REG - 6/13 Part II

Question 1

True or False: An exempt organization subject to tax on its unrelated business income must comply with the Code provisions regarding installment payments of estimated income tax by corporations.

Answer 1

True.
*This means that an exempt organization must make quarterly estimated tax payments if it expects its estimated tax on its unrelated business income to be $500 or more.

Question 2

Yost contracted with Egan for Yost to buy certain real property. If the contract is otherwise silent, Yost’s rights under the contract are

Answer 2

Generally, a party’s rights in a contract are assignable and duties are delegable. However, there are three exceptions: (1) when the contract involves personal services, trust, or confidence; (2) when a provision of the contract or a statute prohibits assignment or delegation; and (3) if assignment would materially change the risk or burden of the obligor.

Question 3

Under the Sales Article of the UCC, unless a contract provides otherwise, before title to goods can pass from a seller to a buyer, the goods must be

Answer 3

Identified to the contract

Question 4

In Fiduciary Accounting, are corpus included in Book Income?

Answer 4

n fiduciary accounting, all receipts and disbursements are classified as either income or corpus (principal). For example, interest on state bonds may constitute accounting income even though not included in gross income for tax purposes. Other items, for example capital gain, would be included in gross income for tax purposes but may be classified as corpus (principal) for fiduciary accounting purposes.
*Any items allocated to corpus (principal) are not included in the computation of a trust’s accounting income.

Question 5

What is a Novation?

Answer 5

A novation is an agreement between three parties whereby a previous agreement is discharged by the creation of a new agreement. The new agreement substitutes one contracting party for another.

Question 6

Is the entire amount of precontribution gain allocated to an equal partner if he/she is the one that contributed what’s being sold? (Partnership)

Answer 6

The entire amount of precontribution gain would be allocated to an equal partner. But limited to the partnership’s recognized gain resulting from the sale.

Question 7

How do you calculate the accrual-basis purchases? (given cash purchases and payments for the CY, and beg/end A/P balances)

Answer 7

To get the accrual-basis purchases, you must adjust cash payments for the beginning and ending balance of accounts payable. Since the beginning balance of accounts payable represents purchases for the prior period paid for in this period, it must be deducted from cash payments. The ending balance of accounts payable represents purchases for this period that will be paid for next period. Accordingly, the ending balance must be added.