Enrolled Agent
All of the following income types are reported on Form 1099-MISC EXCEPT: (A) Non-employee compensation over $600 (B) Payments made to a physician or supplier or provider of medical or healthcare services of $600 or more made in the course of your trade of business (C) Canceled debt payments of $600 of more (D) Crop insurance proceeds of $600 or more
C 2018 Instructions for Form 1099-MISC, pp. 6-9; Treas. Reg. 1.6041-1
Which of the following is true regarding the Report of Foreign Bank and Financial Accounts (FBAR) requirements? (A) The FinCEN Form 114 (FBAR) must be filed by anyone with a financial interest in or signature authority over a foreign bank account (B) The due date for the FBAR filing is generally July 15 of the current tax year for individuals (C) The FinCEN Form 114 (FBAR) is filed with your current tax year individual income tax return (D) The FinCEN Form 114 (FBAR) is filed online with the Financial Crimes Enforcement Network
D 31 C.F.R. §§ 1010.350(b); 1010.306(c); Publication 54, pg. 8 (2017).
What form may be filed when you are repaying the first-time homebuyer credit? (A) Form 1040 EZ (B) Form 1040 A (C) Form 1040 ES (D) Form 1040
D IRS Pub 17, Pg. 8; Instructions for Form 1040; Form 1040, Line 60b; Instructions for Form 5405
The requirement to file the FinCEN Form 114 applies to U.S. Persons with a financial interest in or signature authority over any foreign financial account(s), if the aggregate value of these accounts, at any time during the calendar year, exceeds: (A) $1,000 (B) $5,000 (C) $7,500 (D) $10,000
D IRS, Bank Secrecy Act, (31 U.S.C. § 5314); 31 C.F.R. §§ 1010.350(a); 1010.306(c); Publication 4261, pg. 1 (2016).
Generally, the deadline to file Form 5500, Annual Return/Report of Employee Benefit Plan is the (A) Fifteenth day of the fourth month after the end of the plan year (B) Fifteenth day of the fifth month after the end of the plan year (C) Fifteenth day of the seventh month after the end of the plan year (D) Last day of the seventh month after the end of the plan year
D 2017 Instructions for Form 5500, Annual Return/Report of Employee Benefit Plan, Pg. 4; Treas. Reg. §301.6058-1(a)(4)
What is the total amount a sole proprietor is obligated to report on 1099-MISC forms based on the following expenses claimed on schedule C? Incorporated law firm: $600 Sign printer: $800 ($600 labor and $200 materials) Web page designer: $500 Incorporated janitorial company: $800 Consultant A: $1,000 ($400 paid in cash and $600 paid by check) Consultant B: $500 paid in cash Consultant C: $400 paid by check (A) $1,400 (B) $1,600 (C) $2,000 (D) $2,400
D 2018 Instructions for Form 1099-MISC, page 2 states that attorneys' fees of $600 or more are reportable in 1099-MISC and page 8 states that services by nonemployee includes parts and materials. Pub 15-A, pp. 8-10 covers whether someone is an employee or a nonemployee independent contractor.
American Opportunity Credit Amount
o 100% of qualified tuition & related expenses paid by taxpayer is not > $2,000 o 25% of expenses paid as exceeds $2,000 but not $4,000
(AOC) Limitations
o Credit only allowed for year if at least ½ time student for part of the year o Only allowed for first 4 years of postsecondary Denial of credit if student convicted of felony drug offense
Eligible Student
1. Not claimed an AOC in any four earlier tax years 2. Had not completed the first four years of postsecondary education before 2011 3. Student was enrolled at least half-time in a program leading to a degree for at least one academic period beginning in 2011; 4. Student had not been convicted of any federal or state felony for possessing or distributing a controlled substance as of the end of 2011.
Two taxpayers married on November 30. That same year, the husband enrolled in an accredited college to further his career and subsequently received a Form 1098-T, Tuition Statement. The wife was employed with an income of $45,000 and paid for the husband's education expenses. Based on their circumstances, what is the correct method to report the education credit? (A) Taxpayers must file a joint return to claim an education credit (B) Based on the wife's AGI, they do not qualify to claim an education credit (C) Husband is ineligible to claim an education credit because the wife paid his education expenses (D) Wife should report nonqualified education expenses on Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits)
A IRC § 25A(g)(6); Instructions for Form 8863; page 2
. If a taxpayer and the IRS fail to settle a non-docketed examination controversy in the IRS Appeals Office, the next event to occur is: (A) Issuance of a notice of deficiency (B) Issuance of notice and demand for payment (C) Return of the case to the Revenue Agent for further review (D) Referral of the case to the Taxpayer Advocate
A Publication 556 Examination of Returns, Appeal Rights, and Claims for Refund, p. 5
A new client visits an Enrolled Agent (EA). The taxpayer believes that the U S tax system is purely voluntary and filed a return showing no income tax, requesting all withholding be refunded. The IRS assessed a $5,000 frivolous return penalty. The taxpayer has received a Notice of Intent to Levy and Right to Collection Due Process (CDP) Hearing concerningthe $5,000 penalty. The taxpayer wants the EA to present the previous arguments about the tax system. Which of the following is a correct statement regarding the CDP hearing request raising arguments previously deemed frivolous? (A) If the CDP request is deemed frivolous, the taxpayer will be given 30 days to withdraw or amend the CDP request in order to avoid a frivolous submission penalty (B) The EA would not be subject to a frivolous submission penalty by submitting the CDP hearing request (C) Since a $5,000 frivolous return penalty has been assessed, a second penalty cannot be assessed for the same tax period (D) In all circumstances, filing the CDP request will suspend any levies while Appeals considersthe request
A : IRC 6702
An Enrolled Agent (EA) is in the process of representing Taxpayer A before the Internal Revenue Service for a tax matter. Taxpayer A's ex-husband also asked the EA to represent him for the same matter. Which of the following is NOT required for the EA to represent both? (A) The EA must notify the Office of Professional Responsibility that the EA will be representing both taxpayers (B) Both taxpayers must waive the conflict of interest and give informed consent in writing to the EA (C) The EA must reasonably believe that the EA will be able to provide competent and diligent representation to both taxpayers (D) The representation is not prohibited by law
A Circular 230 Pages 22 and 23, Section 10.2
When advertising their services, an Enrolled Agent may use all of the following phrases to describe their professional designation EXCEPT: (A) Certified to practice before the Internal Revenue Service (B) Admitted to practice before the Internal Revenue Service. (C) Enrolled to represent taxpayers before the Internal Revenue Service (D) Enrolled to practice before the Internal Revenue Service
A Circular 230,section 10.30(a)(1)
An organization may qualify under Section 501(c)(3) if it is organized exclusively for which of the following purposes? (A) Charitable (B) Business (C) Political action (D) Persona
A Code Section 501(c)(3); Treas. Reg. § 1.501(c)(3)-1(d)(1)(i
All of the following returns would include income in respect of a decedent EXCEPT: (A) The final Form 1040 for the decedent (B) The decedent's estate, Form 1041, if the decedent's estate receives right to the income (C) The Form 1040 of any person to whom the decedent's estate properly distributes the income (D) The beneficiary's Form 1040, if the right to income arising out of the decedent's death is passed directly to the beneficiary and is never acquired by the decedent's estate
A IRC 691(a)(1); Publication 559; Survivors, Executors and Administrators, pg. 9. Recipients of income in respect of decedents
Under the updated capitalization and repair rules, amounts paid for which of the following activities generally are not required to be capitalized unless an election is made to treat them as capital expenditures? (A) Repair and maintenance that does not improve a unit of tangible property (B) Adapting a unit of property to a new or different use (C) Materially enlarging a unit of property (D) Replacing a major component or substantial structural part of a unit of property
A IRC § 263; Treas. Reg. § 1.263(a)-3
A couple filed their 2008 return as Married Filing Jointly and claimed $7,500 for the first-time homebuyer credit. The couple used this home as a primary residence. In the current year, they converted the home into rental property. What, if any, is the tax obligation of the taxpayers regarding the first-time homebuyer credit? (A) They must pay the unpaid balance of the credit (B) They must pro-rate the credit received over 15 years and repay 50% of the original credit (C) They must reduce their depreciable basis in the property by 50% of the unpaid balance of the credit (D) Since they used this home as a primary residence for 5 years, there is no requirement to repay
A IRC § 36(f)(2), IRB 2009-6: Form 5405 Instructions, pp. 2-4
If a company is an accrual taxpayer, what is the amount of gross receipts reported on the taxpayer's Form 1040 Schedule C based on the information below? Service income $25,000 Gain on the sale of an asset $1,500 Interest on accounts receivable $3,000 (A)$25,000 (B)$26,500 (C)$28,000 (D) $29,500
A IRS, Tax Guide for Small Business Publication 334, Chap 5, pgs. 20-27; Instructions for Schedule C (Form 1040), Pg. C-5
A taxpayer received a notice from the IRS saying a prior year's tax return had been examined, creating a tax assessment of $2,560. The taxpayer disagrees with the amount of tax assessed. The taxpayer could request an audit reconsideration in all of the following situations EXCEPT: (A) The full amount owed has already been paid (B) There is new documentation for the examination (C) They neither appeared for the examination nor sent information to the IRS (D) They moved and never received the examination notice
A Pub 3598
To avoid the penalty for not having insurance, taxpayers must be enrolled in qualifying health coverage, also called minimum essential coverage. All of the following are examples of minimum essential coverage EXCEPT: (A) Certain insurance coverage that may provide limited benefits. That includes, but is not limited to, the following types of plans: stand-alone dental and vision, accident or disability income or workers' compensation (B) Employer-sponsored coverage. That includes, but is not limited to, the following types of plans: a self-insured group health plan for employees, retiree and COBRA coverage (C) Individual health coverage. That includes, but is not limited to, the following types of plans: health insurance purchased directly from an insurance company, or Health Insurance Marketplace (D) Coverage under government-sponsored programs. That includes, but is not limited to, the following types of plans: Medicare Part A coverage, Medicare Advantage Plans and most Medicaid coverage
A Publication 974, p. 8
Any Enrolled Agent (EA) can represent a taxpayer: (A) Before any administrative level of the IRS (B) Only if the EA prepared the return (C) At all tax-related federal court proceedings (D) Before collections, examinations and Tax Court
A Tax Court Rule 200; Circular 230, sections 10.2(4), 10.3(c) & 10.32
When e-filing their federal return, a taxpayer who meets the requirements to file both Form 8938, Statement of Specified Foreign Financial Assets, and Form 114, Report of Foreign Bank and Financial Accounts, should: (A) Attach both forms to their federal return (B) Attach only the Form 8938 to their federal return and file the Form 114 through the Financial Crimes Enforcement Network's E-Filing system (C) Attach only the Form 114 to their federal return as it contains the 8938 information (D) Send both forms in separately to the Internal Revenue Service
B Form 8938 Instructions, Pg. 1 (2017); Publication 4261, pg. 1 (2016). https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements states that the Form 114 is not filed with a federal tax return
An Enrolled Agent (EA) represented both a taxpayer and a former business partner of the taxpayer before the Internal Revenue Service with regard to a specific tax matter. Due to the conflict of interest, the EA obtained a written consent from each of the clients waiving the conflict of interest and giving informed consent. The EA must keep those written consents for how long after the conclusion of representation? (A) 24 Months (B) 36 Months (C) 48 Months (D) 72 Months
B : Circular 230, section 10.29(c)
If a corporation makes a below-market loan to a shareholder, the corporation generally is deemed to make a payment to the shareholder for federal tax purposes. This deemed payment is treated as a(n): (A) Gift (B) Dividend (C) A payment of compensation (D) Honorarium
B Below Market Loans, Section 7872(c); IRC, § 7872; Publication 535, pg. 15
An Enrolled Agent (EA) can be sanctioned under Circular 230 in each of the following ways EXCEPT: (A) Monetary penalty (B) Imprisonment (C) Censure (D) Disbarment
B Circular 230 Section 10.50
In order for the IRS to grant a guaranteed installment agreement, a taxpayer must have not failed to file any income tax returns or pay any tax shown on such returns during any of the preceding: (A) 3 taxable years (B) 5 taxable years (C) 6 taxable years (D) 10 taxable years
B IRC 6159(c)(2)
The Net Investment Income Tax may apply to which of the following? (A) Alimony (B) Taxable mutual fund distribution (C) Tax exempt municipal bond interest (D) Traditional IRA distribution
B IRC § 1411(c)(1) and (5); Instructions for Form 8960 Net Investment Income Tax--Individuals, Estates, and Trusts, pages 1, 5 and 6
The taxpayer has a child under the age of 24 who is a full-time student in their 2nd year of college. The student will be claimed as a dependent on the taxpayer's return. The student's educational expenses included $8,000 for tuition and room and board of $4,000. The student received a $5,000 scholarship for tuition use only, as well as an additional $2,500 scholarship to pay any of the student's college expenses. Which of the following statements is correct, based on the information above? (A) The student can claim the American Opportunity credit on their return for tuition expenses of $2,500 and should report as income $2,000 of the $2,500 scholarship (B) The taxpayer can claim the American Opportunity credit on their return for tuition expenses of $2,500, and the student should report as income $2,000 of the $2,500 scholarship (C) The taxpayer can claim the American Opportunity credit on their return for tuition expenses of $2,500, and the student should not report any of the $2,500 scholarship as income (D) The taxpayer can claim the American Opportunity credit on their return for tuition expenses of $2,500 and should report as income $2,000 of the $2,500 scholarship
B IRC § 25A(i); IRC § 117; Publication 970, pp. 5, 7
All of the following are true regarding cancellation of debt income for S corporations EXCEPT: (A) The canceled amount is considered gross income on Form 1120S (B) The amount of canceled debt excluded from income will increase the basis of the shareholders' stock (C) The pro rata share of the canceled debt income will pass through to the shareholders (D) Canceled debt income may be excluded to the amount of insolvency of the S corporation
B IRC §§ 108(d)(7)(A), 61(a)(12), and 1366(a); Reg. 1.108-7(d); Form 1120 Instructions, pgs. 13-14
Which of the following would generally be reported as other income for a business? (A) Proceeds from international sales (B) Bad debts recovered (C) Sales tax collected (D) Income from bartering activities
B IRS, Instructions for Schedule C (Form 1040), Pg. C-5; Pub. 535, pgs. 40-41 (Rev. 2016)
A taxpayer who receives a Form 1099-MISC with the wrong dollar amount in box 7 should do which of the following? (A) Contact IRS for a corrected Form 1099-MISC (B) Contact the payer for a corrected Form 1099-MISC (C) Report the incorrect amount stated on the Form 1099-MISC as income (D) Disregard the Form 1099-MISC since it is incorrect
B Instructions for Recipient on Form 1099-MISC (2018)
An Enrolled Agent's (EA's) client is an individual taxpayer who is requesting assistance with a proposed penalty. All of the following are methods of addressing the penalty, EXCEPT: (A) Prior to a penalty being assessed in an examination, it may be appealed via deficiency procedures (B) Prior to assessment, the EA can request binding arbitration to reconsider the penalty (C) After the penalty has been assessed, a written request for abatement can be submitted (D) After the penalty has been assessed and paid, the EA can prepare a claim for refund
B Methods of Appealing Penalties, IRM 20.1.1.4(2)
. A paycheck issued after the date of death to a taxpayer for work performed prior to death is considered: (A) Non-taxable income (B) Income in respect of a decedent (C) Excess compensation (D) Deferred income
B Pub 559, Survivors, Executors, and Administrators Pg. 10; IRC §691(a)(1)
All of the following would be included in the gross receipts of a business for a tax year EXCEPT: (A) Sales made but income not collected during the tax year for a business using an accrual accounting method (B) Sales taxes collected by a business using the cash accounting method (C) The fair market value of property the business received in exchange for a good or service bartered (D) Lease bonus and lease cancellation payments received from a lessee renting personal property or real estate from the taxpayer
B Publication 334, Chap 5, pgs. 20-27 & Chap 6, pg. 38; Gross Income Defined, IRC § 61
A taxpayer is provided a $300 per month mileage allowance for business travel from employer. In order for this to be a non-taxable item, which of the following must be true? (A) The taxpayer must return any excess reimbursement within 180 days after the expense was paid or incurred (B) The taxpayer must adequately account for the expenses within 60 days after they were paid or incurred (C) The taxpayer must receive the advance within 60 days of the time the taxpayer has the expense (D) The taxpayer must adequately account for the expenses within 120 days after they were paid or incurred
B Reg. § 1.62-2(g)(2); Publication 463 Chapter 6 Page 30
All of the following are reporting requirements of a qualified retirement plan subject to ERISA EXCEPT: (A) Submit Form 5500 - Annual Return/Report of Employee Benefit Plan (B) Information on certain contributions, conversions, and distributions to retirement plans reported on Form 8606 (C) Distributions from the plan are reported on Form 1099-R (D) Participants must receive period statements of their retirement benefits
B The Dept. of Labor's Reporting and Disclosure Guide for Employee Benefit Plans which is on the DOL website and referred to on IRS.gov; Publication 590-A, various pages
To find out if a taxpayer's Social Security benefits may be taxable, all of the following are taken into account EXCEPT: (A) Interest that is tax-exempt (B) The exclusion for foreign earned income (C) Notary fees received (D) Unemployment benefits
B § 86(b)(2); IRS, Publication 17, Pg.84
A 62-year-old, married taxpayer files Married Filing Separately, and lives apart from the spouse for an entire taxable year. What is the taxpayer's base amount for computing taxable Social Security benefits? (A) Zero (B) $25,000 (C) $32,000 (D) $9,000
B § 86(c)(1); IRS, Publication 915; page 3
An Enrolled Agent's communications with a client may be privileged if they concern: (A) Encouraging the client to participate in a tax shelter (B) Preparing the client's tax return (C) Representing the client in an IRS examination (D) A criminal tax investigation
C Code section 7525 (a)(1)-(2) and (b) ; Publication 556, pages 3-4
All of the following are true regarding Income in Respect of a Decedent (IRD) EXCEPT: (A) IRD is income the decedent would have received had death not occurred that wasn't properly included in the decedent's final return (B) The character of the IRD remains the same as it would have been to the decedent had they not passed (C) If an individual receives IRD and includes it on their return, they are not allowed a deduction for the estate tax attributable to the item of IRD as reported on Form 706 (D) IRD must be included as income on either the decedent's estate return, if the estate receives it, or the beneficiary, if the right to income is passed directly to the beneficiary and the beneficiary receives it, or any person to whom the estate properly distributes the right to receive it
C : IRC, § 691(a)(1), (3), and (c); IRS, Survivors, Executors and Administrators, Publication 559 Pgs. 9-10, 12
In preparing an Earned Income Credit Worksheet and Form 8867, to meet the due diligence requirements, a return preparer must retain for a certain period all of the following except: (A) A record of from whom the information used to prepare the Form 8867 and the worksheets was obtained (B) A copy of the Form 8867 (C) A record of any questions the taxpayer may have asked the tax preparer about their eligibility for the credits (D) Copies of documents provided by the taxpayer that the return preparer relied on to determine the eligibility for the credits
C Form 8867 Instructions (2017), page 4
Which of the following statements is correct regarding Form 1095A, Health Insurance Marketplace Statement? (A) Taxpayers do not need Form 1095A to complete Form 8962, Premium Tax Credit, to reconcile advance payments of the premium tax credit or claim the premium tax credit on their tax return (B) Taxpayers will receive Form 1095A to complete Form 8962, Premium Tax Credit, if they have been covered by an employer insurance plan for the entire year (C) Taxpayers will use Form 1095A to complete Form 8962, Premium Tax Credit, to reconcile advance payments of the premium tax credit or claim the premium tax credit on their tax return (D) Taxpayers will attach a Form 1095A with their return to reconcile advance payments of the premium tax credit or claim the premium tax credit on their tax return
C Form 8962 Instructions, p. 2
What is the maximum number of shareholders a corporation may have to be eligible to elect to be treated as an S corporation? (A) 25 (B) 50 (C) 100 (D) 200
C IRC 1361(b)(1)(A); IRS, Instructions for Form 2553, Pg. 1
Which of the following will disqualify a corporation from electing S corporation status? (A) 75 shareholders (B) Voting and non-voting stock (C) A non-resident alien stockholder (D) An employee stock option plan shareholder
C IRC 1361(b)(1)(A); IRS, Instructions for Form 2553, Pg. 1
Upon reviewing a new client's prior year tax return, the preparer sees taxes paid for the first-time homebuyer credit. The preparer should ask the taxpayer all of the following EXCEPT: (A) What was the total amount of the original credit received? (B) How much of the original credit was repaid on prior years returns? (C) Was the entire credit used towards the purchase of their main home? (D) Are the taxpayers still using the home that generated the credit as their main home?
C IRC § 36(f), 2016 Instructions for Form 5405: To properly complete Form 5405, all of the questions should be asked except for the use of the proceeds of the credit. There was no stipulation as to how the credit would be used when the first-time homebuyer received it.
If a corporation allows earnings to accumulate beyond the reasonable needs of the business, it may be subject to an accumulated earnings tax of: (A) 10% (B) 15% (C) 20% (D) 25%
C IRC § 531; IRS Pub 542, Pg. 17
Which of the following tasks can be performed by any Enrolled Agent (EA) on behalf of their client? (A) Prepare and file a suit for refund in United States District Court (B) Prepare and sign a United States Tax Court petition to contest a notice of deficiency (C) Prepare and sign a protest to challenge examination results in the IRS Appeals Office (D) Prepare and file a bankruptcy petition in United States Bankruptcy Court due to unpaid tax balances
C IRS Form12203; Pub 947, pages 3 and 7; Pub 5; Instructions for Form 2848, pg. 2
Which of the following individuals are exempt from the individual shared responsibility payment? (A) Residents of states that expanded Medicaid coverage (B) Taxpayers with no coverage for less than four years (C) Members of certain religious sects in existence since 1950 (D) Taxpayers ineligible for Medicaid for any reason
C IRS, IRC § 5000A(d)(2), Instructions for Form 8965; Publication 5187 Affordable Care Act: What You and Your Family Need to Know, Pgs: 6 - 7
Which of the following will disqualify a corporation from electing S corporation status? (A) 75 shareholders (B) Voting and non-voting stock (C) A non-resident alien stockholder (D) An employee stock option plan shareholder
C IRS, Instructions for Form 2553, Pg. 1; IRC 1361(b)(1)(C)
What is the tax consequence of a taxpayer receiving the wages that were due to a decedent at the time of their death? (A) There is no tax consequence. Inheritances are not taxable (B) The income is considered a long-term capital gain because it was inherited (C) The income is considered ordinary income just as it would have been considered for the decedent (D) The income is considered a short-term capital gain if it is paid out within one year of the decedent's death
C IRS, Publication 559 Survivors, Executors, and Administrators Pgs. 9, 10; IRC § 691(a)(3); Treas. Reg. §1.691(a)-3(a)
How many years in the future can an authorization on a Form 2848 be recorded to the Centralized Authentication File (CAF)? (A) Current year + 1 (B) Current year + 2 (C) Current year + 3 (D) Current year + 4
C Instructions for Form 2848 pg. 3
When an Electronic Return Originator (ERO) receives a reject of an e-filed return and cannot rectify the reason for the rejection, how soon must the ERO take reasonable steps to notify the taxpayer? (A) Within 8 hours (B) Within 12 hours (C) Within 24 hours (D) Within 48 hours
C Publication 1345 Handbook for Authorized IRS e-File Providers of Individual Tax Returns pg.30
An Enrolled Agent (EA) prepared an individual income tax return for a taxpayer with a balance due of $25,597. The taxpayer is not able to pay the entire amount upon filing and would like to set up an installment agreement. Which of the following statements are correct with regard to this agreement? (A) Since the taxpayer owed more than $25,000 the taxpayer may not apply online (B) The taxpayer will not be charged a user fee to set up this installment agreement (C) The taxpayer must be in filing compliance (D) The taxpayer will not be charged interest and penalties while making installment payments
C Publication 594 Page 3
Under Treasury Department Circular No. 230, all of the following are considered to be incompetence and disreputable conduct EXCEPT: (A) Conviction of any criminal offense under the Federal tax laws (B) Conviction of any criminal offense involving dishonesty or breach of trust (C) Willfully disclosing tax return information with the consent of the taxpayer (D) Willfully failing to sign a tax return prepared by the tax practitioner as required by Federal tax laws, unless the failure is due to reasonable cause and not due to willful neglect
C Treasury Department Circular No. 230, Section 10.51 of Circular 230, Pgs. 29 and 30
A corporation makes a $100,000 term loan to a shareholder. The stated principal amount of the loan is payable in ten years. The test rate used to determine if the loan is a below-market loan is the: (A) Short-term applicable Federal rate as of the day the loan is made (B) Mid-term applicable Federal rate as of the day the loan is made (C) Long-term applicable Federal rate as of the day the loan is made (D) Adjusted applicable Federal rate as of the day the loan is made
C Treatment of loans with below market interest rates: IRC sections 1274(d) and 7872; Publication 535, pg. 15
A taxpayer filed an appeal of an IRS examination and then signed IRS Form 8821, Tax Information Authorization, on behalf of an unenrolled return preparer. Which of the following is correct? (A) The unenrolled return preparer may represent the client before IRS Appeals based on the Form 8821 (B) The unenrolled return preparer may represent the client before IRS Appeals with the oral consent of the client (C) The unenrolled return preparer may represent the client before IRS Appeals with a note attached by the client (D) The unenrolled return preparer may not represent the client before IRS Appeals
D Form 2848 Instructions pg. 2
An S corporation stockholders' basis is generally increased by: (A) Distributions (B) Nontaxable discharge of indebtedness (C) Separately stated loss items (D) Taxable income
D IRC 108 (d)(7), 26 U.S.C. §§ 1367 and 1366; Treasury Regulations § 1.1366-1(a)(2)(viii)
The computation of recapture amounts is not necessary when the business use percentage of Section 179 or listed property exceeds: (A) 10% (B) 25% (C) 45% (D) 50%
D IRC § 280F(b)(2); Treas. Reg. § 1.179-1(e)(2); Instructions for Form 4797
Which of the following situations will disqualify a single individual from claiming the premium tax credit? (A) Marriage to an individual enrolled in a qualified health plan (B) Increase in household income to 390% of the federal poverty line (C) Inheritance of $1,100,000 non-income producing vacation home (D) Becoming eligible as a dependent on their parent's joint tax return
D IRC § 36B(c)(1)(C); Publication Title: 17, Chapter 37, Premium Tax Credit, Pgs. 246-247; Pub 974; Instructions for Form 8962
The Affordable Care Act requires individuals to have qualifying health coverage, qualify for a coverage exemption, or make an individual responsibility payment when they file their tax return. All of the following are exempt from the individual shared responsibility payment EXCEPT: (A) A US citizen physically present in a foreign country for at least 330 full days during a period of 12 consecutive months (B) A US citizen who owns a home valued at $1,500,000 but gross income falls below the return filing threshold (C) A US citizen who is currently incarcerated (D) A US citizen, single parent, filing Head of Household with two children and gross income of $125,000
D IRC § 5000A(d); Instructions for Form 8965
Cancellation of Debt (COD) income for a Sub-Chapter S Corporation (A) Flows to shareholder if income is excluded by the S corporation (B) Is recognized as income to an S Corporation regardless of the extent of corporate insolvency (C) Is not excluded from gross income to the S Corporation when granted in Chapter 11 reorganizations (D) Gives rise to income which flows to shareholders if income is not excluded by the S Corporation
D Income from Discharge of Indebtedness, IRC §§ 108(a)(1) and 108(d)(7)
Which of the following statements is correct regarding repayment of Social Security benefits received in a prior year if the total figure shown in box 5 for all of your current year Forms SSA-1099 and RRB-1099 is a negative amount and the portion of the negative amount that represents benefits you included in gross income in the prior year is $3,000 or less? (A) The taxpayer must amend the prior year return to claim a deduction on Schedule A (Form 1040), and it is not subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions (B) The taxpayer must amend the prior year return to claim a deduction on Schedule A (Form 1040), and it is subject to the 2%-of-adjusted-gross-income limit that applies to certain miscellaneous itemized deductions (C) The taxpayer can claim a deduction on Schedule A (Form 1040) for the portion of the negative amount that represents benefits you included in gross income in the prior year, and it is not subject to the 2%-of-adjustedgross-income limit that applies to certain miscellaneous itemized deductions (D) The taxpayer can claim a deduction on Schedule A (Form 1040) for the portion of the negative amount that represents benefits you included in gross income in the prior year, and it is subject to the 2%-of-adjusted-grossincome limit that applies to certain miscellaneous itemized deductions
D Publication 17, pp. 85, 88, 92
American Opportunity Credit
a credit for qualified education expenses paid for an eligible student for the first four years of higher education. You can get a maximum annual credit of $2,500 per eligible student.
The Tax Court has generally held that taxpayers who rely on software to justify errors on self-prepared returns are: (A) Not liable for the 6662 accuracy-related penalty (B) Liable for the 6662 accuracy-related penalty (C) Liable for 20% of the 6662 accuracy-related penalty (D) Liable for 40% of the 6662 accuracy-related penalty
b IRC 6662; IRC 6664(c); Treas. Reg. 1.6664-4(b)(1); Anyika v. Commissioner, T.C. Memo. 2011-69
