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ENROLLED AGENT PRACTICE EXAM QUESTIONS PART 1 QUESTIONS AND ANSWERS A GRADED
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ENROLLED AGENT PRACTICE EXAM QUESTIONS PART 1 QUESTIONS AND ANSWERS A GRADED
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ENROLLED AGENT PRACTICE EXAMQUESTIONS PART 1 QUESTIONS AND
ANSWERS A GRADED
Whichaofatheafollowingaisaincomeainarespectaofaaadecedent?
A)aCashareceivedafromaaagrandmother'saestate.
B)aRoyaltiesareceivedaonatheadeceasedafather'sapublishedabook;athearightatoareceiveathesea
royaltiesawasadistributedafromatheafather'saestate.
C)aCertificateaofadepositareceivedaasaaagift.
D)aBothacashareceivedafromaaagrandmother'saestateaandaroyaltiesareceivedaonatheadeceas
edafather'sapublishedabook;athearightatoareceiveathesearoyaltiesawasadistributedafromatheafat
her'saestate.a-
aans✔✔B)aRoyaltiesareceivedaonatheadeceasedafather'sapublishedabook;athearightatoareceiv
eathesearoyaltiesawasadistributedafromatheafather'saestate.
Incomeainarespectaofaaadecedentaisatheaamountathataisaearnedabyatheataxpayerabutanotarece
ivedaprioratoahisaoraheradeathanoraaccruedaprioratoahisaoraheradeathaifaonatheaaccrualamethod
,asoaitaisanotaincludedainatheadecedent'safinalareturn.aIncomeainarespectaofaaadecedentaisaincl
udedainathearecipient'sa(e.g.,atheaestate's)aincomeainatheayearareceivedaoraaccrued.
Whichaofatheafollowingarecipientsaofamoneyamustaincludeatheafundsareceivedainahisatotalainc
ome?
A)aAacarapooladriverawhoaisagivenamoneterm-0yabyahisapassengersaforahighwayatolls.
B)aAnaelectedaofficialawhoaisagivenamoneyabyaaarealaestateadeveloperatoainfluenceahisavote.
C)aAahomeownerawhoaisagivenaaasubsidyabyaaapublicautilityaforatheapurchaseaofaaanewahotaw
ateraheater.
D)aAataxpayerawhoainheritsaoneahundredasilveradollarsainaaabequest.a-
aans✔✔B)aAnaelectedaofficialawhoaisagivenamoneyabyaaarealaestateadeveloperatoainfluencea
hisavote.
Aabribeaisaincome.aInafact,aallaincomeafromaillegalaactivities,asuchaasamoneyafromadealingaill
egaladrugs,amustabeaincludedaonaaataxpayer'sa1040,aeitheraonaLinea8a(fromaSchedulea1)aora
onaScheduleaC.aMoniesareceivedafromacarapoolapassengersaareareimbursements.aAasubsid
yapaidabyaaapublicautilityaforaenergyaconservationaisaexcludedafromaincome.aAabequestaisaals
oaexcludedafromaincomeaevenaifatheabequestaisacash.
,Minnie'sataxareturnashowsatheafollowingaincome:
-$800awages
-$6,490aunemploymentacompensation
-$1,000aalimonyareceivedaunderatheatermsaofaaadivorceadecreeafinalizedabeforea2019
-$8,000arentalaincomeafromaapartmentabuildingsasheaowns
WhataisaMinnie'saearnedaincomeaforatheapurposeaofadeterminingahowamuchasheacanacontri
buteatoaanaIRA?
A)a$800
B)a$7,290
C)a$1,800
D)a$16,290a-aans✔✔C)a$800a
Generally,acompensationaisatheaamountaearnedafromaworking.aCompensationaincludesawa
ges,asalaries,atips,aprofessionalafees,abonuses,aandaotheraamountsaindividualsareceiveafora
providingapersonalaservices.aForaIRAapurposes,acompensationaincludesaamountsaconside
redataxableaalimonyaandanontaxableacombatapay.
Minnie'saearnedaincomeaforatheapurposeaofadeterminingahowamuchasheacanacontributeatoaa
naIRAaisa$1,800.aOnlyawagesaofa$800aandataxableaalimonyaofa$1,000acountaasacompensati
onaforaIRAapurposes,asoatheyasetathealimitaforatheaallowableacontributionaamount.
Qualifiedadividendsaareasubjectatoaoneaofathreeamaximumataxarates.aWhichathreeataxaratesa
areausedaforaqualifiedadividends?
A)a15%a/a25%a/a37%
B)a0%a/a15%a/a20%
C)a15%a/a28%a/a37%
D)a18%a/a20%a/a25%a-aans✔✔B)a0%a/a15%a/a20%
Qualifiedadividendsaareasubjectatoatheasamea0%,a15%aora20%amaximumataxarateathataappli
esatoanetacapitalagain.aQualifiedadividendsaareasubjectatoathea20%ataxarateaifathearegularataxa
rateathatawouldaapplyaisa37%.
Qualifiedabusinessaincomea(QBI)ais:
A)atheaamountaofaqualifiedaitemsaofaincomeaandagainafromaaaqualifiedatradeaorabusiness.
B)atheanetaamountaofaqualifiedaitemsaofaincome,again,adeductionaandalossafromaaaqualifiedatr
adeaorabusiness.
C)atheaamountaofaqualifiedaitemsaofaincomeaandagainafromaaaqualifiedatradeaorabusiness,aon
lyatoatheaextentaincludedainataxableaincome.
D)atheanetaamountaofaqualifiedaitemsaofaincome,again,adeductionaandalossafromaaaqualifiedat
radeaorabusiness,aonlyatoatheaextentaincludedaoraallowedainatheadeterminationaofataxableainc
omeaforatheayear.a-
aans✔✔D)atheanetaamountaofaqualifiedaitemsaofaincome,again,adeductionaandalossafromaaaq
ualifiedatradeaorabusiness,aonlyatoatheaextentaincludedaoraallowedainatheadeterminationaofata
xableaincomeaforatheayear.
Qualifiedabusinessaincomea(QBI)aisatheanetaamountaofaqualifiedaitemsaofaincome,again,aded
uctionaandalossafromaaaqualifiedatradeaorabusiness.aQualifiedaitemsaofagainaoralossaareatake
,naintoaaccountatoadetermineaQBIaoraqualifiedabusinessalossaonlyatoatheaextentaincludedaoraal
lowedainatheadeterminationaofataxableaincomeaforatheayear.
Exception:aDisallowedalossesaoradeductionsaallowedainatheataxableayearaareagenerallyatake
naintoaaccountaforapurposesaofacomputingaQBIaexceptatoatheaextentathealossesaoradeduction
sawereadisallowed,asuspended,alimited,aoracarriedaoverafromataxableayearsaendingabeforeaJ
anuarya1,a2018
Lucilleaboughtaaahouseaina2000aandalivedainaitauntilasheasoldaitaina2020.aSheahadaaagainaofa$3
00,000afromatheasaleaofaherahouse.aShortlyaafteratheasale,asheamarriedaMichael,awhoacoinci
dentallyaalsoasoldahisaprimaryaresidenceaina2020aafteratenayearsaofaownership.aHeahadaaaga
inaofa$100,000afromatheasaleaofahisahome.aCanaLucilleaandaMichaelaexcludeatheiraentireagai
nsafromatheiraincome?
A)aYes,abecauseatheyaareamarried.
B)aYes,abecauseatheyaeachametatheauseaandaownershipatestsaindependently.
C)aNo,abecauseatheyawereanotamarriedawhenatheyasoldatheirahouses.
D)aNo,abecauseatheyacannotaexcludeamoreathana$250,000aforaLucille'sahome.a-
aans✔✔D)aNo,abecauseatheyacannotaexcludeamoreathana$250,000aforaLucille'sahome.
Thea$500,000amaximumaexclusionaforacertainajointareturnsadoesanotaapplyabecauseaLucille
aandaMichaeladoanotajointlyameetatheauseatestaforatheasameahome.aTheaownershipaandauseat
estsaareametaindependentlya(foratheiraownahomes).aTheamaximumaexclusionathatacanabeacl
aimedabyatheacoupleaisatheatotalaofatheamaximumaexclusionsathataeachaspouseawouldaqualif
yaforaifanotamarriedaandatheaamountsawereafiguredaseparately.aTheyacannotaexcludeatheaent
ireagainaofa$300,000aonaLucille'sahomeaasaaaresult,aasatheaexclusionaforathatahomeaisalimite
datoa$250,000.
Taxpayersawhoaareamarriedaandafileaaajointareturnaforatheayearacanaexcludeaupatoa$500,000a
ofatheagainaonatheasaleaofaaamainahomeaifaallaofatheafollowingaareatrue:
-Eitheraspouseameetsatheaownershipatest.
-Bothameetatheauseatest.
-Duringathea2-
yearaperiodaendingaonatheadateaofatheasale,aneitherayouanorayouraspouseaexcludedagainafro
matheasaleaofaanotherahome.
Ifaeitheraspouseadoesanotasatisfyaallathesearequirements,atheamaximumaexclusionathatacana
beaclaimedabyatheacoupleaisatheatotalaofatheamaximumaexclusionsathataeachaspouseawoulda
qualifyaforaifanotamarriedaandatheaamountsawereafiguredaseparately.aForathisapurpose,aeacha
spouseaisatreatedaasaowningatheapropertyaduringatheaperiodathataeitheraspouseaownedathea
property.
Whichaofatheafollowingaisatruearegardingaaanonbusinessabadadebt?
A)aItaisadeductibleaasaaashort-termacapitalaloss.
B)aItaisanotadeductible.
C)aItaisadeductibleaonlyaifayouaitemize.
D)aItaisadeductibleaasaaalong-termacapitalaloss.a-aans✔✔A)aItaisadeductibleaasaaashort-
termacapitalaloss.
Allanon-
businessabadadebtsaareashortatermacapitalalossesaandaareaclaimedaonaForma8949.aTheaam
ountaofatimeatheamoneyahasabeenaowedatoayouadoesanotamatter.
, Eltonadeclaredabankruptcyainatheacurrentayear.aIncludedainathealiabilitiesadischargedainathea
bankruptcyawasaaa$15,000apersonalaloanaEltonahadareceivedafromahisafriend,aEdward,atwoa
yearsaago.aHowawouldaEdwardatreatathisaforataxapurposes?
A)aOrdinaryalossaonaForma4797
B)aLong-termacapitalalossaonaScheduleaD
C)aShort-termacapitalalossaonaScheduleaD
D)aInvestmentaexpenseasubjectatoa2%amiscellaneousaitemizedadeductionalimitationa-
aans✔✔C)aShort-termacapitalalossaonaScheduleaD
Allanon-
businessabadadebtsaareashortatermacapitalalossesaandaareaclaimedaonaScheduleaD.aTheaam
ountaofatimeatheamoneyahasabeenaowedatoayouadoesanotamatter.
Forma4137arequiresathat:
A)aAllaemployersaarearepresentedaonaseparatealines.
B)aAllatipsaareaincluded.
C)aTheacurrentasocialasecurityaandaMedicareataxarateaisaused.
D)aAllaofatheaabove.a-aans✔✔D)aAllaofatheaabove.
UseaForma4137aonlyatoafigureatheasocialasecurityaandaMedicareataxaowedaonatipsayouadidan
otareportatoayouraemployer.aIncludingaanyaallocatedatipsashownaonayouraForm(s)aW-
2athatayouamustareportaasaincome.
Completeaaaseparatealineaforaeachaemployer.
Indicateaallatipsaonatheaform,aincludingatipsaalreadyareported.
Scholarshipsaandafellowshipsaawardedatoadegreeacandidatesaareanotataxableaunlessatheya
areausedafor:
A)aTuition
B)aRoomaandaboard
C)aBooks
D)aSuppliesarequiredaforatheacourseaofastudya-aans✔✔B)aRoomaandaboard
Foradegreeacandidates;ascholarshipsaandafellowshipsaareaconsideredataxableaincomeatoath
eaextentatheaproceedsaareausedaforaroom,aboardaoratravel.
Howadoanon-deductibleacontributionsatoaanaIRAaaffectatheataxpayer'sabasisainatheaIRA?
A)aNon-deductibleacontributionsaincreaseabasis.
B)aNon-deductibleacontributionsahaveanoaeffectaonabasis.
C)aNon-deductibleacontributionsadecreaseabasis.
D)aNon-deductibleacontributionsadecreaseabasisabutanotabelowazero.a-aans✔✔A)aNon-
deductibleacontributionsaincreaseabasis.
Non-
deductibleacontributionsaincreaseabasis.aOrdinarily,aaataxpayerahasanoacostabasisainahisatra
ditionalaIRAaandaalladistributionsaareafullyataxable.aIfaaataxpayeramadeanon-
deductibleacontributionsatoahisaIRA,aanyadistributionamightahaveaaacomponentathataisaaaretu
rnaofataxpayer'sacapital.aSo,aaataxpayerawhoamadeanon-
deductibleacontributionsatoahisaIRAawillahaveaaacostabasisainahisaIRA.aFurtheranondeductibl
eacontributionsawillaincreaseahisabasis.
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