NOTICE: THE CPANET FORUM HAS MOVED!!!
PLEASE VISIT THE NEW FORUM AT: HTTP://CPAFORUM.CPANET.COM/
this forum will remain available for archive purposes only. SEE YOU AT THE NEW FORUM!!

  Active TopicsActive Topics  Display List of Forum MembersMemberlist  Search The ForumSearch  HelpHelp
  RegisterRegister  LoginLogin
REG - Regulation (Forum Locked Forum Locked)
 CPAnet Forum : REG - Regulation
Subject Topic: accountable vs non-accountable plan (Topic Closed Topic Closed) Post ReplyPost New Topic
  
Author
Message << Prev Topic | Next Topic >>
divyagovil1
Major Contributor
Major Contributor
Avatar

Joined: 30 Jan 2009
Location: India
Online Status: Offline
Posts: 1456
Posted: 15 Jul 2009 at 19:32 | IP Logged  

Ques. Easel Co. has elected to reimburse employees for business expenses under a nonaccountable plan. Easel does not require employees to provide proof of expenses and allows employees to keep any amount not spent. Under the plan, Mel, an Easel employee for a full year, gets $400 per month for business automobile expenses. At the end of the year Mel informs Easel that the only business expense incurred was for business mileage of 12,000
a rate of 30 cents per mile, the IRS standard mileage rate at the time. Mel encloses a check for $1,200 to refund the overpayment to Easel.

What amount should be reported in Mel's gross income for the year? a. $0

b. $1,200

c. $3,600

d. $4,800

Explanation Choice "d" is correct. Under a nonaccountable plan, $4,800 ($400 per month x 12 months) must be reported as part of Mel's gross income for the year (in fact, the $4,800 will be included as part of Mel's taxable wages on Mel's W-2).

Rule: Under a nonaccountable plan (i.e., expenses are not reported to the employer), any amounts received by an employee from the employer must be reported by the employer as part of wages on the employee's W-2 for the year (and subject to income tax withholding requirements). The gross amount received is reported as income.

Rule: Any expenses taken against the gross amount received in a nonaccountable plan (e.g., the car mileage expenses and the reimbursement to the company) are considered miscellaneous itemized deductions and are subject to the 2% AGI limitation.

Note: The examiners have attempted to trick the candidate into thinking that this is in some way an accountable plan because they provided for a return of excess funds received to the employer. However, remember that the question specifically states that the plan is nonaccountable.

Choices "a", "b", and "c" are incorrect, per the above rules.

I understood the explanation... However, can someone pls guide me where it is mentioned in Becker -- R2 chapter about accountable vs nonaccountable plan?

I clicked on "Show text", but didn't find any reference ! I am missing out something....

Thanks!



__________________
Divya - CO State

Passed using Becker Review :
FAR - 04/11/09 - 94
BEC - 05/30/09 - 86
REG - 08/29/09 - 95
AUD - 11/21/09 - 92
Ethics - 2011
Back to Top View divyagovil1's Profile Search for other posts by divyagovil1 Visit divyagovil1's Homepage
 
aimedcpa
Newbie
Newbie


Joined: 16 Dec 2008
Location: United States
Online Status: Offline
Posts: 48
Posted: 15 Jul 2009 at 20:07 | IP Logged  

Hi Divya

 Yup u r rite u have surely read Becker thoroughly as this is not covered in R-2 as per my knowledge also & while doing the MCQs even I got familiar with it first time.

 

Back to Top View aimedcpa's Profile Search for other posts by aimedcpa
 
divyagovil1
Major Contributor
Major Contributor
Avatar

Joined: 30 Jan 2009
Location: India
Online Status: Offline
Posts: 1456
Posted: 15 Jul 2009 at 20:17 | IP Logged  

Thanks, aimedcpa... It solves my confusion, then -- atleast, I didn't miss out anything in the book !

BTW, I came across this link for reference on accountable vs non-accountable plans:-

www.sbrg.irs.gov/sections/section4/employeebusinessexp.htm

It's helpful to understand the concept about accountable vs non-accountable plans.

When are you scheduled to give REG?



__________________
Divya - CO State

Passed using Becker Review :
FAR - 04/11/09 - 94
BEC - 05/30/09 - 86
REG - 08/29/09 - 95
AUD - 11/21/09 - 92
Ethics - 2011
Back to Top View divyagovil1's Profile Search for other posts by divyagovil1 Visit divyagovil1's Homepage
 
nacol
Regular
Regular


Joined: 27 Apr 2009
Location: United States
Online Status: Offline
Posts: 178
Posted: 15 Jul 2009 at 21:45 | IP Logged  

I'm using Becker as well and have found it beneficial to supplement the material with Wiley CPA review.



__________________
4/6/09 AUD passed
7/16 REG --PASSED
7/1/09 BEC-PASSED!!
FAR 74, 67, 71 lol, PASSED Ethics Passed
Back to Top View nacol's Profile Search for other posts by nacol
 
divyagovil1
Major Contributor
Major Contributor
Avatar

Joined: 30 Jan 2009
Location: India
Online Status: Offline
Posts: 1456
Posted: 15 Jul 2009 at 21:59 | IP Logged  

I hardly have 1.5 months to prepare for REG and Becker is already appearing to be "too much"... May be due to lack of knowledge about US tax laws, it's getting hard for me to retain the whole info...

Let's see if I have some time at the end, I would atleast go for Gleim mcqs.....



__________________
Divya - CO State

Passed using Becker Review :
FAR - 04/11/09 - 94
BEC - 05/30/09 - 86
REG - 08/29/09 - 95
AUD - 11/21/09 - 92
Ethics - 2011
Back to Top View divyagovil1's Profile Search for other posts by divyagovil1 Visit divyagovil1's Homepage
 




Page of 2 Next >>
  Post ReplyPost New Topic
Printable version Printable version

Forum Jump
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot delete your posts in this forum
You cannot edit your posts in this forum
You cannot create polls in this forum
You cannot vote in polls in this forum

Powered by Web Wiz Forums version 7.9
Copyright ©2001-2010 Web Wiz Guide

This page was generated in 0.1396 seconds.

Copyright 1996-2010 CPAnet/MizWeb Communities All Rights Reserved
Twitter
|Facebook | CPA Links |CPA Exam Club | About | Contact | Newsletter | Advertise & Promote|Expanded Listings