1. Seymour Thomas named his wife, Penelope, the beneficiary of a $100,000 (face amount) insurance policy on his life. The policy provided that upon his death, the proceeds would be paid to Penelope with interest over her present life expectancy, which was calculated at 25 years. Seymour died during 2009 and Penelope received a payment of $5,200 from the insurance company. What amount should she include in her gross income for 2009?

A: $ 200
B: $1,200
C: $4,200
D: $5,200

2. David Hetnar is covered by a $90,000 group-term life insurance policy of which his wife is the beneficiary. Hetnar’s employer pays the entire cost of the policy, for which the uniform annual premium is $1 per $1,000 of coverage. How much of this premium is taxable to Hetnar?

A: $0
B: $40
C: $50
D: $90

3. Jon Moseley, who retired on October 31, 2008, receives a monthly pension benefit of $900 payable for life. His life expectancy at the date of retirement is 20 years. The first payment was received on November 15, 2008. During his years of employment, Moseley contributed $24,000 to the cost of his company’s pension plan. How much of the pension amounts received may Moseley exclude from taxable income for the years 2008, 2009, and 2010?

A: $0 in 2008, $0 in 2009, and $0 in 2010.
B: $1,800 in 2008, $10,800 in 2009, and $10,800 in 2010.
C: $1,800 in 2008, $1,800 in 2009, and $1,800 in 2010.
D: $200 in 2008, $1,200 in 2009, and $1,200 in 2010.

4. Ryan Landerholm, an employee of Wendler Corporation, died on June 30, 2009. During July, Wendler made employee death payments (which do not represent the proceeds of life insurance) of $20,000 to his widow, and $20,000 to his 15-year-old son. What amounts should be included in gross income by the widow and son in their respective tax returns for 2009?

A: $15,000 for the widow, $20,000 for the son.
B: $17,500 for the widow, $17,500 for the son.
C: $20,000 for the widow, $20,000 for the son.
D: $15,000 for the widow, $15,000 for the son.

5. During the current year Jay Walker was hit by a reckless driver and sustained serious injuries. Walker sued the driver and received the following payments during the year:
   Damages for personal physical injury $ 80,000
   Punitive damages 100,000
   The amount to be included in Walker’s gross income for the current year should be

A: $0
B: $ 80,000
C: $100,000
D: $180,000

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I got a nice little packet in the mail last Saturday containing my four passing scores and their respective dates along with info about getting certified/licensed etc. The packet was from my state board of accountancy, but the scoring letter was from NASBA. NASBA apparently sends your state BOA the letter with your scores and then your state BOA sends it onto you in their “welcome to the club – sort of” packet.

After I got my passing score online for FAR, I bought the ethics course from the AICPA, passed it, and submitted my paperwork to my state BOA before ever receiving any *official* confirmation from my state BOA. My state BOA had my certificate paperwork ($25 check for the certificate + a signed oath that I believe in the US Constitution and witnessed by another CPA who has to write down their certificate # along with their signature) before they had received anything official from NASBA.

It only took a day or so to process and I got a letter on Monday this week congratulating me and recognizing me as a CPA – sort of. I am officially a Certified Public Accountant in my state and have my certificate number (the board needs to convene and sign the actual certificate before they mail it to me). However, for the purposes of putting it on a business card or signing a tax return as Jeff, CPA – I must get licensed. I have the work requirement fulfilled – which is to work as an accountant in some capacity (tax, compilations, audit, etc) for one year and have a CPA sign off that I have done this. I’m not going to use my old boss…I’ve moved since then. I’ll use an internal auditor that I used to work with at a different job.

I took the plunge yesterday and added “, CPA” to my work e-mail signature line. This was a weird moment. First of all – it felt surreal. I stared at it. ‘Can this be right?’ I pondered. After deciding that since my state BOA declared me a CPA (with the caveat that I can’t use it in public yet) – then I *am* a CPA and could represent myself as such internally at work. My work e-mails rarely leave the building, so no worries there.

In honor of adding CPA to my e-mail signature at work, I thought of a reason to e-mail the VP of my division That felt good.

If you’re still going through the exam process – you’ll be there soon enough.

Thanks for reading.

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Note – if you work in public accounting or plan on holding yourself out to the public as a CPA, then this information doesn’t apply to you – you need to meet your state’s CPA Exam requirements. This post will benefit those who are short on the 150 hour rule, but are only going to use the CPA designation as a “credential” within the private sector. Make sure you have full understanding on your respective state’s rules on holding yourself out as a Certified Public Accountant.

I have a friend who resides and works in a state that requires candidates to meet the 150 hour rule before they can even sit for the CPA Exam. He’s 24 and works in SEC Reporting for a Fortune 500 company. After graduation, he sat for and passed the Certified Internal Auditor (CIA) Exam. He didn’t have 150 hours and his current work load prohibited him from starting on an MBA or other graduate program which would give him his 150 hours, so he sat for and passed the Certified Management Accountant Exam (CMA).

Unbeknown to him previously (and me as well) – the State of Colorado allows out of state candidates who neither work in nor live in Colorado to be licensed as Colorado CPAs. My friend sent in his application, was approved…and is sitting for BEC this week. If he ever wants reciprocity, he will need the 150 hours, but his boss just wants him to pass the Exam – not be eligible to sign tax returns or audit reports.

Most people who work in the private sector let their licenses lapse anyway…the important thing is…did you pass the Exam? If the answer is yes – that’s all that they care about.

If you’re considering this, be sure to do your due diligence and find out if this is right for you.

The beautiful thing about Prometric offering a uniform exam is that someone in New York can theoretically sit for an exam in New York as a Colorado candidate.

Read more about Colorado’s CPA Exam requirements.

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Many candidates like myself who have spent hundreds of hours studying over the course of several months (or years) and finally passing don’t really know what to do with themselves or their newly found free time. Here are five suggestions to help pass the time:

5. Peruse the internet and treat yourself to an item costing around $350…which is the cost of the new NTS you’re used to paying for plus two rescheduling fees. Your bank account is used to not having it anyway.

4. Now that you have time do to such things, pour a cup of coffee and reflect upon the irony of the AICPA testing the concepts of timeliness and real time data processing.

3. While you don’t really want to do so, grab your Regulation book and spend a few hours reviewing it so that you can answer your relatives’ tax questions over Christmas. The prospect of free CPA advice will be enticing to them and this will be the last Christmas you remember anything about taxes.

2. Put off applying for your license until after you file your tax return. This is the last tax year that you can be liberal with your tax deductions without the professional consequences of doing so.

note – criminal charges may still apply. Consult your local CPA.

(…this is tongue-in-cheek for everyone out there with the IRS Tipline on speed dial…)

1. You’re going to need a new excuse for skipping family reunions and other gatherings you would rather miss. “Sorry, I have my exam in two weeks and I need to study” will not cut it anymore. It’s time to think of a new one.

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NASBA issued a draft in June titled “Education and Licensure Requirements for Certified Public Accountants: A Discussion Regarding Degreed Candidates Sitting for the Uniform CPA Examination with a Minimum of 120 Credit Hours (120-Hour Candidate) and Becoming Eligible for Licensure with a Minimum of 150 Credit Hours (150-Hour Candidate)”.

They stress that the discussion isn’t about whether the 150 hour rule for licensing should stick, but rather is the 150 hour rule for sitting for the CPA Exam still relevant?

According to the draft, the answer is NO.

In the summary, it states:

“We have found no evidence of detriment to the public interest in those states allowing candidates to sit for the CPA examination at less than 150 hours of education and later fulfilling the 150 hours.”

So…let me get this straight:

A candidate meets the “minimum requirements for serving the public interest” after 1. passing the Uniform CPA Exam and 2. passing the ethics exam. The draft is saying that if you have 120 hours under your belt, you should be able to sit for the exam, pass it, pass the ethics exam, but only AFTER you take some classes to reach that arbitrary number of 150 hours (you take a business law class at a juco…grab a public speaking class or two, yada yada), THEN you are eligible for getting a license and are ready to go out in the world and protect the public interest?

It seems to me that if you meet the education requirements (120 hours in some states) to sit for the exam, have the wherewithal to PASS the exam, then forget the stupid classes where you’ll likely find yourself surrounded by undergrads chatting about “oh my gosh! I got so drunk last night!” and txtng their friends in some business law class (by the way – you already passed BEC and REG).

The 150 hour rule is pointless. Why not make it 200 hours? 250? Oh I know why – when it comes to protecting the public, according to NASBA the additional hours do not equip you to better serve the public interest. If NASBA is correct, then requiring the extra 30 hours when the public is not tangibly better off because they are required violates one of the tenets of the auditing and attestation profession: Cost vs. Benefit.

In a way, they are saying “passing the Uniform CPA Exam isn’t good enough to get a CPA license – it requires 30 additional hours of non-uniform, arbitrary college courses that you can take at a JUCO. Only THEN will you meet the minimum requirements to serve the public interest.”

Bottom line: If 120 hours is good enough to sit and pass the exam, then 120 hours is good enough to get a license and start serving the public interest.

Link: NASBA Draft

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