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 Topic: S corp ( Topic Closed)
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caixinran
Regular
Joined: 10 Jun 2009
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Posts: 159
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| Posted: 09 Jul 2009 at 16:09 | IP Logged
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Hi, Arushi
The "At-Risk Rule" limits your deductible loss from K-1s,
Sch C, E & F to your at-risk investment/amount.
If you report Sch E, you have $10,000 at risk in a real
estate investment that generates $3,333 per year in tax
losses, the losses may be used for only three years.
Thereafter, the losses may be used only if the investor
contributes more money or property (net of withdrawals)
or becomes liable to repay borrowed money.
---------------- Found in IRS-------------------
Amounts at risk include:
• cash contributed to the activity
• borrowed money for which the investor is personally
liable
• property pledged as security for the real estate
activity, provided the property is not used in the
activity
An exception is made for qualified third-party non-
recourse financing. These loans may be treated as amounts
at-risk provided:
• a third-party, unrelated to the investor, provides the
loan
• the third-party lender is neither the seller of the
property nor related to the seller
• the lender is not paid a fee with respect to the equity
investor's investment in the property
--------------------- End of Reference ------------------
If you think further, the difference between Recourse
Loan and Non-recourse Loan is should you be personally
liable for the loan balance.
Then the non-recourse loan on a rental property will not
be considered AT-RISK contribution. Only the recourse
loan will increase your at risk investment. (May be too
much XD)
I think BECKER is really good for review.
Good luck to all of us!
__________________
REG - July 21, 2009 - 94
BEC - Nov. 03, 2009 - 90
FAR - Aug. 07, 2010 - 96
AUD - Nov, 23, 2010 - 87
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arushi_13
Major Contributor
Joined: 09 Feb 2008
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Posts: 1235
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| Posted: 09 Jul 2009 at 16:23 | IP Logged
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roswellpodsquad wrote:
I used the 2009 version of Becker.
As for the exam, I just kept going over and over the information until I
felt comfortable with the concepts. I did all the homework/supplemental
reading and used the IRS website to clear up any questions I felt my text
was week on. Also do as many questions as you can. I did all my Becker
questions about 5-7 times. I'd would also go through all the answer
choices and make sure I understood why the correct answer was correct
& why the incorrect choices were wrong. Although some people will tell
you not to do the AICPA released questions, I disagree. This is where
many of the CPA review questions pull their homework questions from.
Hope that helps.
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Wow thanks a lot for the info. It was really helpful. Would you also suggest memorizing all the figures like Personal Exemption amts, AGi Phaseout limits,Section 179, Refundable and Non-refundable credit amounts etc.? I think there are a lot of them and when I memorize some from a chapter I tend to forget the previous ones. It is kind of frustrating not being able to remember all of them.
__________________
CA Board
FARE -87
AUD - 87
BEC - 81
REG - 84
ALL DONE !!!
Arushi
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roswellpodsquad
Regular
Joined: 28 May 2009
Location: United States
Online Status: Offline
Posts: 112
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| Posted: 09 Jul 2009 at 16:25 | IP Logged
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Arushi 13,
Per Becker, when it comes to S Corporations shareholder guarantees do not
increase basis. Don't confuse the partnership rules with that of s
corporations.
For partnerships - losses are limited to the partners ending capital account
+ recourse liabilities
For s corporations - losses are limited to the shareholders basis + direct
shareholder loans. Entity liabilities whether guaranteed or not, do not affect
basis.
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arushi_13
Major Contributor
Joined: 09 Feb 2008
Online Status: Offline
Posts: 1235
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| Posted: 09 Jul 2009 at 16:27 | IP Logged
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caixinran wrote:
Hi, Arushi
The "At-Risk Rule" limits your deductible loss from K-1s,
Sch C, E & F to your at-risk investment/amount.
If you report Sch E, you have $10,000 at risk in a real
estate investment that generates $3,333 per year in tax
losses, the losses may be used for only three years.
Thereafter, the losses may be used only if the investor
contributes more money or property (net of withdrawals)
or becomes liable to repay borrowed money.
---------------- Found in IRS-------------------
Amounts at risk include:
• cash contributed to the activity
• borrowed money for which the investor is personally
liable
• property pledged as security for the real estate
activity, provided the property is not used in the
activity
An exception is made for qualified third-party non-
recourse financing. These loans may be treated as amounts
at-risk provided:
• a third-party, unrelated to the investor, provides the
loan
• the third-party lender is neither the seller of the
property nor related to the seller
• the lender is not paid a fee with respect to the equity
investor's investment in the property
--------------------- End of Reference ------------------
If you think further, the difference between Recourse
Loan and Non-recourse Loan is should you be personally
liable for the loan balance.
Then the non-recourse loan on a rental property will not
be considered AT-RISK contribution. Only the recourse
loan will increase your at risk investment. (May be too
much XD)
I think BECKER is really good for review.
Good luck to all of us!
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Thanks a lot. This is really useful info. Sorry still have a couple of Qs...
Q1)Recourse debt is added to the basis of the shareholder and it increases the sh basis?
Q2) if a shareholder personally guarantees loan then it should be added to his basis as this will be recourse debt?
Q3) Is credit card debt recourse debt?
Thanks a lot.
__________________
CA Board
FARE -87
AUD - 87
BEC - 81
REG - 84
ALL DONE !!!
Arushi
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roswellpodsquad
Regular
Joined: 28 May 2009
Location: United States
Online Status: Offline
Posts: 112
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| Posted: 09 Jul 2009 at 16:37 | IP Logged
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Arushi 13,
I would definitely memorize
1) Sec 179 amounts
2) unified credit/estate & gift deduction amounts
3) personal exemption
4) Adjustment amounts
5) Mom & Pop Exception Phaseout
6) Regular IRA amounts/phaseout
7) Credit Amounts
For the other AGI phaseouts I would just know the top range (i.e. what
amount complete eliminates the credit/adjustment).
Once you go through the credit amounts like 3-4 times it becomes easy
to get down. I would just reviewed it every night for a could of days until
I had it down. Mostly you'll just want to know which credits are
refundable/non-refundable. Make sure you research the changes to the
Hope/Lifetime Learning credit because as far as I remember those credits
faced some big changes for 2009. Good Luck with your exam.
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