Exam (elaborations)
CPA REG EXAM QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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CPA REG EXAM QUESTIONS AND ANSWERS WITH SOLUTIONS 2024
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CPA REG EXAM QUESTIONS ANDANSWERS WITH SOLUTIONS 2024
Individual income tax formula - ANSWER Gross income
- adjustments
=adj gross income
- Standard or itemized deductions
- exemptions
=taxable income
*tax rate
=federal income tax (reg or amt)
- tax credits
Other taxes
- payments
= tax due or refund
Gross income - ANSWER Wages
Interest
Dividends
State tax refunds
Alimony received
Business income (schedule C)
Capital gain/loss (schedule D)
IRA income
Pension annuity
Rental income/loss
K-1 income/loss
Unemployment compensation
Social security benefits
,Other income
Social security tax base is - ANSWER a self-employed person's net profit from self-employment
for employees, it is based on gross wages, employers also pay the tax
Adjustments - ANSWER "deductions to arrive at adjusted gross income"
Educator expenses
IRA
Student loan interest expenses
Tuition and fee deduction
Health savings account
Moving expenses
One half self employment taxes
Self employed insurance
Self employed retirement
Interest withdrawal penalty
Alimony paid
Attorney fees in rare cases
Domestic production activities deduction
Filing Status - ANSWER Determined by end of year status
Exceptions:
Divorced must not be joint.
Death of spouse can still be filed jointly
Qualifying widower - ANSWER Must have had dependent with you the whole year to qualify
,Birth or death during the year - ANSWER Still get the full exemption.
head of household - ANSWER Must have a dependent for more than half the year.
Dependent can be:
Qualifying child
Mother or father(nursing home is fine)
Dependent relatives (must live with you)
Personal exemption - ANSWER Parents use your exemption then you lose it
Phase out of personal exemptions - ANSWER Exemptions reduced by 2% for every 2,500 over a certain
limit
Can a pet be a dependent - ANSWER NEVER
Qualifying child (CARES) - ANSWER Close relative
Age limit (19 or 24+ college)
Residency and filing requirement (1/2 year)
Eliminate gross income test
Support test changes (not more than one half of their own support)
Qualifying relative (SUPORT) - ANSWER Support (tax payer supplied over 50%) test
Under exemption amount of taxable (gross) income test
Precludes dependent filing a joint tax return test
Only citizens (resident of US/Canada or Mexico) test
Relative test or Taxpayer lives with individual for the whole year test
Multiple support agreement - ANSWER 1 supporter gets full exemption but contribute more than 10% of
persons support
, -all must be qualifying relatives that contribute cumulative more than 50% of the support of the
defendant
Increased standard deduction - ANSWER Age 65 or older
Blind
Does not get an extra exemption
Computation of income - ANSWER Taxable =fmv income and fmv basis
Non taxable = no income and nbv basis
2 taxes on net business income - ANSWER 1.Income Tax
2. Federal self-employment (SE) tax
as employee and employer you pay both
No deductible expenses on Schedule C - ANSWER Salary to sole proprietor
Federal income tax
Personal portion of any expenses
Bad debt expense of cash basis
Charitable contributions
Schedule C deductions - ANSWER legal commissions
travel
supplies
office and phone
(penalties and illegal commissions are not deductible)
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