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Enrolled Agent Part 1 Exam Questions and Answers
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Enrolled Agent Part 1 Exam Questionsand Answers
On iwhich iSchedule iwould ia iself-employed ifarmer ireport itheir iincome iand iloss? i-
iCorrect iAnswers i-Schedule iF
What itypes iof iincome iare ireported ion iSchedule iE i(Form i1040)? i- iCorrect iAnswers i-
Income ifrom irental ireal iestate, iroyalties, ipartnerships, iS icorps, itrusts, iand iestates.
What iare isome isituations ithat imake idischarged idebt inon-taxable? i- iCorrect iAnswers i-
(1) ibankruptcy i(2) iinsolvency i(3) iamounts icancelled ias ia igift ior ibequest i(4) icertain
istudent iloan icancellations i(5) iqualified iprincipal iresidence iindebtedness
What iis ithe iSection i121 iexclusion, ias iit ipertains ito ithe isale iof ia ipersonal iresidence? i-
iCorrect iAnswers i-Taxpayers imay iexclude iup ito i$250,000 iin icapital igains ifrom ithe
isale iof ia imain ihome i($500,000 iif imarried ifiling ijointly)
What iis ithe inormal iextended idue idate ifor iindividual itax ireturns? i- iCorrect iAnswers i-
October i15
What iIRS iforms iare iused iby ian iindividual itaxpayer ito ireport ithe igain ior iloss ifrom ithe
isale iof istock? i- iCorrect iAnswers i-Schedule iD iand iForm i8949. iForm i8949 ireports ithe
idetails iof ieach icapital iasset itransaction. iSchedule iD iis iused ito ireport ithe inet ishort-
term iand ilong-term itotals iof ithe igains iand ilosses.
When ia itaxpayer itakes ia idistribution ifrom ia iretirement iplan, iwhich iform idoes ithe
iretirement iplan isend ito ithe itaxpayer ito ireport ithe idistribution? i- iCorrect iAnswers i-
Form i1099-R, iDistributions iFrom iPensions, iAnnuities, iRetirement ior iProfit-Sharing
iPlans
What iis ian iinstalment isale? i- iCorrect iAnswers i-A itype iof isale ithat ioccurs iover ithe
icourse iof iseveral iyears. iGain ion isale ican ibe ireported iwhen iinstalment ipayments iare
icollected, irather ithan iat ithe itime iof ithe isale. iThe imost icommon itype iof iinstalment
isale iis ithe isale iof ireal iestate.
Can ia itaxpayer iwith ian iamount idue iefile itheir ireturn iand istill ipay ia ibalance idue iby
ipersonal icheck ior imoney iorder? i- iCorrect iAnswers i-Yes, ia itaxpayer ican iefile itheir
,ireturn iand isubmit ia icheck ipayable ito ithe iUnited iStates iTreasury iwith ia iform i1040-V
iand imail iit ito ithe iIRS. iAs ilong ias ithe ipayment iis ipostmarked iby ithe iorginal idue idate
iof ithe ireturn, ithe ipayment iwill ibe iconsidered itimely.
What iis ia ibarter itransaction? i- iCorrect iAnswers i-Bartering iis ithe iexchange iof igoods
ior iservices. iA ibarter iexchange iis ian iorganization iwhose imembers icontract iwith ieach
iother i(or iwith ithe ibarter iexchange) ito iexchange iproperty ior iservices
What iis i"Community iIncome" ias iit irelates ito imarried icouples ifiling iseparate itax
ireturns? i- iCorrect iAnswers i-Community iincome iis iconsidered ito ibelong iequally ito
iboth ispouses. iThis ican iaffect ifederal itax ireporting ifor iseparate ireturns i(MFS),
iespecially iwhen ispouses iare idomiciled iin ia icommunity iproperty istate.
What iis ia iQualified idomestic irelations iorder i(QDRO), iand ihow idoes iit iaffect ia
itaxpayer's iretirement iplan ireporting? i- iCorrect iAnswers i-A iQualified idomestic
irelations iorder i(QDRO) iis ia itype iof iproperty isettlement iincident ito idivorce. iA iQDRO
iallows ia itaxpayer iroll iover itax ifree iall ior ipart iof ia idistribution ifrom ia iqualified
iretirement iplan ithat ithey ireceive ifrom ian iex-spouse iunder ia iQDRO.
How idoes ian iannulment iaffect ia itaxpayer's ifiling istatus? i- iCorrect iAnswers i-An
iannulment iis ia ivoiding iof ithe imarriage icontract. iUnlike ia idivorce, ian iannulment iis
iretroactive. iAmended ireturns imust ibe ifiled ifor iany iopen iyears iaffected iby ithe
iannulment.
What iis ithe iIRS idefinition iof ia i"custodial iparent"? i- iCorrect iAnswers i-The icustodial
iparent iis ithe iparent iin iwhose ihome ia ichild ilived ifor ithe igreater ipart iof ithe iyear, ii.e.,
ithe iparent ithat ithe ichild ilived iwith ithe imost idays iduring ithe iyear.
Are itips itaxable, ior iare ithey iconsidered igifts? i- iCorrect iAnswers i-All itips iare itaxable.
iTips iare ireceived ias ia igratuity ifor iservices iperformed. iTips igo ibeyond ithe istated
iamount iof ithe ibill iand iare igiven ivoluntarily.
What iinformation iis ireported ion iForm iW-2? i- iCorrect iAnswers i-Form iW-2 ireports
iwages, isalaries, itips, iand ifederal iincome itax iwithheld ias iwell ias iSocial iSecurity iand
iMedicare itaxes iwithheld.
How idoes ithe iIRS idefine ipermanent idisability? i- iCorrect iAnswers i-The iIRS idefines
i"permanent idisability" ias ia idisability ithat iis iexpected ito ilast iat ileast ia iyear iand ikeeps
ian iindividual ifrom iany igainful iactivity. iSpecial iexceptions iapply ito idisabled ipersons
iwho iwork iin ia isheltered iworkshop.
How iis itax-exempt iinterest iincome ireported? i- iCorrect iAnswers i-Tax-exempt iinterest
iincome imust ibe ireported ion ia itaxpayer's iForm i1040, ibut iit iis inot itaxable iat ithe
ifederal ilevel. iMunicipal ibond iinterest iis iearned ifrom ibonds iissued iby istates, icities, ior
icounties.
, Is iinterest ifrom ia iCertificate iof iDeposit itaxable? i- iCorrect iAnswers i-Interest ifrom ia
icertificate iof ideposit i(CD) iis itaxable iin ithe iyear iit iis iearned. iA ibank ior icredit iunion iwill
iusually iissue ia iForm i1099-INT ithat istates ithe iinterest ieach iyear, iunless ithe iamount
iis iunder i$10.
The iamount iof ithe istandard ideduction idepends ion: i- iCorrect iAnswers i-Filing istatus,
iage iof ithe itaxpayer, iwhether ior inot ithe itaxpayer iis iblind, iand iwhether ithe itaxpayer iis
ia idependent ion isomeone ielse's ireturn.
What iare ipersonal iproperty itaxes? iWhere iare ithese itaxes ireported? i- iCorrect
iAnswers i-Taxes ion ipersonal iproperty iinclude iDMV ifees iand iproperty itax ion ireal
iestate. iPersonal iproperty itaxes iare ideductible ion iSchedule iA, isubject ito icertain
ilimitations.
What iis ia itax icredit, iand ihow idoes iit iaffect ian iindividual's itax ireturn? i- iCorrect
iAnswers i-A itax icredit iis ia idollar-for-dollar ireduction iin itax. iTax icredits ican ibe
ideducted idirectly ifrom itaxes iowed.
What iis ia ipension? iIs ipension iincome itaxable? i- iCorrect iAnswers i-A ipension iis ia
iseries iof ipayments imade ito ian iemployee ior isurvivor i(the ibeneficiary iof ia ideceased
iemployee's ipension) iafter ithe iemployee iretires ifrom iwork. iPension iincome iis itaxable
ias iretirement iincome.
What itypes iof igifts iare iexempt ifrom igift itax ireporting? i- iCorrect iAnswers i-Gifts iunder
ithe iannual igift ilimit i($15,000 iin itax iyear i2021), ipayments iof imedical iexpenses,
ipayments iof ituition, idonations ito iqualified icharities, idonations ito ipolitical
iorganizations, iand igifts ito ia iU.S. icitizen ispouse.
Are istate isales itaxes ideductible? i- iCorrect iAnswers i-Yes. iTaxpayers imay ideduct
ieither i(1) isales itax ior i(2) istate iand ilocal iincome itax ias ian iitemized ideduction ion
iSchedule iA, i(but inot iboth).
Can ian iindividual itaxpayer ideduct iforeign iincome itaxes? i- iCorrect iAnswers i-Yes.
iForeign iincome itaxes imay ibe iclaimed ieither ias ian iitemized ideduction ior ias ia inon-
refundable itax icredit. iTaxpayers imay ichoose iwhichever imethod igives ithem ithe ibest
itax iresult.
Are igambling ilosses ideductible? i- iCorrect iAnswers i-Yes. iGambling ilosses iare
ideductible ias ian iitemized ideduction, ibut ionly iup ito ithe iamount iof igambling iwinnings.
iLosses iin iexcess iof iwinnings iare inot ideductible.
What iis ithe iACA iMarketplace? i- iCorrect iAnswers i-The iterm i"Marketplace" irefers ito
istate iMarketplaces, iand ia ifederally-facilitated iMarketplace; igovernmental iagencies ior
istate ientities ithat imake iqualified ihealth iplans iavailable ito iindividuals iand ismall
ibusinesses.
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