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Enrolled Agent - Part 2 Exam Questions and Answers
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Enrolled Agent - Part 2 Exam Questionsand Answers
Adams iowns ia isecond iresidence ithat iis iused ifor iboth ipersonal iand irental ipurposes.
iDuring iYear i1, iAdams iused ithe isecond iresidence ifor i50 idays iand irented ithe
iresidence ifor i200 idays. iWhich iof ithe ifollowing istatements iis icorrect? i- iCorrect
iAnswers i-Utilities iand imaintenance ion ithe iproperty imust ibe idivided ibetween ipersonal
iand irental iuse
Since iAdams imade irental iuse iof ithe iproperty imore ithan i14 idays ior i10% iof ithe itotal
irented idays, ihe imust iallocate ithe itotal iexpenses ibetween ithe irental iuse iand ipersonal
iuse ibased ion ithe inumber iof idays iused ifor ieach ipurpose.
Carmine iis ia iself-employed iconsultant iwith ione iemployee, iDevin, iwho iearned i$48,000
iin i2022. iDevin icontributed ithe imaximum iamount ito ihis iSIMPLE i401(k) iplan iunder
iwhich ian iemployee ican ichoose ito imake isalary icontributions iof iup ito i15% iof ipay.
iCarmine imade ia i3% imatching icontribution. iWhich iof ithe ifollowing icorrectly irepresents
ithe iamount ithat iCarmine iwill ideduct ifor icompensation iand ibenefits ipaid ito iDevin iin
i2022? i- iCorrect iAnswers i-$48,000 iwages iand i$1,440 iretirement iplan icontribution
-Although ithe iemployee ican ichoose ito imake icontributions iin ian iamount iexpressed ias
ia ipercentage iof ithe iemployee's icompensation, ithe iamount icannot iexceed i$14,000 ifor
i2022
-As ia iresult, iCarmine iwould ideduct i$48,000 iwages iand i$1,440 i(3% iof i$48,000)
iretirement iplan icontribution ias icompensation iand ibenefits ipaid ito iDevin iin i2022.
A itaxpayer isold ihis irental ihouse ifor i$190,000 iin iMay i2022. iThe idepreciation itaken
iunder iMACRS iwas i$67,840. iIf ithe itaxpayer ihad iused ithe istraight-line imethod, ithe
idepreciation iwould ihave ibeen i$64,960. iHow imuch iSection i1250 igain idid ithis
itaxpayer ihave iwhen ithe ihouse iwas isold? i- iCorrect iAnswers i-Publication i544, ipage
i26, iprovides ithat iIRC iSection i1231 igains iand ilosses iare itaxable igains iand ilosses
ifrom iSection i1231 itransactions ibut idoes inot iinclude iany iof ithe igain ithat iis iordinary
iincome ias ia iresult iof iany irecapture iprovisions. iIn ithe icase iof ia isale ior iexchange iof
ireal iproperty ithat iis iused iin ia itrade ior ibusiness iand iheld ilonger ithan i1 iyear, ithe isale
ior iexchange iis ia iSection i1231 itransaction.
In iaddition, iall ireal iproperty ithat iis isubject ito ian iallowance ifor idepreciation iand ithat iis
inot iand inever ihas ibeen iIRC iSection i1245 iproperty i(see iPublication i544, ipages i27
iand i28, ifor iSection i1245 iproperty idefinition) iis iknown ias iIRC iSection i1250 iproperty,
,iand ithe igain ion iits idisposition iis itreated ias iordinary iincome ito ithe iextent iof iadditional
idepreciation iallowed ior iallowable ion ithe iproperty i(Publication i544, ipage i29).
The iadditional idepreciation ifor iSection i1250 iproperty ithat iis iheld ilonger ithan i1 iyear iis
ithe iactual idepreciation iadjustments ithat iare imore ithan ithe idepreciation ifigured iusing
ithe istraight-line imethod. i(Publication i544, ipages i29)
In ithis iproblem, ithe itaxpayer's iSection i1250 igain iis ithe idifference ibetween ithe
iMACRS iand istraight-line idepreciation, iwhich iis i$2,880 i($67,840 i− i$64,960).
John iand iMary ihad ia ipipe iburst iin ithe ibasement iof iyour irental ihome. iThey iwere
iunable ito ireach iyou ion ivacation. iThey ihad ithe iplumber icome iout iand irepair ithe ipipe
iand idamage. iThey ipaid ithe iplumber i$575. iThey ideducted i$575 ifrom itheir irent iof
i$5,000. iHow imuch irent ishould ibe iconsidered iincome ithat imonth? i- iCorrect iAnswers i-
-5,000
If ia itenant ipays iany iof ithe irental iproperty iexpenses, ithe ipayments iare itreated ias
irental iincome iby ithe iproperty iowner iand imay ibe ideducted ias ian iexpense iby ithe
iproperty iowner iif ithey iare ideductible irental iexpenses. i(See ipages i3-4 iof iPublication
i527.)
In ithis iproblem, ithe itaxpayer iincludes ithe i$5,000 i($4,425 iactual irent ipayment iand
i$575 ito irepair ithe ipipes).
When iare iestimated itax ipayments idue ifor ia icorporation? i- iCorrect iAnswers i-By ithe
i15th iday iof ithe i4th, i6th, i9th, iand i12th imonths iof ia icorporation's itax iyear
Which iof ithe ifollowing iare inot iorganizational icosts ithat ican ibe iamortized? i- iCorrect
iAnswers i-Costs iof iissuing iand iselling istock
The icosts ifor iissuing iand iselling istock ior isecurities, isuch ias icommissions,
iprofessional ifees, iand iprinting icosts, iare inot iorganizational icosts. iThey iare icapital
iexpenses ithat ithe itaxpayer icannot iamortize.
Under iwhich iof ithe ifollowing isituations idoes ia icorporation iqualify ifor ithe ismall
ibusiness icorporation iexemption ifrom ialternative iminimum itax i(AMT)? i- iCorrect
iAnswers i-The iTax iCuts iand iJobs iAct imade imajor ichanges ito ithe itaxation iof
icorporate itaxpayers, iincluding, ibut inot ilimited ito ithe irepeal iof ithe icorporate ialternative
iminimum itax i(AMT), ieffective ifor itax iyears ibeginning iafter i2017. iThus ifor inow, ithe
ismall ibusiness icorporation iexemption ifrom iAMT idoes inot iapply.
Which iof ithe ifollowing istatements iis icorrect iconcerning ithe idistribution iof istock irights
i(also iknown ias i"stock ioptions") ito ishareholders? i- iCorrect iAnswers i-They iare
idistributions iby ia icorporation iof irights ito iacquire iits istock.
They iare igenerally itax-free ito ishareholders.
Distributions iby ia icorporation iof iits iown istock iare icommonly iknown ias istock
idividends. iStock irights i(also iknown ias i"stock ioptions") iare idistributions iby ia
icorporation iof irights ito iacquire iits istock. iDistributions iof istock irights iare igenerally itax-
free ito ishareholders.
However, ithere iare isituations iwhereby ithe istock idividends iand istock irights ibecome
itaxable. iFor iexample, iif iany ishareholder ihas ithe ichoice ito ireceive icash ior iother
, iproperty iinstead iof istock ior istock irights, ithe istock iand istock irights iare itreated ias
iproperty iand iare igoverned iby idifferent irules. iFor iother itaxable isituations, isee
iPublication i542, ipage i18.
Christopher iwants ito icreate ia irevocable igrantor itrust ithat iwill iown iall iof ihis istocks iand
irental iproperties. iWhich istatement iregarding iincome iof ithe itrust iis itrue? i- iCorrect
iAnswers i-Christopher iwill ibe itaxed ion iall iincome iof ithe itrust, iregardless iof
idistributions.
A itrust iis ia igrantor itrust iif ithe igrantor iretains icertain ipowers ior iownership ibenefits.
iThis ialso ican iapply ito ionly ia iportion iof ia itrust. iIn igeneral, ia igrantor itrust iis iignored
ifor itax ipurposes iand iall iof ithe iincome, ideductions, ietc. iare itreated ias ibelonging
idirectly ito ithe igrantor.
In iaddition, ithe igrantor iis itreated ias ian iowner iof iany iportion iof ia itrust iin iwhich ihe ior
ishe ihas ia ireversionary iinterest iin ieither ithe iincome ior icorpus itherefrom, iif, ias iof ithe
iinception iof ithat iportion iof ithe itrust, ithe ivalue iof ithe ireversionary iinterest iis imore ithan
i5% iof ithe ivalue iof ithat iportion. iThis irule ialso iapplies iin ithe icase iof ithe iowner's
ispouse.
Note: iThe igrantor iis itreated ias iholding iany ipower ior iinterest ithat iwas iheld iby ieither
ithe igrantor's ispouse iat ithe itime ithat ithe ipower ior iinterest iwas icreated ior iwho
ibecame ithe igrantor's ispouse iafter ithe icreation iof ithat ipower ior iinterest.
As ia iresult, iall iof ithe iincome ifrom iChristopher's irevocable igrantor itrust iwill ibe itaxed ito
ihim, iregardless iof idistributions.
A ibusinessman ican ideduct iup ito i$2,000 iper iyear iof iexpenses ifor iattending
iconventions, iseminars, ior isimilar imeetings iheld ion icruise iships. iAll iof ithe ifollowing
irequirements imust ibe imet, iexcept: i- iCorrect iAnswers i--the icruise iship icompany
iprovides ia istatement ithat iit ihas iadequate ifacilities ito iaccommodate ithe ineeds iof ithe
iconvention, iseminar, ior imeetings.
-However, ia itaxpayer ican ideduct ithese iexpenses ionly iif iall ifive iof ithe ifollowing
irequirements iare imet:
the iconvention, iseminar, ior imeeting iis idirectly irelated ito ihis ior iher itrade ior ibusiness,
the icruise iship iis ia ivessel iregistered iin ithe iUnited iStates,
all iof ithe icruise iship's iports iof icall iare iin ithe iUnited iStates ior iin ipossessions iof ithe
iUnited iStates,
the itaxpayer iattaches ito ithe itax ireturn ia iwritten istatement isigned iby ithe itaxpayer ithat
iincludes iinformation iabout ithe itotal idays iof ithe itrip i(not iincluding ithe idays iof
itransportation ito iand ifrom ithe icruise iship iport), ithe inumber iof ihours ieach iday ithat ithe
itaxpayer idevoted ito ischeduled ibusiness iactivities, iand ia iprogram iof ithe ischeduled
ibusiness iactivities iof ithe imeeting, iand
the itaxpayer iattaches ito ithe itaxpayer's ireturn ia iwritten istatement isigned iby ian iofficer
iof ithe iorganization ior igroup isponsoring ithe imeeting ithat iincludes ia ischedule iof ithe
ibusiness iactivities iof ieach iday iof ithe imeeting, iand ithe inumber iof ihours ithe itaxpayer
iattended ithe ischeduled ibusiness iactivities.
Jacob icontributes iproperty iwith ia ifair imarket ivalue iof i$7,000, iadjusted ibasis iof
i$4,000, iand ia imortgage iof i$1,000, iwhich ithe ipartnership iassumes, ito ia ipartnership
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