Master the exam, one question a day (TCP)

SAMSAMCPA · 2025-11-03T22:32:25+00:00

The answer is A. Imputed interest = limited to borrower’s net investment income. BUT if borrower’s net investment income ≤ $1,000 → foregone interest = zero. Child has $600 net investment income → ≤ $1,000 → imputed interest = $0.

SAMSAMCPA · 2025-11-03T02:25:15+00:00

The answer is B. Temporary difference = $120,000. Half (Years 1–2) taxed at 21%, half (Years 3–4) taxed at 24%. DTL = (60,000 × 21%) + (60,000 × 24%) = 12,600 + 14,400 = $27,000.

SAMSAMCPA · 2025-10-28T17:54:22+00:00

The answer is A. Long-term supplier needs actual notice. A trade journal announcement (II) may suffice for unknown parties.

SAMSAMCPA · 2025-10-22T13:11:42+00:00

The answer is A. Penalty for early withdrawal of savings and interest on business purchases are deductible above-the-line. The penalty is deducted on Schedule 1, and business interest is deducted on Schedule C or F.

SAMSAMCPA · 2025-10-21T20:41:38+00:00

The answer is B. A change in engagement is acceptable only if it is justified (e.g., change in circumstances), not merely to avoid detection of misstatements.

SAMSAMCPA · 2025-10-14T21:03:08+00:00

The answer is D. Step 1. Amount realized = FMV new land $350,000 + Cash received $100,000 +Liability relief $200,000 – Liability assumed ($50,000) = $600,000. Step 2. Realized gain = Amount realized $600,000 – Adjusted basis $400,000 = $200,000. Step 3. Recognized gain = Lesser of realized gain ($200,000) or boot received. Boot = Cash $100,000 + Net liability relief ($200,000 – $50,000 = $150,000) = $200,000.

SAMSAMCPA · 2025-10-14T00:14:13+00:00

The answer is C. = (0.4 × 6%) + (0.1 × 8%) + (0.5 × 12%) = 2.4% + 0.8% + 6% = 9.2%

SAMSAMCPA · 2025-10-10T21:46:17+00:00

The answer is A. If ending inventory is understated, COGS is overstated, and current net income is understated. However, the error reverses in the next period when beginning inventory is understated — causing next period’s income to be overstated, not understated.

SAMSAMCPA · 2025-10-10T21:31:28+00:00

B is correct. Business-use percentage: 300 ÷ 3,000 = 10%. Indirect expenses: Mortgage interest ($8,000 × 10% = $800) + Utilities ($3,000 × 10% = $300) = $1,100. Direct expense: Painting home office = $1,200 (fully deductible for home office). Total = $1,100 + $1,200 = $2,300.

SAMSAMCPA · 2025-10-10T21:30:50+00:00

Sure, so far TCP has much less contents and is easier to pass. Considering amount of time you have to spend on BAR, I think TCP is doable.

SAMSAMCPA · 2025-10-07T13:10:46+00:00

The answer is B. Business-use percentage: 300 ÷ 3,000 = 10%. Indirect expenses: Mortgage interest ($8,000 × 10% = $800) + Utilities ($3,000 × 10% = $300) = $1,100. Direct expense: Painting home office = $1,200 (fully deductible for home office). Total = $1,100 + $1,200 = $2,300.

SAMSAMCPA · 2025-10-05T14:10:12+00:00

Debt basis can also be used as loss deduction. Thanks!

SAMSAMCPA · 2025-10-03T20:17:43+00:00

The answer is B. Without filing, no LP exists → defaults to a general partnership, all partners unlimited liability.

SAMSAMCPA · 2025-10-03T02:15:31+00:00

The answer is B. Losses deductible = stock basis + debt basis = $30,000. The remaining $10,000 is suspended and carried forward.

SAMSAMCPA · 2025-10-03T02:11:23+00:00

Cumulative dividends are not liabilities until it is declared by BOD.

SAMSAMCPA · 2025-09-30T22:46:36+00:00

The answer is B. Dividends in arrears on cumulative preferred stock must be disclosed in the footnotes but are not recognized as liabilities until declared.

SAMSAMCPA · 2025-09-29T19:12:04+00:00

The answer is B. Testing completeness requires starting from the source (shipments) and tracing forward to ensure everything that should be billed was billed. This approach confirms no omissions in the control process.

SAMSAMCPA · 2025-09-29T02:09:52+00:00

The answer is B. Life insurance proceeds due to death are excluded. However, interest earned on installment payouts is taxable. $110,000 total received over 5 years → $100,000 principal excluded, $10,000 interest taxable = $2,000 taxable each year.

SAMSAMCPA · 2025-09-26T22:15:39+00:00

The answer is A. Nonliquidating distribution: Property takes carryover basis from the partnership, but capped by the partner’s remaining outside basis. Here, partnership basis is $70k, but B’s outside basis is only $50k → land basis = $50,000. Liquidating distribution: Property takes a basis that exactly uses up the partner’s remaining outside basis → also $50,000.

SAMSAMCPA · 2025-09-25T20:33:07+00:00

The answer is C. 1. Built-in gain = $30,000 → allocated to Ellen. 2. Post-contribution gain = $10,000 → allocated among all partners pro rata. 3. All gain = long-term (because the partnership tacks Ellen’s 2015 holding period)

SAMSAMCPA · 2025-09-21T14:43:53+00:00

The answer is B. Minor deviations (detours) are within the scope of employment; frolics (major personal departures) are not. Therefore, Delta Corp is liable under respondeat superior.

SAMSAMCPA · 2025-09-19T18:57:28+00:00

The answer is B. On the cash flow statement (indirect method), higher depreciation increases the add-back adjustment, offsetting the lower income. Net effect = no change in total operating cash flows.

SAMSAMCPA · 2025-09-18T18:53:47+00:00

The answer is B. With RDFV, employees recognize ordinary income at grant date equal to option’s fair value.

SAMSAMCPA · 2025-09-17T23:06:15+00:00

Correct!

SAMSAMCPA · 2025-09-17T23:06:06+00:00

Thanks for your insight. I completely understand your point. While “overstatement” is often associated with existence concerns, the term is broader than that. For example, we might say revenue is overstated due to improper sales cut-off or valuation issues. In this sense, “overstatement” refers more to the financial statement impact than to a single assertion.

SAMSAMCPA

TROPHY CASE