Becker REG Memory Mnemonics

R1 - Social Security INCLUDED

Lesser of 50% or 85% of Social Security OR provisional income amount above threshold (% and threshold levels vary with provisional income); Where MAGI = AGI + Tax-Exempt Interest + Social Security So basically 50% or 85% of it is included, or it could be less, based on provisional income and threshold.

R5 - 1934 Antifraud Rule 10b-5

MAIDS M - Material A - Actual reliance I - Inducement D - Damages S - Scienter

R6 - Statute of Frauds

MY LEGS (Peter Olinto) M - Marriage Y - Year L - Land E - Executors G - Goods S - Surety

R5 - Tax Ethics

Marketed Opinion Evasion = Bad

R2 - Keogh Plan for Self-Employed

Max. Deduction = Lesser of: $53,000, or 25% net Keogh earnings Max. Addition = Lesser of: $53,000, or 100% net Koegh earnings Shortcut: 20% self-employment income (after 1/2 SE tax deduction) = 25% Keogh earnings limitation

R4 - Estate Tax - Medical Expenses

Medical Expenses paid on behalf of decedent over one year after death, can still be deducted from Gross Estate, but cannot be deducted on the Decedent's Final Income Tax Return.

R2 - Adoption Tax Credit

NOT Medical Expenses

R4 - Estate and Trust Income Tax Exemptions

No standard deduction Estate - $600 Simple - $300 Complex - $100

R3 - Section 1244 Small Business Stock

Noncorporate shareholder $50,000 (MFJ $100,000) ordinary loss treatment when stock becomes worthless No Phase-Out Stock held for more than five years, exclude 50% of gain on sale.

R1 - Business Income on Schedule C

Nondeductible Expenses: 1. Salaries paid to sole proprietor - Considered a draw. 2. State and local tax expense 3. Health Insurance of sole proprietor 4. Charitable contributions of sole proprietorship 5. Personal interest expense of sole proprietorship 6. Self-Employment Payroll Taxes (can deduct half on 1040)

R3 - C Corp. NonLiquidating vs. Liquidating Distribution

Nonliquidating - Only recognize gain to the extent that cash exceeds basis - Watch out: Basis in assets received cannot exceed basis in stock Liquidating - Recognize gain to the extent that FMV of assets received exceeds basis -Watch out: If FMV of assets is less than basis, have to zero out basis by allocating amongst assets.

R2 - Retirement Savings (IRA) Credit

Nonrefundable Calculate as a percentage of first $2,000 contributed Goes 50%-20%-10%-0% at $30,500 ($61,000 MFJ).

R3 - C Corp. Contribution - Basis of Common Stock

Note: Contribution is taxable if 80% control test is not met Adj. Basis of Property transferred + FMV Services + Gain Recognized by shareholder - Cash received - Liabilities assumed by C Corp. - FMV of nonmoney boot received = Basis of Common Stock

R6 - Irrevocable Offers

OUM (oummmmm irrevocableee) O - Option U - Unilateral M - Merchant

R2 - Adjustments/Deductions - Nondeductible Moving Expenses

THEM ("Moving? you can't deduct THEM") T - Temporary H - House hunting E - Expense breaking lease M - Meals No deduction for temporary living, but travel and lodging (hotel room) are deductible. Reduce deduction by any reimbursement not included on W-2.

R1 - Series EE Bonds

Tax-Exempt Interest when: 1. Used to pay for higher education 2. Sole or joint (spouse) owner 3. Over age 24 4. After 1989

R1 - Nontaxable Fringe Benefits

Tax-Free Fringe Benefits, not included on 1040: 1. Life Insurance Proceeds 2. Health Insurance Premiums 3. De Minimus 4. Meals and Lodging 5. Employer payment of Educational Expenses 6. Qualified Tuition Reductions 7. Qualified Employee Discounts 8. Contributions to Benefit/Retirement Plans (taxed when benefit received) 9. FSA's

R5 - CPA Legal Liability - Liability for Negligence

The minority of states are narrower.

R1 - Uniform Capitalization Rules for Inventory

Threshold: $10 million Real Property or Tangible Personal Property produced for use in the business, or produced/acquired for resale

R2 - IRS Reorganization Categories

Type A - Merger/Consolidation Type B - Stock for Stock Type C - Stock for Assets Type D - Divide Corporation Type E - Recap. Type F - Change in Entity/Form

R1 - Rental Income goes on Schedule E (Passive Activity)

Vacation/Rental Homes 15 Day Threshold

R7 - Bankruptcy Exceptions to Discharge

WAFTED W - Willful A - Alimony F - Fraud T - Taxes E - Embezzlement D - Debts Undisclosed In addition to this: FOLS F - Fines O - Open-ended L - Luxury S - Student Loans General Negligence is not included in this list of exceptions to discharge.

R4 - Nondeductible Losses

WRaP W - Wash R - Related and P - Personal

R3 - C Corp. Property Dividend

Watch out for Current E&P effect of distributing property where FMV > Adj. Basis. C Corp. must recognize a gain on distribution (as if sold), thus increasing Current E&P, increasing the amount taxable as a Dividend (no reduction of shareholder's basis)

R3 - S Corp. Built-in Gains Tax

When C Corp. becomes and S Corp., and there is built-in gain on appreciated assets. Gain is taxed to the S Corp. when asset sold ***Very unusual because S Corps. are always taxed as a flow-through entity. There is never a tax on the S Corp. itself.

R1 - Married Filing Separately

You may only claim an exemption for spouse if: 1. Spouse has no gross income 2. Was not claimed as dependent by anyone else

R7 - Bankruptcy Means Test for Ch.7 - Otherwise you get Ch. 13

[(Avg. Mo. Inc.) - (Allowed Mo. Exp.)] * 60 = Means Under $7,475 - Ch. 7 Permitted "no abuse" $7,475 - $12,475 - Ch. 7 Permitted only if amount <25% of non-priority unsecured claims owed by debtor Over $12,475 - Abuse of Ch.7, Ch. 13 Permitted

R5 - SEC 1993 Act, Transaction Exemptions

1. Casual Sales 2. Exchanges with Existing Holders - No Commission 3. Corporate Reorganization - Government Approved 4. Intrastate Sales - Blue Sky Laws

R4 - Exemptions (unlimited) from Gross Estate

1. Charity 2. Spouse ("Marital Deduction") (Engaged not = Married) 3. Direct Educational 4. Direct Medical

R3 - S Corp. Termination

1. One class of stock 2. 100 or fewer shareholders 3. Ineligible shareholders (C Corp., Partnerships) 4. With residual C Corp. income at end of each year, cannot have >25% G.R. from passive income for three years 5. Voluntary revocation Cannot re-elect for 5 years

R5 - SEC 1933 Act - Registration Statement

1. Prospectus 2. Information about the Securities Being Issued (Audited F/S, Details) Shelf Registrations 1. Not first time issuer (1934) 2. Continuously Updated

R3 - Accrual Basis Required

1. Taxpayers with annual G.R. > $1,000,000 2. C Corps., Trusts w/ UBI, P-Ships w/ C Corp. partner if any of these have G.R. > $5,000,000 3. Inventory 4. Tax Shelters 5. Farming

R2 - Itemized Deductions

10% AGI - Medical Expenses (7.5% before 2014) 10% AGI - Casualty and Theft (plus $100 each) 2% AGI - Misc. Itemized Deductions Investment Interest is deductible only to the extent of Net Investment Income (= Invest. Income - Invest. Exp.)

R7 - Ch. 11 Reorganization Plan Acceptance

2/3 Creditors (amount) 1/2 Creditors (number) 2/3 Shareholders (amount) After acceptance, then the court will Confirm the plan. Creditor's Committee - Seven largest unsecured. $2.3M Threshold

R4 - MACRS Categories

3 - Racehorses and Special Tools 5 - Cars, Light Trucks, Computers, Office Supplies 7 - Furniture, Fixtures, Equipment 3 - basically nothing 5 - most things 7- big things

R3 - S Corp. Election

3/15

R5 - SEC 1934 Act, other individuals required to report

5% TIP 5% - 5%+ Owners T - Tender I - Insiders P - Proxy

R2 - Charitable Contributions limitations

50% AGI 30% Long-term Capital Gain Property deducted at FMV 20% Long-term Capital Gain Property to Nonoperating Private foundation

R1 - Traditional IRA Distributions are included

59 1/2 70 1/2 10% Penalty Tax Exceptions: HIM DEAD H - Home ($10,000) I - Insurance M - Medical D - Disability E - Education And D - Death

R4 - Partnership Contribution

COPS LA C - Contribution O - Other P - Partner's S - Share of L - Liabilities A - Assumed

R4 - Estate and Trust DNI

Estate/Trust Gross Income (incl. Cap. Gains) (Estate/Trust Deductions) Adjusted Total Income Net Tax-Exempt Interest (Capital Gains) DNI Tax Exempt Income is included in DNI.

R5 - SEC 1993 Act Section 11

LAM L - Loss A - Acquired M - Misstatement

R4 - Partnership Guaranteed Payments

"Reasonable Compensation paid to a partner for services rendered or use of capital without regard to his ratio of income" Guaranteed payments CAN be paid in proportion to each partner's "share of partnership" ("use of capital"), just not "according to their profit sharing ratios." Both a deduction to arrive at ordinary business income on Sched. K and a separately stated item. Non-guaranteed Payments are simply salary, and are considered a draw.

R1 - Kiddie Tax on unearned interest income

$0 - Standard Deduction amt. - 0% tax rate Next $1,050 - Taxed at lower child's rate Amount above is taxed at Parent's higher tax rate

R2 - Student Loan Interest Deduction (for AGI)

$2,500 Phase-Out: S: $65,000 with $15,000 range MFJ: $130,000 with $30,000 range You can't be a dependent.

R3 - Accumulated Earnings Tax

$250,000 $150,000 (PSC's) 20% flat tax rate

R2 - Health Savings Accounts (HSA's) (for AGI)

$3,350, $6,650 for families Increase by $1,000 age 55+ High-Deductible = $1,300/$2,600 per yr., with out-of-pocket limitation $6,450/$12,900 on the other side.

R2 - IRA Deduction Phase-Out memory

$5,500 AGI S: $61,000 MFJ: $98,000 ($20,000 range) Plan S: $183,000

R2 - IRA deduction Phase-Out explanation

$5,500 each No IRA Deduction: 1. Rich, AND 2. Employer Retirement/Pension Plan (need both conditions) Rich Phase-Out -S: $61,000 with $10,000 phase-out range -MFJ: $98,000 with $20,000 phase-out range -See calculation at R2-5. Employer Retirement/Pension Plan -If you or your spouse is on plan, this condition is met. -Exception: Only spouse is on plan, you can still take deduction. -Exception Phase-Out: $183,000 with $10,000 range Phase-Out: Take the maximum $5,500 and reduce it by the percentage your AGI goes into the phase-out range.

R5 - SEC 1933 Act - Regulation A

$5M Threshold Partial, "EZ" Registration Offering Statement (Notification and Offering Circular)

R3 - S Corp. - AAA

AAA is like E&P for S Corp. Comes into play when the S Corp. used to be a C Corp. S Corp distributions are always tax-free, UNLESS there is C Corp. E&P that you have to "get rid of." S Corp distributions come out of AAA first, and are tax-free (reduces basis, cap gain after basis hits zero), until AAA is exhausted, at which point distributions come out of C Corp. E&P and are taxed as dividend income. Once C Corp. E&P is gone, it's back to tax-free S Corp. Distributions. (R3-56).

R2 - Tuition and Fees Deduction (for AGI)

AGI < $65,000 = $4,000 deduction AGI >= $65,000 = $2,000 deduction AGI >= $80,000 = $0 deduction MFJ phase-out is just double this (but still $4,000).

R2 - Individual AMT - AMT Credit

AMT paid in one year is carried forward to future years (forever) and can be used as a credit to reduce Regular Tax. Permanent difference AMT adjustments cannot be part of the credit.

R5 - Reg. D (Private Offering exemptions from SEC 1933 Registration)

ARF A - Advertising R - Resale F - Fifteen

R3 - Personal Service Corporation

Accounting, law consulting, engineering, etc. 35% flat tax rate - no graduated rates.

R3 - C Corp. AMT

Adjustments (LID) L - Long-term I - Installment D - Depreciation Preferences ACE AMT Exemption - $40,000 less 25% MTI over 150,000 Exempt Corporations 1. First year 2. First three years, $5M or less 3. Previous three years $7.5M or less

R3 - C Corp. Consolidated Tax Return

Affiliated Group 80% Exclusions: 1. Brother/Sister Corps. 2. S Corps. 3. Foreign Corps. 4. REITS, Insurance Cos., Exempt Organizations

R2 - Other - Statute of Limitations for Taxpayer Refund

Amended Tax Return Form 1040x Latest of: 1. Three years from Date the return is actually filed 2. Three years from Due date of the return, or 3. Two years from when tax is paid If no return filed, used two years from tax payment. "Bad Luck 7 Years" re: Bad Debts, Worthless Securities

R6, R7, R8 - UCC Articles

Article 2 - Sale of Goods Article 3 - Commercial Paper Article 7 - Documents of Title Article 8 - Investment Securities Article 9 - Secured Transactions (Creditors)

R5 - SEC 1933 Act, Securities Exemptions - Securities issued by certain types of issuers are not required to register

BRINGS B - Banks R - Railroads I - Insurance N - Not-for-profits G - Government S - Short-term

R4 - Capital Assets

Capital Assets: 1. Personal Automobile 2. Furniture and Fixtures 3. Stocks and Securities 4. Personal Property not used in trade or business 5. Real Property not used in trade or business 6. Partnership Interest 7. Goodwill of a Corporation 8. Copyright, literary, musical or artistic compositions that have been PURCHASED 9. Other assets held for investment Noncapital Assets: 1. Inventory 2. Section 1231 3. Accounts Receivable 4. Copyrights, literary, musical or artistic composition held by ORIGINAL ARTIST 5. Treasury Stock Improvements are generally capitalized. Remember: "Art follows the Goodwill rules."

R7 - Bankruptcy

Chapter 7 - Liquidation Chapter 11 - Adjustment of Debts (Corporations usually) Chapter 13 - Reorganization (Individuals)

R7 - Bankruptcy Excluded Entities - may not file bankruptcy

Chapter 7: RIBS R - Railroads I - Insurance B - Banks S - Small Business Investment Co. Chapter 11: BIBS B - Brokers I - Insurance B - Banks S - Small Business Investment Co.

R2 - Child and Dependent Care Credit

Child under Age 13 - not a teenager $3,000 expenditures per dependent, $6,000 max. Multiply by 20-35% 35% goes to 20% between $15,000-$43,000 Combined AGI So 20% if AGI above $43,000.

R5 - CPA Legal Liability - Elements of Tort Negligence

DBCD ("deuchebag CD) D - Duty B - Breach C - Cause D - Damages

R7 - Bankruptcy Debtor's Estate is everything he owns, plus DII 180

DII 180 D - Divorce I - Inheritance I - Insurance 180 - 180 Days from filing

R1 - Passive Losses Exceptions - Rental Activities

Deduct losses from certain rental activities: Mom and Pop - $25,000 1. Actively participates 2. More than 10% ownership 3. Phase-Out AGI $100,000 with $50,000 range (50% of each dollar above) Real Estate Professional - Fully deduct 1. More than 50% of her personal services are real estate 2. More than 750 hours

R3 - Exempt Organizations

Disqualified if: 1. Private shareholder 2. Influence legislation 3. Political campaign (cannot endorse or contribute) UBI - Taxable: 1. Activity constitutes trade or business 2. Regularly carried on 3. Not substantially related to tax-exempt purpose

R3 - C Corp. Distribution - Allocation of Current E&P

Distribution made during the year (Current E&P) * (Dist. / Total Dist.) = Current E&P Allocated to Distribution

R4 - Property Taxation - Repair Regulations

Exception to General Rule of Capitalization: -Less than $200, or -12 mo. or less economic life De Minimus Rule: -Written Policy to Expense -Applicable F/S $5,000 -No Applicable F/S $500 -If items cost more than the de minimus amount, then none of the cost can be expensed. Safe Harbor Rules: -Must be routine maint., not resulting in betterment -Qualifying Small Taxpayer $10M -Qualifying Building $1M -May expense improvements that do not exceed the lesser of $10,000 or 2% of Adj. Basis

R1 - Long-Term Contracts - Percentage Completion required

Exceptions: SHLAW S - Small H - Home L - Land A - Architects, etc. W - Warranty Note: SHLAW does not apply for AMT - except for H (Home construction contracts). This is the C in PANIC TIMME.

R2 - Individual AMT Credits

FACCE

R7 - Commercial Paper, Real Defenses

FAIDS F - Fraud, Forgery A - Adjudicated Insane, Alteration I - Infant, Illegal D - Duress, Discharge S - Surety, Statute

R4 - Estate and Trust, Gift tax returns

Form 1041 - Income Tax for Estates and Trusts - 4/15 Form 706 - Estate and Trust Tax ("Value") - 9 mo. Form 709 - Gift Tax Return - 4/15

R4 - Gifted Property Rules

General Rule: Carryover Basis Exception: Built-in Loss, Donee's basis depends on future selling price Higher: Gain Basis (Carryover) In Between: Neither Gain or Loss Recognized (Basis = Middle Selling Price) Lower: Loss Basis (Lower FMV) Holding Period: Carryover, except if Loss Basis (Lower FMV), then holding period restarts.

R4 - Estate Tax - Gift Taxes Paid

Gift Taxes Paid are a Credit against the Estate ("Value") Tax, not a deduction to arrive at Gross Estate.

R2 - Coverdell Education Savings Accounts

Grandma and Grandpa $2,000 per child (under 18) Phase-Out: S: $95,000 with $15,000 range MFJ: $190,000 with $30,000 range No phase-out for retirement/pension plan (unlike IRA)

R3 - C Corp. Contribution - C Corp.'s Basis of Property Received

Greater of: 1. Shareholder's Adj. Basis, or 2. Liabilities Assumed

R3 - C Corp. - Charity/DRD MAGI

Gross Income (incl. Dividend Income) (Normal Deductions) (Charity) (DRD) MAGI Limitations are calculated based on this order.

R4 - Gain Deferral Transactions

HIDE IT H - Homeowner's I - Involuntary D - Divorce E - Exchange I - Installment T - Treasury

R4 - MACRS Depreciation of Non-Real Estate

HYMQ40 ("hell yeah my quiz 40") HY - Half-Year MQ40 - Mid-Quarter if 40% purchased in last quarter Use MACRS Table, ignore salvage value.

R1 - Unemployment Compensation

INCLUDED "comes from the government - include" Note: Worker's Comp. is EXCLUDED "comes from the employer - exclude"

R2 - Individual AMT, Adjustments

PANIC (timing differences) TIMME (itemized deductions not recognized by AMT - always increase) P - Passive A - Accelerated N - NOL's I - Installment C - Contracts T - Taxes I - Interest (Home Equity) M - Medical M - Miscellaneous E - Exemptions and Standard Re: Miscellaneous deductions - the taxpayer can only deduct the amount above 2% AGI, so don't add-back the whole misc. deductions, just the amount deducted = (misc. deductions) - (2% AGI).

R3 - Personal Holding Company (PHC) Tax

PHC Definition: -More than 50% owned by 5 -60% of AGI comes from: NIRD N - Net Rent I - Interest R - Royalties D - Dividends NIRD 60% would also include income from investments in stocks and securities. Personal Holding Company income. Intuitive.

R4 - Gift Tax - Present vs. Future, Complete vs. Incomplete

Present Interests: 1. Outright Gifts 2. Mandatory Trust 3. Life Estates 4. Estates for Term Certain 5. Bonds (include interest even though future) 6. Unrestricted Life Insurance Transfers Future interests include reversions (get back later), remainders, discretionary trust and present interests without ascertainable value - All Included in Gross Estate A gift is not considered complete if it is conditional or revocable - Included in Gross Estate

R1 - Employee Stock Options

Qualified Options - No tax at grant date. No deduction for employer. Employee gain is capital. 1. Incentive Stock Options (ISO) -Key employee -Grant out of money -Less than 10% Ownership 2. Employee Stock Purchase Plans (ESPP) -Grant no more than 15% in the money (can be less than 85% FMV) -Less than 5% Ownership -27 months before you can exercise -Both have a holding requirement for stock once exercised (two yr. after grant, one yr. after exercise). -Both require you to remain an employee until 3 mo. before option is exercised. NON-QUALIFIED OPTIONS - Taxable to employee at grant date if readily ascertainable value. Deductible by employer.

R1 - Dependency Exemptions - Qualifying Child or Qualifying Relative. See page R1-11.

Qualifying Child: CARES C - Close A - Age R - Residency E - Eliminate (gross income) S - Support Qualifying Relative: SUPORT S - Support U - Under (gross income) P - Precludes (joint) O - Only (citizens) R - Relative, or T - Taxpayer lives with for whole year. Qualifying child has residency requirement (more than half). Close Relative includes: child, stepchild, sibling, stepsibling, or nieces/nephews. Age Test: UNDER 19 or under 24 if full-time (5 mo.) student, unless totally/permanently disabled. Gross income test does not include: 1. Social Security 2. Tax-exempt interest 3. Tax-exempt scholarships

R1 - Qualifying Widower (aka Surviving Spouse) and Head of Household

Qualifying Widower (aka Surviving Spouse) 1. Two years after year spouse died, did not remarry 2. Dependent entitled to exemption 3. Dependent lived there for ENTIRE year Head of Household 1. Not married, but maintains household (over half support), where Dependent lives for more than HALF the tax year. 2. Exception: Dependent parent does not have to live there, as long as household maintained.

CPA Exam - REG - Becker Review

R1 - Individual Tax: Income R2 - Individual Tax: Adjustments, Deductions, Credits R3 - C Corps., S Corps., Exempt Orgs., Other R4 - Property, Partnership, Estate & Gift Tax R5 - Professional Responsibilites and Securities Regulation R6 - Contracts, Sales, Copyrights/Patents R7 - Commercial Paper, Secured Transactions (Debtor-Creditor), Bankruptcy R8 - Surety, Agency, Business Structures, Employer-Employee, Money Laundering, Antitrust, Docs. of Title, Dodd-Frank Act

R4 - MACRS Depreciation of Real Estate (which does NOT include Land). Remember, for tax purposes, Land is not Real.

RS ("runescape") MM ("mark mcnulty") R - Real Estate S - Straight Line MM - Mid-Month 27.5 39

R5 - Reg. D

Rule 504 -$1M -Ads if registered under State Law -Unaccredited: No Limit -No Disclosure required Rule 505 -$5M -Never Ads -Unaccredited: 35 or less -Disclosure required to all if any Unaccredited Rule 506 -$ Unlimited -Ads only if all Accredited -Unaccredited: 35 or less, must be sophisticated -Disclosure required to all if any Unaccredited

R7 - Distribution of Debtor's Estate - Priorities amongst "Priority Claimants" category (nine subcategories)

SAG WEG CTI S - Support A - Administrative G - Gap W - Wage E - Employee G - Grain C - Consumer T - Tax I - Injury (DUI)

R5 - CPA Legal Liability - Exceptions to Confidentiality

SSQADB ("squad, b!") S - Subpoena S - Surviving Q - Quality A - AICPA D - Defense B - Buyer

R6 - Exceptions to Statute of Frauds

SWAP S - Specially W - Written A - Admitted P - Performed

R4 - Partnership - Separately Stated Items

Section 179 Depreciation is a separately stated item (all other depreciation is not separately stated), but it ends up on the 1040 as part of Passive Income line item. Separately stated items retain character as: Passive Portfolio Capital

R3 - S Corp. Loss Limitation

Shareholder can only deduct losses up to his "At-Risk Amount" Loss Limitation = Basis (less nonrecourse loans) + Direct Shareholder Loans - Distributions According to this formula, Distributions are deducted from Basis first, before pass-through losses for purposes of the loss limitation. Basis = Contributions + Income + Share of Liabilities Nonrecourse loans increase stock basis, but are not considered "at-risk." Direct Shareholder Loans are different thing than Recourse Loans