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Practice Test 10 - CPA Tcp

20 questions. Answer them in any order, then submit to see your score and every explanation.

  1. Evan is unmarried and has one child, Maya (age 10). Maya lived with Evan for 190 nights and with her other parent for 175 nights in 2025; Evan paid more than half the cost of keeping up his home. Evan signed Form 8332 releasing the child dependency claim to the other parent for 2025. Which filing status provides the best tax advantage for Evan?
  2. A sole proprietor sells their business for $500,000. The assets include inventory ($80,000 FMV, $60,000 basis), equipment ($120,000 FMV, $40,000 adjusted basis with $60,000 of accumulated depreciation), goodwill ($200,000 FMV, $0 basis), and a non-compete covenant ($100,000 FMV, $0 basis). The tax consequences include:
  3. Upon complete termination of a partnership, each partner is treated as receiving:
  4. A 501(c)(3) hospital is considering operating a for-profit fitness center open to the general public (not limited to patients). This activity:
  5. A Section 751(b) 'disproportionate distribution' occurs when:
  6. A taxpayer who owes self-employment tax must file Schedule SE when:
  7. The IRS's First Time Abate (FTA) administrative waiver allows penalty relief when:
  8. For U.S. federal income tax purposes, a U.S. citizen living abroad is:
  9. A domestic corporation's taxable income is calculated beginning with gross income and then:
  10. A CPA learns from a client that a business associate of the client (not a CPA client) has been committing tax fraud. Under professional standards, the CPA:
  11. In 2025, Devon (age 55, single) took a $10,000 distribution from a traditional IRA (no basis) to buy a first home. What is the tax treatment of the retirement distribution?
  12. A taxpayer has no prior-year tax liability (prior-year tax was $0). The prior-year safe harbor for estimated taxes:
  13. A partnership has a Section 754 election in effect. A partner sells their partnership interest for $80,000 when their outside basis is $50,000. The transferee partner's beginning outside basis is $80,000. The Section 743(b) basis adjustment:
  14. A partnership has recourse liabilities of $60,000. A partner bears the economic risk of loss for $20,000 of those liabilities. How much do the recourse liabilities increase the partner's outside basis?
  15. A single taxpayer has $155,000 of wages, $1,000 of taxable interest, $2,000 of qualified dividends, and $8,000 of long-term capital gains. The taxpayer itemizes $12,000 of SALT and has no other AMT adjustments. Under IRC §56, which adjustment is required for AMT calculation?
  16. A married couple filing jointly plans to sell shares of a publicly traded stock to fund a real estate down payment. They purchased the shares for $50,000 and can sell them today for $92,000. If they sell now, the holding period is 10 months; if they wait 3 more months, the holding period will exceed one year. Their other income places them in the 32% ordinary bracket, and they prefer minimizing federal tax on the sale. What is the tax consequence of realizing a short-term capital gain in this scenario?
  17. In 2025, Keenan, a single filer, had $9,000 of net rental income, $800 of interest from municipal bonds, and $500 of lottery winnings. Which of the following items should be included in Keenan's gross income under IRS rules?
  18. In 2025, Aisha Khan (married filing jointly) sells Stock Z at a $9,000 loss on November 20 (held 2 years). On December 5, she buys substantially identical Stock Z shares. She has no other capital transactions. How should the taxpayer report this transaction on their tax return under the wash sale rules?
  19. A sole proprietorship technology repair shop hires a technician who is paid $28 per hour, must work in the shop during set hours, is supervised by a manager, and cannot perform services for competitors during employment. The owner is evaluating whether the technician is an employee for payroll tax purposes (FICA, FUTA, SUTA) and which year-end form to issue. What is the correct classification for this worker?
  20. Which of the following is a deduction available to C corporations but NOT to individual taxpayers?

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