Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

CPA Regulation R3 > CPA Reg R3 > Flashcards

CPA Reg R3 Flashcards

1
Q

When calculating capitalized expenditures is detailing a capitalized expense

A

No. it is part of repair and maintenance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What basis would a company received when another company gifted a personal asset to the gifting company basis or FMV

A

At company who gave the gift basis. However if FMV is lower the basis than use FMV.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

For inheritance of property how much is considered taxable

A

None. inheritance are not taxable.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

If a company has a accounting policy to expense tangible property up to $8000 under the de minimis rule ( under $5K) also it has applicable F/S. If it purchase 3 pieces of equipment at $4K each how much can it deduct in the current year

A

$12K the 3 pieces of equipment were purchase at $4k each and under the policy and de minimus rule of $5k. If it does not have an applicable F/S, the de minimus is $2500 so the company could not deduct no for the $4 equipment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

If a person stock basis is $40K and gift to son at FMV $30K. No gift tax is paid. son sales at $36K what is g/l

A

Zero. When gift is sold between Gifter basis and FMV, no g/l

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

If Co. has avg gross receipts of $8.5m during y1 and y3. During y4 pays $9.2K in repairs and imprvments on owned building with unadj. basis of $700K cost. Under safe harbor rule can $9.2K be deducted

A

yes. Considered small business under $10M, unadj basis under $1M. Can deduct between $10K-$14K or 2% of unadj basis $700K. Over Safe harbor zero.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

If a person stock basis is $40K and gift to son at FMV $30K. No gift tax is paid. son sales at 50K what is g/l

A

$10 gain over basis. 50 - 40 = 10. If sold at 10, it would be 10 sold - 40 son basis with 30 loss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

If purchase land with $40K cash , assumed mortgage $50K and had paid insurance @ 2K what is basis

A

$40 cash + 50K mortgage a+ $2insurance exp or cost incurred to purcahse = $92k

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is the basis for person inheriting property FMV or basis

A

FMV of death person

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are the some of the realize (not taxed) but are not recognized (taxed) for tax purposes

A 
Exclusion from tax: HIDE IT or WRAP
HIDE IT (GAINS)
Homeowner's Exclusion
Involuntary conversion (insurance beneficiary)
Divorce property settlement
Exchange of like-kind business real property (business) no BOOT
Installment sales
Treasury capital and stock
WRAP (LOSSES)
Wash sale losses
Related party losses and
Personal losses
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Company A enter into an like exchange ; building for Land. Company A gave up building with FMV of $350k, the orginal purchase was $300K.and Depr ex $80K. Company A received was at FMV $280K plus received cash $70K from other Company B.
Does the qualify as like-kind exchange:
what is the realized gain for Co. A:

A 
Does the qualify as like-kind exchange: Yes
what is the realized gain for Co. A: 
 what did we get
Cash (boot)            $70K
FMV land               $280:
                               $350K
CR: what did we give up
Buildg@ basis                $300K
 less Dep                          (80)
Net give up                      $220

Comp A realize(not taxed) : $350-220= $130

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Company A enter into an like exchange ; building for building. Company A gave up building with FMV of $350k, the orginal purchase was $300K.and Depr ex $80K. Building received was at FMV $280K plus received cash $70K from other Company B.
What is the recognized (taxed) for Comp A

A 
Recognized is Boot (cash) 
Does the qualify as like-kind exchange: Yes
what is the realized gain for Co. A: 
 what did we get
Cash (boot)            $70K
FMV land               $280:
                               $350K
CR: what did we give up
Buildg@ basis                $300K
 less Dep                          (80)
Net give up New basis      $220

Comp A realize(not taxed) : $350-220= $130
Recognized= $70K boot

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Company A enter into an like exchange ; building for building. Company A gave up building with FMV of $350k, the orginal purchase was $300K.and Depr ex $80K. Building received was at FMV $280K plus received cash $70K from other Company B.
What is the total basis in property and cash received fpr Company A

A 
What is the total basis in property and cash received fpr Company A
 what did we get
Cash (boot)            $70K
FMV land               $280:
                               $350K
CR: what did we give up
Buildg@ basis                $300K
 less Dep                          (80)
NBV                              $220

Def g/l: realize gain 130- boot rec’d 70= 60 def gain

New basis rec’d fmv 280- def gain 60+ def loss 0=
$220K new basis

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Company A enter into an like exchange ; building for building. Company A gave up building with FMV of $350k, the orginal purchase was $300K.and Depr ex $80K. Building received was at FMV $280K plus received cash $70K from other Company B.
what is the recognized gain fro Company B
What is Company basis in property received

A

No Cash or boot received = no recognized gain = 0

Co B gave land with FMV $280K +cash of $70K = $350K

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

A company has an like exchange their adj basis was $20,000; new property was $10,000 plus rec $3,000 what is the tax basis

A

This like like exchange result in a loss with boot. So I take the Adj basis $20 - boot $3 = tax basis $17K

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

When an taxpayer per stock on 12/15 for 100 shares at $15K; Purch 12/31 addition 100shs for $13K and sales on 1/3//y2 100shs for $13K that were purch on 12/15 what is the deduct loss and in what yr

A

No loss in year 1 because no sale. In Yr 2, this is a wash sale meaning purch another $13K stock within 30days before sale of 12/15 stock results in zero deduct loss for yr2.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

one requirement for like kind exchange it is simular assets and

A

must be real property not stocks or bonds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

When business property is damaged and business submits a claim, what amount should the involuntary loss from building be detrmine

A

by Basis (or fmv if lower than basis) + additional cost; i.e. clean up.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

If stock purchase are not within 30 days, are they considrer wash sales

A

No and result in capital loss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Co loss building due to fire. Original basis was $75K . Insurance proceeds was $195K, new building is $167K Co elects the minimum gain. What is the new basis

A

New basis= new bldg - gain not recognize

Insurance proceeds        195  
less orignal basis              75
=realized gain                  120
less Recognized gain
195-167 new building        28 
Gain not recogized        92 involuntary

Cost new 167
less not recogn 92
Basis new bldg 75

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

In like exchange: Gain when boot received:

In like exchange: What is the new basis:

A

FMV received 35 + boot cash 5 = 40 received
Less: Cost 30 - depr 5 = 25 NBV
Realized Gain 15
Recognized(lesser 15 of gain and boot 5)
Recognize gain 5. Realized deferred gain 10
New Basis:
FMV received 35- deferred gain 10+ Deferred loss 0 = 25 Basis

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

In like exchanges are losses recognize

A

No. the are only realized and deferred

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

In like exchange what is the realized gain when no boot

and what is the new basis

A

Gave away Cost 35 - depr 18 = 17 nbv
Got FMv 20 and no boot = 20fmv
Realized gain 3
Recognize lesser of gain 3 and 0 boot = 0 recognized
What is deferred gain realized
Deferred gain 3 - recognized 0 = 3 deferred
Basis: FMV rec 20 - def gain 3+ def loss 0 = 17 basis

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Like-kind exchange with realize loss

What is basis

A

Gave away Cost 35 - Accum dep 12 = 23 nbv
less got FMV 20 + no boot = 20
realize loss 3
Recognized g/l = 0 can not recognize loss
What is the deferred g/l= deferred loss 3 - loss recognize 0 = 3 def loss
New Basis: FMV 20+ def loss 3 - def gain 0 = 23 new basis

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Like -inkind exchange with boot received greater than gain realize
& what is new basis

A

Gave away Cost 35 - accum dep 18 = 17 nbv
got FMV 16.5 + 3.5 boot cash = 20
Realize gain = 3
Gain recognized: lessor of gain 3 and boot 3.5
Recognize 3
Def gain= realize 3 and recognized gain 3 = 0 deferred gain
What is new basis: FMV 16.5 + def loss 0 - def gain 0 = 16.5 new basis

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Like exchange: what is boot received less than gain realized

& what is new basis

A

Gave away cost 35-accum dep 18 = 17 nbv
got FMV 17.5 + 2.5 boot = 20
Realize gain 3
recognized gain lessor of realize 3 and boot 2.5= 2.5 recognized
what is deferred gain= realize gain 3 - recognize 2.5 = .5 def gain
New basis= FMV 17.5+def loss 0-def gain.5= 17 new basis.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

Like exchange what is realize gain when boot is paid

& what is new basis

A

Gave away cost 35 - accum dep 18 +cash 2 = 19nbv
got fmv 22+ no boot = 22
realize gain 3
Recognize= lessor of realize gain 3 or boot 0
amount recognize = 0
Deferred gain= realize 3- recognize 0 = def gain 3
Basis: FMV 22 + deferred loss 0 - def gain 3 = 19

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Like exchange is best on real property

A

yes. not partner interest, convertable bonds, pref stocks

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Like Exchange when non like exchange included as boot what is realize, recognized and new basis

A

Gave away cost 35 - accum dep 18 = 17 nbv
fmv 16.5 + 3.5 non like exchng non boot = 20
realize gain = 3 3
Recogn less of realize gain 3 and non like boot 3.5
recognize 3
New basis: NBv 17+gain recogn 3-boot 3.5= 16.5. Since it is non like use nbv 17 instead on fmv 16.5 getting.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Like Exchange when boot is assum liab of other party what is realize, recognized and new basis

A

Give away cost 35 - accu dep 18 = 17 nbv
getting fmv 22- 2 liab = 20
Amount realize gain 3
amount recognized is lesso
r of realize gain and boot received 0
amount recognized 0
n
New basis = nbv (since non boot) 17+ assumed liab2= 19 new basis

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Like exchange when other party assum liab as boot what is realize g/l, recogn g/l and new basis

A

Give away 35- accum depr 18 = 17 nbv
getting 17.5 + 2.5 liab off books 20
realize gain 3 3
g/l recognized lessor of 3 and 2.5
2.5 recognized
New basis 17 nbv+2.5 g recogn- 2.5 boot= 17

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Like exchange when you assum liab of other party and other party assum liab as boot what is realize g/l, recogn g/l and new basis

A

Cost 35 - accum dep 18 +1 liab assum = 18 nbv
fmv 17.5 +liab assum 3.5 boot = 21
amt realize 3
amount recogn diffe 3.5
- 1 =2.5
lessor of real gain and diffe 2.5
2.5
New basis= nbv 18+amt recog2.5- 3.5 boot 17

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

When provided services and payment in form of stock what wold your basis be person gave you stock or fmv when stock give to you

A

FMV

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

Does Boot consist of cash and debt cancellation

A

Yes in a inkind exchange

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Like exchange on rental home property when there is exchange of debt and cash boot

A

Rental home is considered real property inkind exchange nonrecognition treatment. When there debt relief from both parties, net it. and include with fmv,and boot on getting side.
Give NBV 70 ( liab of 60 par of net)
getting fmv 65 + cash boot 12 + net liab 8 ( 60-52) = 85
realized gain 15

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

If a person has sell two personal automobile. one get a loss and the other a gain. how is it capture on taxes

A

Loss 0 can not claim. Gain must be recognized.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

Are investment in US treasury Bonds a capital asset

A

Yes. Investment assets that are not inventory are capital assests

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

Would a property held by a individual taxpayer for over a year and sold at a gain be considered long-term capital gain

A

Yes. because property was held for over a year and sold for more than cost.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

What amount of a capital loss can an individual taxpayer offset to ordinary income

A

the limit is $3000 and overage is carryforward indefinitely.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

If a owner uses land to operate a parking and it has a shed on it for attendants, would any PPE be considered 1231 asset

A

Both would are PPE and depreciable assets used in a trade or business and used for more than one year.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

What are not consider capital assets

A

Property normally in inventory of held for sale to customers
Depreciable property and real estate use in a business
Accounts and notes receivable arising from sales or services in the taxpayers’ business
Copyrights, literacy, musical or artistic compositions
Treasure stock

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

Define capital assets

A

personal property held by taxpayer over one year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

What are 1250 and 1245 assets

A

1245 are tangible or personal property asset that are depreciated over shorter depreciated lives: MACRS
Includes: furnitures, fixtures , carpet, decorative light fixtures, electric cost that serve telephones and data outlets.
1250: real property that depreciable: building, walls, floors, stairs, elevators. roof, HVAC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

Are personal assets capital assets

A

Yes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

How are 1231 and ordinary gains recognized or sale of 1231 assets

A

The capture portion of depreciation is a ordinary income

the remainder is a 1231 gain.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

would government sold bonds by individual tax payer be considered a capital assets

A

Yes. capital gains are personal property assets held over 1 year

47
Q

For individual: multiple ST G/L and LT G/L how are the reported on tax returns

A

You add all ST together and LT together and net out. Which ever is dominate will be used to report. If ST sum greater than LT sum, use ST sum. at a 15% rate group.

48
Q

If a taxpayer sold Equipment for $200K that had an adj basis of $180K. Through date of sale, taxpayer had deducted $30 of depr. of that amt, $17K was in excess s/l dep. what amt of gain would be recaptured under 1245 gain

A

For excess depr, the 1250 rule apply for 1245.
Get the recapture: 200-180 20 gain. then the 1245 gain on excess depr is the lesser of excess 30 and 20 recapture
20 gain is 1245 gain

49
Q

Indv taxpayer purch furniture 4 yrs ago for $30000. he sold it for 37000. His accum depr was 20700. what is his l t capital gaint

A 
Cost 30000
Acccu 20700
NBV 9300
sold  37000
less nbv 9300
Realize gain 27700
recapture Ordinary income 20700
L t Cap Gain  7000
50
Q

Co sold bldg for $600K. received down payment of $120K and will get four additional payment of $120K.
Co. purch bild for $500K and depr exp $80K/ waht is Co. gain in year of sale under the installment method

A 
Under the installment calculate amount received in the year * gr %
received year 1              $120K
 * GP %
                     $600 SP
Pur 500
- accu de[  80
= nbv                   420
Gross Prof          180

GP %: 180/600 = 30%
gain report $36

51
Q 
Indv can deduct loss of $3K.   
        So if yr 1 loss was -5K,
                   yr 2                1
                  yr  3               4
How much gain yr3
A

Yr1 -5 can only use -3K use in y1. can carryforward -2 in year 2
Y2 1 - 2 = -1 y2
Y3 = 4 = gain 4 yr 4.

52
Q

Can you take full loss on 1231 assets for tax purposes

A

Yes

53
Q

If a taxpayer has a long term lease with a landlord and the landlord wants to sell the building and buyout taxpayer, is the buyout a long term capital gain

A

Yes. leasehold interest on apartment was more than year.

54
Q

Is Land use in business and held for more than 1 year a 1231 asset. And is inventory for resale a 1231 asset

A

Land used in business is a 1231 asset. Inventory for resale is not a 1231 assets.

55
Q

Are 1244 stock considered capital gain when sold or ordinary income

A

1244 are considered ordinary income.

56
Q

Can you deduct loss on the sale of personal residence and municipal bonds

A

No for loss sale on personal residence

Yes for loss on sale of muni bonds.

57
Q

How are short sales recorded

A

Short sales result in capital asset sales. The holding period is based on the date the short sale is executed. So if taxpayer purch stock on 12/15 y1 and executed sale on 3/15 yr 2 the would be a ST capital asset sale

58
Q

Taxpayer borrowed $45 to secure property with basis of $20K. Defult on loan. Foreclsorsure preceeding begin. bank sales for $35K as full settlemt of debt. What income should indv recognize on return.

A

Forclosure of proerty with non recourse, secured loand is treated as a sale of the property. this is not cancellation of debt.
$45 outstanding loan - basis 20 = g$25 gain recognized.

59
Q

Can a indv with a non business loss that has a small chance of collections be considered deduction of $3000

A

No. loss must be 100% worthless.

60
Q

Can related parties use the installment method

A

Yes.

61
Q

IRS Sections 267 defines related parties transaction as

A

Brother and Sister, Husband and wife; ancestors & lineal decendents; i.e. grandparents, son, daughter; child from a previous marriage. Not considered related: in-laws, & step-relationship, aunts, uncles, cusins,miece and nephews.

62
Q

from % point of view, shareholders and C corps are considered related when.

A

shareholder owns more than 50% of the corporation’s stock.

63
Q

Angie owns 60%, Mike owns 20%, and Tim owns 20% of Alpha Corp. Alpha corp owns 70% of Delta Corp. Peter owns 30% of Delta. What the ownership in delta and are there any related parties with Angies ownership

A

Angie has no relationship to the other parties except her interested in Alpha. Angies’s % owner in Delat: .6070%=42%; related party no (not more than 50%);
Peter is Angie brother: Angies % in delta 4 2angie.30 peter = 72%; related party yes; Mike is Angies husband and peter is mike’s brother; Angies % .60+.2070% = 56% Angies ownership; related party; yes
Mike and Tim are Angies Stepsblings: Angies% 42% no related party
Mike and tim are angies parents and peter is angies nephew. Angies % .60+.20+.2070% = 70%. related parties yes on the parents

64
Q

A corp sells an automobile to a shareholder for 4500. Corp adjusted basis was 12,000 and the fmv was 5000. what is the loss recognized

A

Zero. shareholders and considered related parties. Related parties can not tak lossed (WRAP)

65
Q

A father purchase stock from his son for 12000. his son’s cost basis was 16000. the father sell the stock for $18000. What is the father recognized gain

A

the son’s loss 12000-16000 - (4000) is not allowed due to related parties. Since father sold stock, his basis in 16000- 18000 rec’d on sale = 2000 recognized gain.

66
Q

Cost recovery deduction on depreciation is calculated through 3 way

A

3 ways through IBM

  1. Internal revenue Code Section 179
  2. Bonus Depreciation
  3. MACRS
67
Q

A taxpayer may be eligible to take one or more depr cost recovery deductions including:

A

Section 179
MACRS
and Bonus depreciation

68
Q

List order in which cost recovery depreciation is done

A

PPE- calulated section 179 dedcution.

less calculated basis after 179- bonus depreciation-calculation basis after bonus depreciation-calculated MACRS

69
Q

A company places $1,250,000 of 5 years MACRS property into services in the current year. Scenario 1: Co takes all 179 deduction
Scenario 2: Gilmore ops out of 179 deduction
5 years MACRS percentages: 20% yr 1, 32% yr 2, and 19.2% yr 3. 179 limit is $1,000,000
What are calculation for each scenario

A 
Yr 1
Senario 1:  Company will take the full $1,000,000 179 and 
1,250,000-1,000,000= 250,000
MACRS 250,000*20% = 50,000..  YR 1 total : 1,050,000
Y2 : 250,000*32% = $80,000
Yr 3 250,000*19.2% = 48,000
Senario 2 
No 179 take = 0
MACRS
Yr 1 = 1,250,000*20% 250,000
yr 2 = 1,250,000*32% = 400,000
yr 3 = 1,250,000*19.2% = 240,000
70
Q

When a taxpayer place more than 40%of its property into services in the last quarter of the taxable year the corp mus use what convention

A

Mid-quarter convention

71
Q

A Co. placed into services a office building costing $264,000 including land at 30,000 on Augst 1 yr 1. what is the deduction for yr 1:

A

Depreciation for nonrental property is 39years using midmonth conventon: 264,000- 30,000 land = 234,000/39 = 6000 per yr/12 = 500 per month.
500*5.5 (half month aug) = 2250

72
Q

MACRS after 1986 is salvage value ignore

A

yes.

73
Q

The process for half year conventions : for personal property placed into service or disposed halfway through the year is

A

one half the years depreciation is allowed in the year in which the property is placed into services, regardless of when property is placed into services during the year. same holds true with disposal.

74
Q

what are five year MACRS property 200% ddb

A

automobiles, , light trucks, computers, and copiers

75
Q

what are three year MACRS property 200% ddb

A

special tools for manufacturing plastics, fabrics, motor vehicles

76
Q

what are seven year MACRS property 200% ddb

A

office furnitures, fixtures, equipment

77
Q

what are ten year MACRS property 200% ddb

A

Vessel and water transportaion

78
Q

what are 15 year MACRS property 200% ddb

A

municipal sewage treatment plants

79
Q

what are 25 year MACRS property 200% ddb

A

municipal sewage treatment plants 25 yrs and older

80
Q

What are some of the intangible assets that can be amortized for tax deductions

A

customer list, trade names, patent, good will, covenants at 15years no convention

81
Q

Is land depreciable

A

No

82
Q

What is real property

A

Real property are building and land, homes and all items affixed to land

83
Q

What is personal property

A

Machines, furniture, clothes , automobiles anything not real property

84
Q

Half year convention on

A

personal property

85
Q

Mid month convention

A

real property. Half month taken when real property disposed

86
Q

what are the s/l depr for residental rental real property and nonresidential real property

A

residental rental real property 27.5 years

and nonresidential real property 39 years

87
Q

In year 4 Mom sold 50 shares of stock to son for 42000. she bought at 50000 8years ago. Son sold in year5 for 60000. how much gain will son recognize.

A

for related stock purchase and sale, son would use anything over basis at son fmzv basis less sales+ 50-60 = 10 recognized. under mom basis use mom basis less sales 42000-40000 = 2000 loss not deductible.
Anything in between no g/l.

88
Q

what is the beneficiary basis of property at decendents death

A

FMV

89
Q

When donor gift property to donee. what is donee new basis

A

It would be donors basis. However, if fmv lower than donor basis than use fmv

90
Q

real property uses what .convention

A

Mid month with mid month being the first month to sum up. for example purchase bugilding aug 23. what is depre aug 1/2 (1), sept (2), oct (3), nov (4), dec 5 . = 5.5 months

91
Q

becareful with MACRS depreciation with y3 placed in service questions

A

for example co. purch a machine in y3. what is the machine macrs for yr3. Use the period 1 macrs b/caus the machine purch yr 3 for periord 1 macrs

92
Q

From a tax perspective, which is the difference btwn realize and recognize

A

realize shows non tax; recognize tax

93
Q

if the Alternative valuation date (AVD)is used and beneficiary sold stock after the date, what is the basis to the beneficiary

A

If beneficiary sold stock after the AVD then the basis is the FMV on the date of AVD minus FMV at date of distribution. If sold before AVD, the beneficiary basis is the basis is the FMV on date of sale minus FMV of decedent at of distribution..

94
Q

Subjects that are true about decedents, fmv, basis, and gifts

A

If asset is acquire by gift and the fmv on date is lower than donors basis,the recipient basis can’t be determine until asset is sold
Basis of property acquired by gift is a carryover of of basis from donor

95
Q

Is the basis of property acquired by decendent always the FMV of date of death of decendent.

A

No. AVD can change the date.

96
Q

If Joe lived in his primary residence in for four years and sold in yr 3, does he get the sales of primary residence exclusion

A

Yes. he owned 2yrs out of a 5 yr period.

97
Q

If a co. loss a building with a adj. basis of $890K to a fire. The insurance proceeds were $950K, The new building purchase was $900K. What is the recognized gain an new basis

A

. Realized gain is $60K = 950 proceeds - 890 adj basis
Recognize $50K (boot) = $950K proceeds- $900 new building; deferred $10K from realized
New basis $890K = $900 fmv getting - deferred gain $10K.

98
Q

What is the recognized gain for a receiver when both parties asssum liab as boot in like kind transctions

A

you net the assumed liab.

99
Q

If installment sales were used and Yr2 sale 40- Yr 2COS = 10 gp. what is deferred gp

A

Deferred GP y2 = 10 gp/40 s = 25% gp%
10gp*25% = 2.5 deferred gp.

If y3 was S 50 - COS 25= 25 gp. 25/50 = 50% gp %.
25*50% = 12.5. Solve how much def gp yr3 = 12.5-2.5 yr 2 = 10 def gp yr 3.

100
Q

On 4/4/y4 If Rick purchase 100 shares @ $86 per shares = $8600 basis. On 2/8/y5 sold 50 shares @ $60 = $3000 and on 3/1/yr5 repurch 50shares at $64 = $3200. What is realize loss on y5 and recognized. what is the basis.
What is the amount of the 50 sharse repurch new basis

A

Amount loss realized= Purch on 2/8/yr 5 from 4/4/yr can be used to calc loss. 50shars are half of total purch. 8650= 4300
6050=3000
loss = 1300
Amount loss recognized = zero due to wash sale buy bak on 3/1/y5

50 shares basis : the $1300 realized is not deferred due wash sales.

Basis of 50shs 3200+def loss 1300-def gain 0 = 4500.

101
Q

if co. purch equipment in early part of yr for 20 and purch other in late yr 30. waht is convention

A

It is mid qt= if only tw pruch and last beats early by more 40% than mid qtr. 30/ (20/30) = 60%

102
Q

MACRs convention is mid year built in table for depreciation

A

Yes already build in for Depr exp

103
Q

MACRs convention is mid year built in table for sale

A

No. must take orginal cost * macrs % and year /half year

104
Q

Is Real Property eligible for 179 deduction

A

Yes.

105
Q

Is 179 deduction allowed for losses

A

No.

106
Q

Under 1231; 1245 Asset used in business, sales price greater than adj basis but not greater than original cost would all gain be 1245 recaptured.

A

Yes because all gain is accum dep = all gain is 1245

107
Q

On a 1250 (1231 real property used in business) how much of excess of straight line depreciation is considered ordinary

A

Build purch at 124K sold at 200 and had 14K accum dep of which 4 was excessive. 124-14 = 110 adj basis
200 sold - 110 adj basis = 90 gain on sale. Any accum of excessive is considered 1250 ordinary income; so the 4 is considered 1250 ordinary. Of the 14 depr, 10 would be considered unrecaptured.

108
Q

How do you determain recognized gain on 1250

A

the lessor of S-adj basis= gain to accum depr.

109
Q

How are multiple 1231 g/l posted

A

cost - accum depr = nbv. Step 2 SP - NBV = g/l
Gain: Gain - Recapture depr (ordinary) = 1231 gain.
For loss = ordinary DO NOT NET TO 1231 gain.

110
Q

What is 1245 ordinary gains

A

It is the less of accum depr and recognized gains

111
Q

John purch home on 10/15/y2,. One 6/10/yr he married Susan and she moved into the house. From Oct 15/y5 to Oct 15 yr 6 that lived else where and rented the home. they returned Oct 15, yr 6 and sold home Oct 15, y 7 for $855K what is the gain

A

Both meet time require (not necessary for spouse to be on deed) only one meet use require but only one meet the ownership requirement. There a gap in living so one year gap non qualified for deducted from $500K exclusion. 855-240 = 610 realized gain. 610*1y/5y =122 recognized gain.

112
Q

What is the calc for 1231 g/l and 1245 recapture.

Cost Accu dep Adj basis = g/l 1245 recap 1231 g/l

A

Cost- Accu dep= Adj basis - SP = g/l 1245 recap 1231 ordinary
5000-3000= 2000- 2300 = 300 300 0
1200 - 500= 700 - 2000 = 1300 500 800
3800- 1800= 2000- 1500 = (500) 0 (500)

Total 800 300

113
Q

What is tax treatment of net losses in excess of the at-risk amount for an activity

A

Any losses in excesses of the at-risk rare suspended (deferred) and carryforward indefinetly against future net income.

CPA Regulation R3 (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions