Practice Test 9 - CPA Tcp
20 questions. Answer them in any order, then submit to see your score and every explanation.
- In 2025, Carlos Diaz (married filing jointly) sells an investment land parcel held 3 years for $70,000 (basis $50,000). He also sells stock held 8 months for $12,000 (basis $15,500). He has no other capital transactions. What is the taxpayer's net capital gain for 2025 after applying the short-term and long-term netting rules?
- A taxpayer with no qualifying children has earned income of $18,000 and is age 32. The taxpayer may claim the EIC if they also meet:
- A CPA is asked by a client to help structure a transaction to minimize taxes. When does tax planning cross the line into an ethical violation under Circular 230?
- An S corporation shareholder who is also an employee must receive reasonable compensation for services. The primary tax consequence of not paying adequate wages is:
- In tax year 2023, Lakeview Inc., a C corporation, has taxable income (before net operating loss deduction) of $1,000,000. It has a 2017 net operating loss carryforward of $300,000 and a 2022 net operating loss carryforward of $900,000. What is the correct application of net operating loss for this year?
- A corporation makes a charitable contribution in excess of the 10% taxable income limitation. The excess contribution:
- A non-shareholder employee at a company earns $80,000 for performing the same duties as the sole shareholder-employee who earns $250,000. The excess of $170,000 ($250,000 - $80,000) is most likely:
- An individual taxpayer who is due a refund has how long to file a claim for the refund?
- What is the amount of built-in gains tax Apex Corp. must pay for 2024?
- Under Section 1060, when a business is sold in an asset sale, the purchase price must be allocated among assets using a residual method. The allocation order under Section 1060 is:
- Under Section 704(b), a partnership allocation must have 'substantial economic effect' to be respected for tax purposes. Which of the following is a key requirement of substantial economic effect?
- The underpayment of estimated tax penalty for individuals under Section 6654 can be avoided if:
- Tanya, a cash-basis individual, is deciding whether to prepay $2,400 of January 2027 mortgage interest on December 31, 2026. She expects 2026 wages of $120,000, $1,000 of interest income, and a $4,000 long-term capital gain if she sells stock in 2026; she itemizes deductions. Based on timing rules for interest, when should Tanya pay the mortgage interest if her goal is to legitimately accelerate an itemized deduction into 2026?
- An individual taxpayer files an amended return (Form 1040-X) claiming a refund. The statute of limitations for filing the refund claim is:
- A corporation receives $100,000 of dividends from a domestic corporation in which it owns 25% of the stock. The dividends received deduction (DRD) percentage applicable is:
- A two-owner business (50/50) needs to decide between an S corporation and a partnership structure. Which statement correctly describes a key difference?
- A C corporation that has historically paid no dividends and consistently absorbs all profits through compensation to shareholder-employees is most at risk for:
- A taxpayer who filed an amended return claiming a refund has not received a response from the IRS after 6 months. The taxpayer's option is to:
- A taxpayer whose income consists primarily of capital gains realized in December may benefit from:
- Which of the following income items is EXCLUDED from the definition of UBTI for exempt organizations?