Practice Test 5 - CPA Tcp
20 questions. Answer them in any order, then submit to see your score and every explanation.
- An individual taxpayer with significant self-employment income is required to make estimated tax payments. These payments are due:
- A tax advisor is engaged for tax planning and proposes a series of transactions that could generate significant losses. The client asks the advisor to ignore certain unfavorable facts to make the plan "cleaner" in the written memo. Which action should the tax professional take to comply with Circular 230 standards for written advice and diligence?
- In 2025, Grant, married filing jointly, received $20,000 of net rental income from a condo, $350 of interest from municipal bonds, and $2,000 of lottery winnings. Which of the following items should be included in Grant's gross income under IRS rules?
- A sales transaction is 'sourced' to a state for apportionment purposes when:
- A foreign national is classified as a U.S. resident alien for tax purposes if they meet:
- Unrelated business taxable income (UBTI) of a tax-exempt organization is subject to:
- Cypress, Inc., a C corporation, sells all assets to an unrelated buyer and then liquidates. Cypress's shareholders ask whether the liquidation distribution is treated as a sale or exchange of their stock or as a dividend, and whether the corporation recognizes gain on distributing property. Which tax treatment applies under Sections 331 and 336?
- A U.S. person who gives up U.S. citizenship or long-term residency may be subject to the U.S. exit tax under Section 877A if:
- An entity that elects S corporation status must meet ongoing eligibility requirements. Which of the following would terminate S corporation status?
- A taxpayer files their return on July 15, having received a valid extension to that date. The 3-year statute of limitations for assessment runs from:
- A Type E reorganization is a:
- The additional child tax credit (ACTC) is:
- A surviving spouse may use the Married Filing Jointly rates for:
- Under the cash method of accounting, income is generally recognized when:
- A taxpayer who receives an IRS notice proposing additional tax after filing an amended return may:
- Caleb (cash-basis individual) is deciding whether to sell publicly traded stock that would generate a $30,000 long-term capital gain. He can execute the trade on December 31, 2026 or January 2, 2027. Caleb also expects $145,000 of wages, $2,000 of interest income, and plans to itemize deductions including $7,000 of mortgage interest. Which timing rule applies to the capital gains sale for determining the tax year of recognition?
- A shareholder sells stock back to a corporation in a redemption qualifying as a sale under Section 302. Basis was $25,000; amount received was $40,000. The result is:
- Harper and Sam are legally married but separated and living apart since March 2025; divorce is not final by December 31, 2025. Harper paid more than half the cost of keeping up a home where their child lived for all of 2025, and Sam did not live in the home during the last 6 months of the year. Harper earned $78,000 in wages and expects to claim the child-related credits if eligible. What is the most tax-efficient filing status for Harper?
- An individual taxpayer receives an IRS correspondence audit notice requesting support for the child and dependent care credit claimed for payments to a babysitter. The IRS letter indicates the caregiver's identifying information is missing and requests proof of qualifying expenses and the taxpayer's work-related need. What documentation should the taxpayer provide to the IRS?
- The Section 179 deduction allows a corporation to: