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Practice Test 6 - CPA Tcp

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

  1. In 2025, Alexis and Brooke file a joint return and have $95,000 of wages and $10,000 of taxable interest. They paid $4,000 of state income tax and $3,500 of real property taxes, and they made $40,000 of qualified charitable contributions and paid $7,500 of mortgage interest. Based on the SALT limitation, what SALT amount is deductible on Schedule A?
  2. A married couple where one spouse is a nonresident alien and the other is a U.S. citizen may elect to:
  3. A partnership has nonrecourse liabilities of $90,000. How are these liabilities generally allocated among partners for outside basis purposes?
  4. Hawthorn, Inc., a C corporation, sells all assets to an unrelated buyer for $2,500,000 and then liquidates, distributing the proceeds to its two equal shareholders. Hawthorn's aggregate adjusted basis in assets is $1,700,000; each shareholder has stock basis of $400,000 and has held the stock for more than one year. Based on the facts, how should the gain be reported at the corporate and shareholder levels?
  5. In tax year 2025, Marco, a head of household filer, received $48,500 of wages, $1,100 of interest from a certificate of deposit, and a $3,000 gift from Marco's sibling. Which of the following items should be included in Marco's gross income?
  6. A taxpayer living abroad on April 15 is entitled to an automatic extension to:
  7. During a tax preparation engagement, a tax preparer is finalizing an individual income tax return when the client mentions they received a Form 1099-NEC for $18,000 but asks the preparer to omit it because "the Internal Revenue Service will not match it." The preparer knows the omission would create an understatement and the client refuses to include the income. Which action should the tax professional take to comply with Circular 230?
  8. WX LLC is classified as a partnership and has two members who share profits and losses equally. Member W contributes $100,000 cash; member X contributes property with adjusted basis $30,000 and fair market value $100,000. The LLC agreement provides that depreciation deductions on the contributed property will be allocated 100% to W, with no corresponding economic arrangement and no substantial economic effect. Under Internal Revenue Code section 704(b), what is the most appropriate tax allocation of depreciation deductions?
  9. The substantial presence test for resident alien status requires physical presence in the U.S. of:
  10. A U.S. citizen who is also a citizen of another country and lives abroad must:
  11. A multistate business with nexus in three states uses a double-weighted sales factor formula. In a state that double-weights sales, the apportionment formula is:
  12. The step transaction doctrine can cause a series of related transactions to be treated as a single transaction for tax purposes. In the context of reorganizations, this means:
  13. Olivia is unmarried and has one child, Lucas (age 7). Olivia and Lucas's other parent, Ryan, share custody; Lucas spent 210 nights with Olivia and 155 nights with Ryan in 2025. Olivia paid more than half the cost of maintaining her home, earned $62,000 in wages, and plans to claim the child as a qualifying child. Under these conditions, which filing status is appropriate?
  14. In 2025, Chloe Ramirez (single) sells Stock W at a $3,200 loss on December 15 (held 3 years). On January 5, 2026, she buys substantially identical Stock W. She has no other capital transactions in 2025. How should the taxpayer report this transaction on their 2025 tax return under the wash sale rules?
  15. A corporation's payroll supervisor realizes that federal income tax withholding was withheld from employees correctly, but the employer portion of Social Security tax was not included in payroll tax deposits for the last month due to a system mapping issue. The corporation wants to correct the deposit error promptly and minimize compliance exposure. How should the business correct the payroll tax error?
  16. Which of the following correctly describes the late filing penalty for a partnership or S corporation that fails to file on time?
  17. What is the final deadline for the taxpayer to file a timely petition with the U.S. Tax Court?
  18. In a representation engagement, a tax representative is asked to sign an affidavit to submit to the Internal Revenue Service that includes statements the representative cannot verify and suspects may be false. The client insists it is necessary to resolve the matter quickly. Which action should the tax professional take to comply with Circular 230?
  19. An individual taxpayer receives a 30-day letter after an IRS examination proposing additional tax due to disallowed charitable contribution deductions for lack of substantiation. The taxpayer disagrees with the proposed adjustments and wants to resolve the dispute without litigation. Which step should the taxpayer take next in the appeals process?
  20. Under the tax benefit rule, if an accrual-basis taxpayer deducts an expense in one year and later recovers that amount, the recovery is:

Practice tests