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Exam (elaborations)

CPA REG EXAM QUESTIONS AND ANSWERS WITH SOLUTIONS 2024

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  • Course
  • CPA - Certified Public Accountant
  • Institution
  • CPA - Certified Public Accountant

CPA REG EXAM QUESTIONS AND ANSWERS WITH SOLUTIONS 2024

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  • August 21, 2024
  • 51
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • CPA - Certified Public Accountant
  • CPA - Certified Public Accountant
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CPA REG EXAM QUESTIONS AND
ANSWERS WITH SOLUTIONS 2024
Individual income tax formula - ANSWER Gross income

- adjustments

=adj gross income

- Standard or itemized deductions

- exemptions

=taxable income

*tax rate

=federal income tax (reg or amt)

- tax credits

Other taxes

- payments

= tax due or refund



Gross income - ANSWER Wages

Interest

Dividends

State tax refunds

Alimony received

Business income (schedule C)

Capital gain/loss (schedule D)

IRA income

Pension annuity

Rental income/loss

K-1 income/loss

Unemployment compensation

Social security benefits

,Other income



Social security tax base is - ANSWER a self-employed person's net profit from self-employment



for employees, it is based on gross wages, employers also pay the tax



Adjustments - ANSWER "deductions to arrive at adjusted gross income"



Educator expenses

IRA

Student loan interest expenses

Tuition and fee deduction

Health savings account

Moving expenses

One half self employment taxes

Self employed insurance

Self employed retirement

Interest withdrawal penalty

Alimony paid

Attorney fees in rare cases

Domestic production activities deduction



Filing Status - ANSWER Determined by end of year status

Exceptions:

Divorced must not be joint.

Death of spouse can still be filed jointly



Qualifying widower - ANSWER Must have had dependent with you the whole year to qualify

,Birth or death during the year - ANSWER Still get the full exemption.



head of household - ANSWER Must have a dependent for more than half the year.

Dependent can be:

Qualifying child

Mother or father(nursing home is fine)

Dependent relatives (must live with you)



Personal exemption - ANSWER Parents use your exemption then you lose it



Phase out of personal exemptions - ANSWER Exemptions reduced by 2% for every 2,500 over a certain
limit



Can a pet be a dependent - ANSWER NEVER



Qualifying child (CARES) - ANSWER Close relative

Age limit (19 or 24+ college)

Residency and filing requirement (1/2 year)

Eliminate gross income test

Support test changes (not more than one half of their own support)



Qualifying relative (SUPORT) - ANSWER Support (tax payer supplied over 50%) test

Under exemption amount of taxable (gross) income test

Precludes dependent filing a joint tax return test

Only citizens (resident of US/Canada or Mexico) test

Relative test or Taxpayer lives with individual for the whole year test



Multiple support agreement - ANSWER 1 supporter gets full exemption but contribute more than 10% of
persons support

, -all must be qualifying relatives that contribute cumulative more than 50% of the support of the
defendant



Increased standard deduction - ANSWER Age 65 or older

Blind



Does not get an extra exemption



Computation of income - ANSWER Taxable =fmv income and fmv basis

Non taxable = no income and nbv basis



2 taxes on net business income - ANSWER 1.Income Tax

2. Federal self-employment (SE) tax



as employee and employer you pay both



No deductible expenses on Schedule C - ANSWER Salary to sole proprietor

Federal income tax

Personal portion of any expenses

Bad debt expense of cash basis

Charitable contributions



Schedule C deductions - ANSWER legal commissions

travel

supplies

office and phone



(penalties and illegal commissions are not deductible)

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