[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]

@svit To be effective, an acceptance must be received before the offer is terminated. An offer may be terminated by Peter at any time unless Mason gave consideration to keep the offer open. Since Mason gave no consideration, Peter could revoke.

p.s. good luck tomorrow!

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

[Anonymous]

Thanks Gabe.

I'll be sure to pop back in tomorrow and post my thoughts and experiences.

[Anonymous]

@anjanja – I echo Angelwatch's advice. Keep at it. The REG rules can be voluminous and overwhelming, but it does come together after you do so many MCQs and SIMs. I faced the same feelings about the REG material and working these MCQs and SIMs help to digest the REG material one bite at a time. This might be of help to you, which is what I did with REG rules every time I got sick of the MCQs. For example, I would write three columns side by side and put in what all had in common and their specific characteristics to differentiate among them. E.g. Common law vs. SEC 1933 Act vs. SEC 1934 Act; Estate vs. Simple Trust vs. Complex Trust. Write them out. It might be tedious, but it pays off and makes it easier to retain the details.

[Anonymous]

@angel good luck tomorrow I'm rooting for you!

[Anonymous]

Can someone elaborate on the “holder through a holder in due course” concept. How is it that you can still qualify for this even if you are aware of bad faith.

[Anonymous]

Tom Lewis, individual taxpayer, donated clothes and various household items to his local church during the year. What is the appropriate tax treatment?

[hunter32]

@cpa8488 charitable deduction at FMV.

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

[Anonymous]

West, an Indiana real estate broker, misrepresented to Zimmer that West was licensed in Kansas under the Kansas statute that regulates real estate brokers and requires all brokers to be licensed. Zimmer signed a contract agreeing to pay West a 5% commission for selling Zimmer’s home in Kansas. West did not sign the contract. West sold Zimmer’s home. If West sued Zimmer for nonpayment of commission, Zimmer would be:

A.

liable to West only for the value of services rendered.

B.

liable to West for the full commission.

C.

not liable to West for any amount because West did not sign the contract.

Incorrect D.

not liable to West for any amount because West violated the Kansas licensing requirements.

[Anonymous]

@cpa8488 – That question above has contrasting answers/explanations. With Becker the answer is D, while Ninja says it's C.

[Anonymous]

just came across this gleim mcq. Of course I forgot that S/T taxed at ordinary rate. Am I supposed to know rates for particular types of cap. gains? And what is Sec. 1202? I don't remember seeing this. Should I bother or is this important?

Alan Kupper had the following transactions during 2013:

Gain of $7,000 on sale of Sec. 1202 stock purchased on January 15, 2012, and sold on April 15, 2013.

Gain of $5,000 on sale of common stock purchased on October 15, 2012, and sold on March 25, 2013.

Receipt of a $10,000 installment payment on an installment contract created in 2005 when Kupper sold for $100,000 (exclusive of 6% interest on installments) land acquired in 1993 for $20,000. The contract provides for 10 equal annual principal payments of $10,000 beginning on July 1, 2005, and ending on July 1, 2014.

What is the amount of Kupper’s net capital gain and appropriate tax-rate basket(s) for 2013?

A. $15,000 ($7,000 – 28% basket, $8,000 – 15% basket).

Answer (A) is correct.

Net capital gains (losses) are first computed separately for each tax rate basket. The sale of stock in April resulted in a long-term capital gain in the 28% rate basket because the asset was Sec. 1202 stock.

B. $17,000 ($7,000 – 28% basket, $10,000 – 15% basket).

C. $20,000 ($12,000 – 28% basket, $8,000 – 15% basket).

D. $15,000 ($15,000 – 28% basket, $0 – 15% basket).

[imgonnabacpa]

@ cpa8488 & cracked : to me becker answer d is more logicl s not licensed means void contract.

Can you explain the difference between when to increase the shareholder basis vs Ajustment Account(AAA) basis. What are the differences and points to remember. I know both increase with income and decrease with losses but how to differentiate. Also how would the C-Corp's Acc E&P at the time of S election play a role?

Thanks

BEC - 78
AUD - 69,72,78
FAR - 73, 77
REG - 74, 74, April 20(Monday). Not anymore (Fingers Crossed xxxxx)

[Anonymous]

@cpa8488 – “holder through Holder in Due Course” means that we follow the chain of holders as the instrument gets negotiated, even if the holder at the end of the chain is aware of a lawsuit pending, bad faith-type of deal, or dishonored (whatever). The reason for this “holder via HDC” vis-a-vis treatment is to allow parties at the end of the chain to be willing to take a hit if the instrument fails to materialize. I hope this makes some sense. For now, just remember that a holder in HDC gets the perks of being a HDC as long as it follows through the chain: A negotiated to B, B negotiated to C, C negotiated to D. B sued A b/c A failed to do whatever. B tells D that A was naughty. D can still retain the benefits of a HDC because the instrument was negotiated legitimately to B, to C, and finally to D. Just keep this in mind and you will nail this.

[Anonymous]

“Also how would the C-Corp's Acc E&P at the time of S election play a role?” Excellent question…

When a C-Corp elects S-Corp, its AEP will remain in place until it is “liquidated” through a distribution that wipes out the S-Corp's AAA. There is a great example of this in NINJA MCQ bank if you work through the S-Corp MCQs. Key is to remember that AAA gets used up first to fulfill the distribution to the shareholder (return OF invested capital) THEN any remainder of the unfulfilled portion of the distribution will be fulfilled with the AEP as a taxable dividend (return ON invested capital).

[imgonnabacpa]

Thanks Bulldozer but i am still not getting the concept of how could the Corpo be liquidated now? its already converted to an S Corp. It had some E&P, where did it go ?

S Corp starts fresh with AAA A/c. then keeps adding all the incomes and losses and at the time of the distribution, its first adjusted From AAA. IS it dividend upto AAA and then Return of capital (uoto basis) and finally Return ON capital. ?

BEC - 78
AUD - 69,72,78
FAR - 73, 77
REG - 74, 74, April 20(Monday). Not anymore (Fingers Crossed xxxxx)

[imgonnabacpa]

Here's another one, I know i did ask this one earlier but it keeps coming in my test bank. I have memorized the explaination but not yet understood it .

My question : -> why would you multiply by 2 and also if it says how much cn you deduct- Would it not mean — what is the amount of IRA deduction available after the phaseout ? Why is it giving the phaseout amount as the answer? Wht Am I missing?

Rita Spano is an active participant in a company retirement plan. Her husband, John, age 45, works for a company that does not have a retirement plan. The Spanos' joint adjusted gross income for 2014 is $185,000. John contributes $4,000 to an IRA for himself. How much of this $4,000 contribution for John can the Spanos deduct on their 2014 joint return?

A.

$4,000

Correct B.

$3,200

C.

$2,000

D.

$0

Beginning in 1998, individuals are not considered participants in a company retirement plan simply because their spouses are. However, the maximum deductible IRA contribution for a nonparticipant spouse is phased out for couples with joint return adjusted gross incomes between $181,000 and $191,000.

Calculation for reduced IRA contribution:

1) Modified AGI $ 185,000

– 181,000

2) Difference between AGI and phaseout $ 4,000

Full contribution limit / 10,000

3) Reduction factor 0.400

4) Maximum contribution ($4,000 x 2) $ 8,000

Reduction factor x 0.400

Reduction amount $ 3,200

BEC - 78
AUD - 69,72,78
FAR - 73, 77
REG - 74, 74, April 20(Monday). Not anymore (Fingers Crossed xxxxx)

[Author]

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