REG Study Group Q2 2015 - Page 118

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    Topic
  • #192517
    jeff
    Keymaster

    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
Viewing 15 replies - 1,756 through 1,770 (of 3,544 total)
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    Replies
  • #678981
    Anonymous
    Inactive

    cpa8488

    I just don't see how any other answer in partnership question could make any sense which made me suspicious that I am missing some important concept. Second-guessing is the worst

    #678982

    Hi all I'm using both Another 71's MCQ and the NINJA review notes. I can't tell what part of the review notes relates to the “Federal Tax Process, Procedures, Accounting” in the MCQ's. Does anyone here know? I scored the lowest on that part and I want to re-write those notes before I go back to answer MCQ's.

    Thanks!

    AUD - NINJA in Training
    BEC - 77
    FAR - NINJA in Training
    REG - 77
    Double-entry Deviant

    REG: 5/30/15 - 77
    FAR: TBD
    BEC: 8/31/15 - 70, 73, 1/8/16 - 77
    AUD: 6/1/16- 73, 8/2/16

    #678983
    Anonymous
    Inactive

    @anjanja

    never second guess. Go with your gut 9/10 your right the first time! trust me I do the same thing!

    @jstay just did the first 5 SIMs in R1 not bad at all. Definitely understanding the concepts helps and I counted 61 tax SIMs in Becker. So 4 a day I should be good. If I'm feeling it I might do 5 a day and finish all 74 Becker SIMs lol. Were passing this time around DAMN IT!

    #678984
    Anonymous
    Inactive

    Lincoln Corp., a calendar-year C corporation, made a nonliquidating cash distribution of $1.5 million to its shareholders with respect to its stock. At that time, Lincoln's current and accumulated earnings and profits totaled $825,000 and its total paid-in capital for tax purposes was $10 million. Lincoln had no corporate shareholders. Which of the following statements is (are) correct regarding Lincoln's cash distribution?

    The distribution was taxable as $1.5 million in ordinary income to its shareholders.

    The distribution reduced its shareholders' adjusted bases in Lincoln stock by $675,000.

    A.

    I only

    B.

    II only

    C.

    Both I and II

    D.

    Neither I nor II

    Correct answer B. Can someone explain why? I thought D because $1.5 distribution would be considered Portfolio (dividend) income, so that gets rid of answer A.

    And then the since it had both 825,000 as Current E&P and Acc E&P were 825,000 + 825,000 = 1.65M, which would mean that it all was dividend income and all taxable, therefore not reducing basis.

    #678985
    Anonymous
    Inactive

    they likely mean that current and retained earnings totaled 825, not each is 825, that's how I understand it

    #678986
    jstay
    Participant

    having a brain far…this is how that transaction would be taxed, right?

    825 – dividend income

    675 – reduce basis

    anything excess is capital gains

    nothing would be taxed as ordinary income right?

    is there any situation that would be taxed as ordinary income?

    #678987
    Anonymous
    Inactive

    i don't think so, it should be taxed as dividends

    #678988
    Anonymous
    Inactive

    Under a 150,000 insurance policy on her deceased fathers life, May green is to receive 12,000 per year for 15 years. Of the 12,000 received in the current year, the amount subject to income tax is:

    A. 0

    B. 12,000

    C. 1,000

    D. 2,000

    #678989
    Anonymous
    Inactive

    d?

    #678990
    Anonymous
    Inactive

    A is incorrect it's also what I assumed.

    Amount of death benefits received 12,000

    Less: return of principle (150,000/15yrs) (10,000)

    Taxable interest. =2,000

    Can someone explain this? I thought it would be 0 I'm not sure why I assumed this.

    #678991
    Anonymous
    Inactive

    life insurance proceeds are not taxable, but the interest is

    #678992
    Anonymous
    Inactive

    Thank you that makes sense! So if she would've got the lump sum of 150,000 it would be tax free?

    #678993
    Anonymous
    Inactive

    yeah pretty sure. Unless the policy was held as investment. Or I think if it's included in estate (if there is no beneficiary named?). Also portion of premiums paid by the employer is taxed if the policy is > 50K. Something like that

    I have also seen a couple of questions where business partners were insuring each other lives but it didn't make sense to me so I didn't want to spend time on thinking about it

    #678994
    Anonymous
    Inactive

    @aninja okay thanks, sometimes I have problems comprehending what they are asking me. I feel like that is half the challange on the exam.

    Another question:

    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.

    D.

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

    I thought it was D because of the weasel rule. Or am I not understanding the weasel rule correctly? (correct answer was C)

    #678995
    Anonymous
    Inactive

    Having a brain fart!

    Married couple with no dependents. One spouse died. That year is MFJ. The year after death is single correct?

Viewing 15 replies - 1,756 through 1,770 (of 3,544 total)
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