REG Study Group Q1 2017
December 22, 2016 at 2:04 am #1398476
Hi all –
New here. REG will be my first exam. Been studying hard the last 3 weeks putting in about 5 hours a day on weekdays, and I pick a weekend day for 8. I'm using Roger & Ninja MCQ. I can't schedule my exam until CA decides to process my application so I am in a holding pattern in that regard. Open to any tips or tricks as I don't know many who have gone through the process in the last 10 years. Right now I spend about an hour each day going over everything I have already reviewed before I start on a new section. The MCQs are becoming easier, but I am super nervous as this is my first test. Hoping to knock out at least REG and BEC before the cutoff.
Anyway, glad to be apart of this community. Best of luck to everyone this quarter.December 22, 2016 at 6:46 am #1398491
heliosmusicParticipantDecember 22, 2016 at 7:03 am #1398497
Wiley focus notes.
I think the Wiley focus notes are great. I used the Becker book/videos/flashcards. I know its all the same information but some times looking a the info organized a little different helps the topic stick. I try to stay away from the mnemonics but if you like them Wiliey has a few clever ones especially for business law.December 22, 2016 at 7:21 am #1398500
@financelady- How many pages are the Wiley notes? I was considering purchasing them, but can't find many reviews on here to see if it's worth it.December 22, 2016 at 7:28 am #1398506
it's 200 “FLASH CARDS” so maybe about 30 pages. I have a few pages scanned I can email them to you if you like to see. = )
Ohh DO NOT get the Kindle/Electronic version it SUCKS just stick w the paper copy.December 22, 2016 at 7:39 am #1398513December 22, 2016 at 8:07 am #1398519
@teal thanks! Wow the forum got active after I went to bed! Must be some west coast people! Or night owls–1 of the 2 lol.December 22, 2016 at 9:28 am #1398545
Hows everybody dealing with studying and the holiday this weekend? Hopefully we can all take a little break and enjoy some quality time with our families!December 22, 2016 at 9:36 am #1398554
@jmg I agree, ratchet back your studying and enjoy your holidays! I plan on brushing through a little but I won't sacrifice time with my family.December 22, 2016 at 10:30 am #1398600
@dtatham10 same here, and I'm definitely going to treat myself to some nice craft beer this weekend!
Side note, this ones got me a little confused:
Parent company X and subsidiary company Y file a calendar-year consolidated federal income tax return. Company X reported a $120,000 tax loss, which included a $10,000 dividend from Y. Company Y reported $140,000 of taxable income, which included $30,000 of dividends received from less than 20%-owned stock investments. Neither company took into account any applicable dividends-received deduction. What is the group's consolidated tax loss for the year?
Incorrect A. $(1,000)
So the 10K dividend from Y to X is eliminated from income to X, but still deducted from Y's income?December 22, 2016 at 10:35 am #1398605
Is the answer C?
The intercompany dividend is 100% eliminated so the $120k loss becomes $130K loss.
Company Y's dividend from a less then 20% is included but you still need the DRD. So you need to lower their income by $21k (30k * 70%). Company Y now has income of $119K
$130K loss netted with $119K income brings you to an $11k loss
**EDIT, I understand what you're asking now…hmm I didn't look that far into it. Now I'm kind of wondering why it's not as well! lol**December 22, 2016 at 10:52 am #1398626
@JMG- I'm going to try and get some studying done in the morning on Christmas Eve and Christmas Day. If I don't, it's not the end of the world. I stayed home on Thanksgiving because my exam was a couple days later, but I plan on fully enjoying my son's first Christmas!
I'll be enjoying some craft IPA's as well 🙂December 22, 2016 at 11:32 am #1398644
@dtatham10 yeah the answer is C, I think I got it now. I didn't take into account that the elimination of the dividend increased the loss for X Corp.December 22, 2016 at 1:30 pm #1398747December 22, 2016 at 1:39 pm #1398756
esenthilParticipantDecember 22, 2016 at 1:42 pm #1398761
So I've been working through Becker flashcards and am trying to “trim the fat” and eliminate all the cards I either know or don't find necessary. There are quite a few in chapter 2 over Credits. I'm not too up on the credits besides what's a refundable credit and some other small misc items. Do you guys think its necessary to memorize all the minor details in credits? Based on my experience I would say no lolDecember 22, 2016 at 1:43 pm #1398764
@jmg – Yeah the answer is C. But about your question. If X and Y are filling a consolidated statement, I don;t think the questions gives us that much detail. We don't know for sure that the taxable income of Y of $140 includes the $10K dividends. At least that is from reading the problem a few times.December 22, 2016 at 2:11 pm #1398771
@dtatham10 – I think know which are f=refundable and which are not and the major issues with them should suffice.December 22, 2016 at 2:21 pm #1398777December 22, 2016 at 2:59 pm #1398809
Speaking of DRD, I haven't cycled back through that material. But there is some rule. I believe you cannot take a DRD if it causes you to go from a profit to a loss–am I making this up?
JMG, what's not clicking? I'm trying to figure out how I can explain it better. If you have a loss and received dividend income you would reduce that loss by the dividend. If that dividend is eliminated then you are back to the original loss amount.December 22, 2016 at 3:28 pm #1398833
@dtatham10- Not sure if this is what you're referring to, but I just had this question come up. In this situation you're allowed to take the full DRD as opposed to using the taxable income limitation. Sorry if the formatting is a little messed up.
During 2016, Sea Corporation reported gross income from operations of $100,000 and operating expenses of $150,000. Sea Corporation also received dividend income of $90,000 from a domestic corporation in which Sea is a 20% shareholder. What is the amount of Sea Corporation’s net operating loss?
Answer (D) is correct.
Sec. 172(c) defines a net operating loss as the excess of deductions over gross income, with certain modifications. One modification is that the dividends-received deduction is computed without regard to the 80% of taxable income limitation (i.e., $40,000 × 80% = $32,000 deduction limit) in Sec. 246(b); therefore, the deduction is the full amount of $72,000. Thus, Sea’s NOL is $32,000 as computed below.
Gross income from operations
Less: Operating expenses
Less: Dividends-received deduction
(80% × $90,000)
Net operating loss
$ (32,000)December 22, 2016 at 3:30 pm #1398837
@dtatham10 you're thinking of the exception to the taxable income limitation rule for DRD if it results in a NOL.
For that problem I think I'm just having a hard time with the wording, because it says the dividend was “included” in the loss. So just explain to me how we get from (120K) to (130K) with the dividend being eliminated.December 22, 2016 at 3:47 pm #1398857
Nevermind, I just answered my own question lolDecember 22, 2016 at 3:51 pm #1398860
@ JMG there are 3 companies in the question. Maybe thats where your lost?
1.Parent X – Owns 100% of Sub Y.
2.Sub Y owns 20% of some other company as a stock investment.
the question tells you that DRD is not calculated in NI for either company so DRD needs to be deducted.
1. Parent X elimated 100% of Sub Y Dividends. SO NI 120 less 10k DRD = 130K for Parent
2. Sub Y owns 20% of stock investment = 70% DRD. 30k divd x 70% = 21,000 elimination allowance. NI = 140 – 21k = 119 for Sub
11k Consolidated NI
The Question AGAIN:
Parent company X and subsidiary company Y file a calendar-year consolidated federal income tax return. Company X reported a $120,000 tax loss, which included a $10,000 dividend from Y. Company Y reported $140,000 of taxable income, which included $30,000 of dividends received from less than 20%-owned stock investments. Neither company took into account any applicable dividends-received deduction. What is the group’s consolidated tax loss for the year?
Hope that Helps = )December 22, 2016 at 4:00 pm #1398863
Ok now im lost on the DRD %. does anyone remember them from FAR?
Owns = Eliminated
less than 20% – 80%?
20% – 80% = 70% ?
Over 80% = 100%
I thought the max elimination was 70% but at @re2pect question it says 80%.December 22, 2016 at 4:20 pm #1398893
@financelady thanks for the help, my brain fart was telling me “eliminated” = zero, instead of eliminated = (10K) so that's where I was confused.December 22, 2016 at 4:20 pm #1398896
@jmg – the problem is meant to trick your math it is a loss of 120 which includes the 10 dividend. If we take out the dividend it will look like this: -120 – 10 = -130 that netted against the 140 – 21 = 119 which ends up at 119 – 130 = -11
less than 20% -> 70% DRD
20-80% -> 80% DRD
80% and more -> 100% DRD meaning no dividend income from affiliated companies
Not to confuse with GAAP which only requires 50% for consolidation.
Hope this helps.December 22, 2016 at 4:23 pm #1398899December 22, 2016 at 4:35 pm #1398912
THANKS @aatoural I knew there was something wrong.. Starts at 70% and goes up to 100% !December 22, 2016 at 4:42 pm #1398918
DRD = lesser of:
– 70-80% dividends received
– 70-80% taxable income (w/out DRD, NOL deduction, cap loss carryback, or DPA deduction)
Taxable income limitation does not apply if the result of the DRD is a NOL
There's a really good example of this in the book, wish I could post it up here.
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