[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

[hunter32]

Yes, because S-Corp basis does not include share of liabilities.

BEC - 80 (Becker)
AUD - 92 (Becker+NINJA MCQ)
FAR - 87 (Becker+NINJA MCQ)
REG - 90 (Becker+NINJA MCQ and Audio)

[Anonymous]

Becker question 7 from C-Corps:

Mock operates a retail business selling illegal narcotic substances. Which of the following item(s) may Mock deduct in calculating business income?

I. Cost of merchandise

II. Business expenses other than the cost of merchandise

A. II only

B. Both I and II

C. I only

D. Neither I nor II

This is the only question I've found that deals with illegal businesses. The answer is C and I agree with that because the illegal nature of the business is to sell illegal narcotics. But I don't like their explanation:

Choice “c” is correct. A gain from an illegal activity is includible in income. To determine the gain, a deduction is permitted for cost of merchandise. Business expenses for operating an illegal business, other than the cost of merchandise, are not permitted as a deduction.

What I learned in my tax class contradicts this explanation. In class an illegal business that does NOT deal in illegal drugs is allowed to deduct all LEGAL business expenses to arrive at income. For example, an illegal casino can deduct salary expenses since that is a normal business expense. Now they are NOT allowed to deduct things like bribes or kickbacks since those are illegal expenses. Now an illegal business dealing with illegal drugs are only allowed a deduction for the cost of merchandise (it's a weird rule but because it's a weird rule it's stuck with me all this time).

Anyone have any thoughts on it or know how other study material handles it? Odds are I won't see a question on the CPA exam relating to it but do I just hate the contradiction.

[Anonymous]

Roger says for illegal drugs only COGS are deductible, no overhead. It makes sense, I imagine commissions paid to retailers are not being taxed so => shouldn't be deducted, am i right?

[Anonymous]

Which of the following types of entities is entitled to the net operating loss deduction?

A.

Partnerships

B.

S corporations

C.

Trusts and estates

Incorrect D.

Not-for-profit organizations

why are trusts and estates allowed a NOL deduction?

[hunter32]

I believe it's due to that they aren't a pass through entity

BEC - 80 (Becker)
AUD - 92 (Becker+NINJA MCQ)
FAR - 87 (Becker+NINJA MCQ)
REG - 90 (Becker+NINJA MCQ and Audio)

[Anonymous]

Just want to know if there are other people in my position ….. I did R1 and R2 ( for becker users) and i guess they were ok. most of the stuff was sticking after looking over the material once or twice….. Now I am halfway through R3 (C-corp taxation) and im finding it to be completely and insanely difficult. I just feel like everything is all over the place and nothing ( and i mean nothing ) is sticking no matter how many times i look at it. i feel like i should watch the lecture over from scratch because i feel like nothing on this topic is going in. anyone else feel this way ?

[Anonymous]

[Anonymous]

dsch9319,

I can't remember anything I read or listen or see in mcqs. Sometimes I read something and the next minute I just can't recall any details. If I do, I will for sure forget week later

I did not experience this when studying for FAR or AUD

I hope this made you feel little better

[Anonymous]

its so frustrating…

[Anonymous]

most concepts seem pretty random to me. My memory can't make connections through linking random things. Only repetition, I guess. It is frustrating

[Anonymous]

dsch9319: I think most of us feel the same way. I actually found this to be one of the more difficult sections to study for because there are so many rules and exceptions to those rules. By comparison FAR has a ton of material but it's all pretty straightforward. I feel once you master a FAR concept, you move on and you're good. REG just has a lot of little details that you know. And it is frustrating at first.

The only real advice I have for you is to just keep at it. Just keep going over the material until it starts to stick. Do as many MCQ as you can and you'll start to see how the rules work. And finally, this isn't a sprint. It's a marathon. You don't need to master everything immediately. It may take a few weeks but it will all start to come together.

[Gabe]

Good luck tomorrow Angel!!

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

[Sandia]

Angel!! best luck x you tomorrow…

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

[Svitlana85]

I thought the offeror i supposed to keep the offer opened. What am I missing?

On June 15, Peters orally offered to sell a used lawn mower to Mason for $125. Peters specified that Mason had until June 20 to accept the offer. On June 16, Peters received an offer to purchase the lawn mower for $150 from Bronson, Mason’s neighbor. Peters accepted Bronson’s offer. On June 17, Mason saw Bronson using the lawn mower and was told the mower had been sold to Bronson. Mason immediately wrote to Peters to accept the June 15 offer. Which of the following statements is correct?

A.

Mason’s acceptance would be effective when received by Peters.

B.

Mason’s acceptance would be effective when mailed.

C.

Peters’s offer had been revoked and Mason’s acceptance was ineffective.

Incorrect D.

Peters was obligated to keep the June 15 offer open until June 20.

CPA Excel/Wiley/Ninja Notes/MCQs

FAR Feb 2014 85
AUD Aug 2014 88
BEC Nov 2014 85
REG Feb 2015 71 Retake April 16, 2015

[jstay]

is it C?

[Author]

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