — each party must make a change in their “position.” Consideration is usually either the result of:

a promise to do something you're not legally obligated to do, or

a promise not to do something you have the right to do (often, this means a promise not to file a lawsuit).

Hope this helps.

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

[Anonymous]

Key thing to remember is that Consideration needs to be “Legally Sufficient”

Fairness has nothing to do with it. It might not be fair to sell a brand new car for $10 cash but both the cash and the car are both “Legally Sufficient” consideration so the exchange will be valid and enforceable.

[Gabe]

^ agree with angel. As long as both parties agree, it is consideration.

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

[Anonymous]

@Gabe, I too googled the concept of consideration, but it didn't help me understand the concept.

@angelwatch, Thanks for the golden nugget on considerations having to be legally sufficient.

Anyone else struggling with the concept of consideration?

[Author]

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