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Enrolled Agent Exam – businesses Questions and Answers
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Enrolled Agent Exam – businessesQuestions and Answers
True ior ifalse: iForeign iincome iyou iearned ifrom iwages ior iself-employment ior iany
isource ifrom ianywhere iin ithe iworld iis itaxable ifor iAmerican icitizens iand imost iresidents
iwith icertain iexceptions i- iCorrect iAnswers i-True
First iexception ifor iexcluding iforeign iincome i- iCorrect iAnswers i-An iAmerican iresiding
ioutside ithe iU.S. ifor imost iof ithe iyear ican iexclude i$104,800 i(2018; iadjusted iannually
ifor iinflation) ion iyour iincome itaxes
These iare ithe itwo icaveats iof ibeing iAble ito iexclude iforeign iincome ias ian iAmerican
iliving ioutside ithe iU.S. i- iCorrect iAnswers i-1. iMust ipay isocial isecurity itax ion iall iyour
iforeign iearnings iand i2. iyou imust ipay iincome itax ion iany iforeign iinvestment iincome
iyou imake iwhile iliving ioutside ithe icountry
2nd iexception ito ipaying iforeign iincome itax i- iCorrect iAnswers i-if iyou ipay itaxes iin
ianother icountry ion iincome inot icovered iby ithe iforeign itax iexclusion, iyou imay iget ia
itax icredit iin ithe iU.S. ifor ithe itaxes iyou ipaid iabroad.
Examples iof ithings ithat iare inot iconsidered iincome i- iCorrect iAnswers i-gifts iand
iinheritance, iprize iand ilottery iwinnings, ifringe ibenefits, ireturn iof icapital, iloans,
iconsignments
Gifts iand iInheritances i- iCorrect iAnswers i-Individuals imay ireceive iproperty ias igifts ior
ifrom ia idecedent's iestate i(an iinheritance)
While ithe ireceipt iof iproperty iis imost icertainly ireal iincome ito ithe irecipient, ithe ivalue iof
igifts iand iinheritances iare iexcluded ifrom igross iincome ibecause ithese itransfers iare
isubject ito ithe iFederal iGift iand iEstate itax
What itypes iare ifringe ibenefits iare iconsidered itaxable? i- iCorrect iAnswers i-vacation
ipay, ibonuses, ietc.
T/F iGetting iback iwhat iyou iput iinto ia ibusiness idoesn't ihave iany itax iconsequences i-
iCorrect iAnswers i-true
, T/F iif ithe ibusiness ihas ito ipay iback ia iloan, iit's inot iconsidered iincome i- iCorrect
iAnswers i-True
These iare igoods iheld iby iyour ibusiness ithat ibelong ito iothers iand iare ineither iincome
inor iinventory i- iCorrect iAnswers i-consignments
What iis ione iof ithe imost icommon iforms iof itax ishelters? i- iCorrect iAnswers i-Rental
iproperty
How idoes ithe irental iproperty itax ishelter iwork? i- iCorrect iAnswers i-Cash iand inon icash
ideductions, iinterest, idepreciation, iand iinsurance iexceed irental iincome
T/F iwith irental iproperties, iany iappreciation iof ithe iproperty iis inot itaxable iuntil ithe
iproperty iis isold i- iCorrect iAnswers i-true
Telltale isigns iof itax ischemes i- iCorrect iAnswers i-transactions iwith itax ireduction
imotives ithat ihave iminimal ior ino ieconomic isense, iusually ipromise ilarge itax ideferrals,
ideductions ior iwrite ioffs ibeyond iinvestment icosts, ioften imore icomplicated ithan ipeople
iwould ilike ito iadmit
Moral iof iTax ischemes i- iCorrect iAnswers i-don't ibuy iin iif ithey idon't ihave ia ireasonably
igood ichance iof iturning ia iprofit i- iwith itax isavings ias ia ibonus
Theory ibehind iAlternative iMinimum itax i- iCorrect iAnswers i-If isomeone iwho itakes ia ilot
iof itax ideductions ior itax icredits ishould istill ihave ito ipay ia iminimum iamount iof iincome
itaxes.
True ior ifalse: iAll itaxpayers imust ifigure itheir iincome itax iunder iboth ithe iregular
i(marginal) itax irates iand ithe iAMT irates iand ipay iwhichever iis iless. i- iCorrect iAnswers i-
false
________ iis ifigured iby iadding iback ito itaxpayers' iincome imany iof ithe iexemptions,
ideductions iand icredits ithat ilowered itheir itaxable iincome iin ithe iregular isystem i-
iCorrect iAnswers i-Alternative iminimum itax
Ways iAlternative iminimum itax iis itriggered i- iCorrect iAnswers i-NOL ideductions iin ia
ibusiness, iinterest ideductions ion ihome iequity iloans, ilarge iitemized ideductions ifor
iSALT, iforeign itax icredits, ipassive iincome ior iloss, icertain iinstallment iof isale iincome,
iunreimbursed iemployee iexpenses, iexemptions ifor idependents, iChild i& ieducation itax
icredits, iinterest iincome ion icertain itax-exempt ibonds, iexercise iof iincentive istock
ioptions
These itypes iof iexpenses imight ibe ihard ito iprove ito iIRS iauditors i- iCorrect iAnswers i-
cash iexpenses
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