[jeff]

Free Study Planner, Notes, Audio, Flashcards: https://www.another71.com/cpa-exam-study-plan/

Free CPA Exam Survival Guide: https://www.another71.com/cpa-exam-survival-guide/

AUD - 79
BEC - 80
FAR - 76
REG - 92

Jeff Elliott, CPA (KS)
NINJA CPA | NINJA CMA | NINJA CPE | Another71

[Windel]

Hi REG Team,

Couple questions:

1. Has anyone else met/completed the weekend Ninja500 challenge?

2. If so have you received, your week-long access to the Ninja Blitz as promised?

Perhaps I’m just anxious because I haven’t received my access yet…and my exam is exactly 1 week from today (10/6). I’m in the process of charting out my 6-day action plan but I’m not sure if the Ninja Blitz would be sufficient enough to give me the edge I need to ace this thing. Granted; I have no idea what’s included, when it would be available…if at all, or even if it would work to my (dis)advantage given my short timeline.

Jeff! Are you listening, hopefully you’ll chime in as well.

[rzrbkfaith]

@King Coffee – it looked like Jeff was having some technical difficulties earlier this afternoon. You might want to give it until tomorrow morning and then contact him if you don't have access yet.

For the record, I don't use the Ninja (wish I would have known about it before Becker…)

AUD - 99
BEC - 97
REG - 91
FAR - 1/8/16

[Anonymous]

im and Kay Ross contributed to the support of their two children, Dale and Kim, and Jim’s widowed parent, Grant. Dale, a 19-year-old full-time college student, earned $4,500 as a baby-sitter. Kim, a 23‑year-old bank teller, earned $12,000. Grant received $5,000 in dividend income and $4,000 in nontaxa­ble Social Security benefits. Grant, Dale, and Kim are U.S. citizens and were over one-half supported by Jim and Kay. How many exemptions can Jim and Kay claim on their joint income tax return?

A.

Two

B.

Three

Incorrect C.

Four

D.

Five

You answered C. The correct answer is B.

Jim and Kay Ross are entitled to a total of three personal exemptions on their personal tax return: one each for themselves (Jim and Kay) and one for Dale. Kim does not qualify because she is not a full-time student, is 23 years old, and made more than the gross income test requires. Grant does not qualify because he also fails the gross income test.

two questions here….1) I thought Grant would be a qualifying child thus eliminating the gross income test? 2) Dale has 5,000 in dividend income so doesn't that exclude him or does the dividend income qualify as nontaxable inc like soc sec?

[shankysays]

@aspiringcpa2014, I think you just got a little confused by the (admittedly poor) wording of the question.

Grant is Jim's parent, not child. They could potentially claim him as a dependent if they provide over 1/2 of his support (which they do), but due to his income, he would file himself, instead. Grant got the 5,000 in dividend income, not Dale.

Dale is their child, and although he is over 19, he is a full-time college student and doesn't make more than the income amount, so he can be claimed.

BEC - 72, 82! ✓
FAR - 80! ✓
AUD - 70, 92! ✓
REG - 74, 78! ✓

Licensed CPA 5/2015

[Anonymous]

Which of the following promises is supported by legally sufficient consideration and will be enforceable?

Incorrect A.

A person's promise to pay a real estate agent $1,000 in return for the real estate agent's earlier act of not charging commission for selling the person's house

B.

A parent's promise to pay one child $500 because that child is not as wealthy as the child's sibling

C.

A promise to pay the police $250 to catch a thief

D.

A promise to pay a minor $500 to paint a garage

You answered A. The correct answer is D.

In order for a contract to be enforceable, consideration must be mutual. The $500 is the consideration from the homeowner and the painting of the garage is the consideration from the minor.

I thought contracts with minors were not enforceable?

[Anonymous]

yup thanks shanky.. I'm officially loosing it!

[leglock]

@aspiring

I specifically remeber working this question. I guess the correct answer is the best choice of all of them bc if the minor doesnt rescind it would b legally enforceable, as a contract with a minor is voidable not void.

Typical nonsensical cpa question

[rzrbkfaith]

@aspiringcpa

What leglock said is correct about D being the best choice, but you can also choose the correct answer by knowing what the wrong answers are (that is how I came to choose D).

A – You can't legally enforce a promise to pay for an act that had already been performed. The real estate agent had already chosen not to charge commission without consideration.

B – No consideration

C – You can't legally enforce a promise to pay for someone doing what they were already obligated to do. The policeman was already obligated to catch the thief because it was his job.

That leaves D. D is correct because a contract with a minor is legally enforceable; however the minor has more rights, in that he has the ability to disaffirm at any time while he's a minor and within a reasonable time after reaching the age of majority.

AUD - 99
BEC - 97
REG - 91
FAR - 1/8/16

[Evwy_Mom]

Can someone give me some insight in regards to the limitation on the DRD deduction? Specifically:

The DRD may be limited to 80% of Taxable Income before the DRD, except when the full DRD creates or increases a NOL.

So, is my thinking correct that when the DRD would create or increase a NOL it would be fully allowed (not limited to 80% of TI before DRD)? What is the logic behind this? I would think that it would be exactly the opposite, that it would be limited if it were going to cause or increase a NOL.

Can someone give me a logical explanation?

AUD = 85
FAR = 79
BEC = 79
REG = 65, 72, 75!

I AM DONE!!

[rzrbkfaith]

Becker puts it this way…

The DRD equals the LESSER of 70% (<20% owner) or 80% (20 to <80% owner) of dividends received or 70% or 80% of taxable income unless you are going to be a “LOSER.” You are considered to be a “LOSER' if the full DRD would create an NOL. In that case, you take the full DRD. Hope this helps!

AUD - 99
BEC - 97
REG - 91
FAR - 1/8/16

[time-wast3d]

@rzrbkfaith…thanks. yeah…I was kinda tempted to think on those lines for th basis…:)

Reg is seriously a mammoth…and sadly the ‘underscore/highlight this' person with bkr has drained any bit of motivation that I had left….neways.. I shall rant about this later…hehe. time to get my act together & study….:(((

[Evwy_Mom]

@rzrbkfaith Thanks, that really does help a lot. Could you clarify another point for me? What is the logic of allowing the bigger DRD deduction to a corporation that is already operating on the edge of a loss? Is it to help the company by reducing tax liability?

AUD = 85
FAR = 79
BEC = 79
REG = 65, 72, 75!

I AM DONE!!

[rzrbkfaith]

@Evwy_Mom – I honestly don't understand why the rule can't be uniform, but its not. I guess it really comes down to reducing the tax burden of the “loser.” Most companies don't go from having an NOL to having huge income the next year (again, that is most companies). So I guess in essence, its helping out the little guy or the struggling company. That is the only reason I could possibly see. Either that or its there just to make our lives miserable for the CPA exam… I think that is totally possible too. LOL

AUD - 99
BEC - 97
REG - 91
FAR - 1/8/16

[Evwy_Mom]

@rzrbkfaith – I think you've hit the nail on the head! lol

Thanks though, that was the only logical reason I could think of as well, but I didn't know if I was missing something. 🙂 Thanks so much!

AUD = 85
FAR = 79
BEC = 79
REG = 65, 72, 75!

I AM DONE!!

[yassy]

Which of the following types of conduct renders a contract voidable?

A. Mutual mistake as to facts forming the basis of the contract

Incorrect

B. Undue influence by a dominant party in a confidential relationship

C. Duress through physical compulsion

D. Duress through threats of a civil suit

You answered B. The correct answer is C.

Duress is a wrongful act that compels contractual agreement through fear. Although threats of a civil suit are not considered duress legally, physically threatening a person to do another's bidding is definitely duress and any such contract is illegal and can be voided.

—-

Am I missing something? Isn't physical duress void and undue influence voidable?

FAR 75 (8/21/13)
AUD 72 (10/29/13) 74 (2/12/14) 84! (04/01/14)
BEC 75 (11/27/13)
REG 72 (05/29/14) 74 (07/10/14) 86 and DONE! (10/02/14)

[Author]

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