Practice Test 3 - CPA Taxation & Regulation (REG)
20 questions. Answer them in any order, then submit to see your score and every explanation.
- Under UCC Section 2-610, when a party anticipatorily repudiates a contract before performance is due, what options does the aggrieved party have?
- What is the extent of Jin's liability for the unpaid rent?
- Under Section 61, gross income is defined as all income from whatever source derived unless specifically excluded by the Code. Which of the following is included in gross income?
- A note is marked 'non-negotiable' on its face. A holder takes the note for value, in good faith, and without notice of defects. Can the holder be an HDC?
- A taxpayer owns a residential rental property that was placed in service several years ago. The property has a depreciable basis of $275,000. On July 10 of the current year, the taxpayer sells the property. What is the amount of MACRS depreciation for the property in the year of sale?
- Under Section 1033, when a taxpayer's replacement property costs more than the condemnation proceeds received, which of the following correctly describes the gain and basis treatment?
- Penbrook Corporation used the alternative minimum tax (AMT) credit in a prior year to offset regular tax. Which of the following best describes the AMT credit carryforward?
- Under UCC Section 3-302, a holder who takes an instrument with notice that it is overdue cannot qualify as an HDC. When is a demand instrument (such as a check) considered 'overdue'?
- A note is payable in installments. The first two installments are past due and unpaid. A transferee takes the note for value and in good faith. Can the transferee qualify as an HDC?
- Under UCC Section 9-324, a PMSI in goods other than inventory has super-priority over prior perfected security interests. What are the timing requirements for this super-priority?
- What is Dan's basis in the inventory he receives?
- Oakhurst Corp, a large C corporation, generated excess general business credits of $80,000 in Year 1. The credits could not be fully used due to the tax limitation. Under the general business credit carryback and carryforward rules, which of the following correctly describes Oakhurst's options?
- 19) Accounts receivable—attachment vs perfection (UCC Article 9): SilverLine Services, Inc. grants a security interest in its accounts to FinanceCo. SilverLine signs an authenticated security agreement, FinanceCo gives value, and SilverLine has rights in its accounts. FinanceCo does not file a financing statement. Under UCC Article 9, which statement is most accurate?
- The income distribution deduction (DNI - distributable net income) is the key concept limiting the deduction available to a trust or estate. Which of the following correctly describes the role of DNI?
- Jorge and Mei are married filing jointly with 2025 AGI of $90,000. They paid $10,000 of unreimbursed qualified medical expenses in 2025 (Internal Revenue Code Section 213). What is their allowable medical expense itemized deduction after applying the 7.5% of AGI floor?
- Under Section 1366(f), if an S corporation has corporate-level taxes (such as the built-in gains tax or the tax on excess passive income), how are these taxes treated?
- A taxpayer has a net operating loss in 2023 and wants to carry it back to 2020 under applicable NOL carryback rules. The 2020 return was filed April 15, 2021. What is the deadline for filing the refund claim for 2020 based on the NOL carryback under IRC Section 6511(d)(2)?
- A corporation acquired machinery for $130,000 and capitalized $5,000 of installation costs. The corporation has taken $40,000 of depreciation to date. In the current year, it makes a capital improvement costing $16,000. Determine the basis adjustment after applying depreciation methods.
- What is the total MACRS depreciation for the year?
- Under the AICPA Code of Professional Conduct, a CPA's independence is impaired when which of the following occurs?