Exam (elaborations)
Enrolled Agent Part 2 Sample Test 4 Questions and Answers
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Enrolled Agent Part 2 Sample Test 4
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Enrolled Agent Part 2 Sample Test 41. nOverstreet nCorporation nis nowned nby nthree nindividuals nwho nhave nmore nthan
n80% nof nthe ncombined nvoting
power nfor nfour nother ncorporations. nThese nthree nindividuals nalso nhave nidentical
ncommon nownership nwithin nthe
five ncorporations nof nat nleast n50%. nThe nfive ncorporations nrepresent nan nexample nof:
A. nPersonal nservices ncorporations.
B. nClosely-held ncorporations.
C. nA nparent-subsidiary ncontrolled ngroup.
D. nA nbrother-sister ncontrolled ngroup. n- nCorrect nAnswers n-D
2. nHadiya nis na nmanaging npartner nof nRealTime nPartnership. nShe nhas na n50%
npartnership ninterest nand nshares
profits nand nlosses nbased non nthat npercentage. nAt nthe nbeginning nof nthe nyear, nthe
nbasis nof nHadiya's npartnership
interest nis n$35,000. nRealTime nPartnership nhas nan n$82,000 nnet noperating nloss nfor
nthe nyear. nHow nwould
RealTime nPartnership nreport nthis nloss non nher nSchedule nK-1, nand nhow nwould nthis
nloss nbe nreported non nHadiya's
individual nreturn?
A. n$35,000 nof npartnership nlosses nand na n$6,000 nloss ncarryforward.
B. n$41,000 nof npartnership nlosses na n$5,000 nloss ncarryforward.
C. n$41,000 nof npartnership nlosses.
D. n$6,000 nof npartnership nlosses. n- nCorrect nAnswers n-A
3. nEugene nowns na nlarge nplot nof nfarmland. nIn n2015, nhe nforegoes ngrowing nhis nown
ncrops nand nrents nthe nfarmland
to nsomeone nelse. nAfter nthe nnew ntenants narrive, nEugene ntakes na nvacation nand nis
ngone nfor nmost nof nthe nyear.
Eugene ndoes nnot nmaterially nparticipate nin nthe nfarming nactivity non nhis nfarm nin
n2015. nHow nshould nEugene nreport
this nincome?
A. nEugene nmust nreport nthe nincome non nSchedule nF.
B. nEugene nmust nreport nthe nincome non nSchedule nE.
C. nEugene nmust nreport nthe nincome non nForm n4835.
D. nEugene nmust nreport nthe nincome non nSchedule nC. n- nCorrect nAnswers n-C
,4. nForm n3115 nis nused nby na nbusiness nto:
A. nApply nfor na nchange nin naccounting nmethod.
B. nChoose nentity nclassification.
C. nReport npartnership nincome.
D. nReport ncash npayments nover n$10,000. n- nCorrect nAnswers n-A
5. nSaul noperates na ntuna nfishing nboat nand nreports nhis nincome non nSchedule nF.
nSaul nhires nhis n16-year-old nson,
Ingram, npart-time nto nhelp nhim nrun nthe nbusiness. nSaul npays nhis nson na nreasonable
nwage nof n$6,200 nfor nthe nyear.
Which nof nthe nfollowing nstatements nis ncorrect nabout nIngram's nwages?
A. nIngram's nwages nare nsubject nto nthe nkiddie ntax.
B. nSaul ncannot ndeduct nthe nwages nhe npaid nto nIngram nbecause nof nrelated nparty
ntransaction nrules.
C. nSaul nmay ndeduct nIngram's nwages nas na nbusiness nexpense, nand nthe nwages nare
nnot nsubject nto nSocial nSecurity
and nMedicare ntaxes.
D. nIngram's nwages nare nsubject nto nbackup nwithholding. n- nCorrect nAnswers n-C
6. nRick nwants nto ntransfer nassets nto na ncorporation nin nexchange nfor na ncontrolling
ninterest nin nthe ncorporation's
stock. nWhich nof nthe nfollowing ntransfers nwould ncreate na ntaxable nevent nfor nRick
nunder nsection n351?
A. nRick nexchanges ndepreciated nproperty nin nexchange nfor n100% nof nthe
ncorporation's nstock.
B. nThe ncorporation nassumes nliabilities nin nexcess nof nthe nbasis nof nthe nassets
ntransferred.
C. nCash nis nexchanged nfor n100% nof nthe ncorporate nstock.
D. nRick nwill nnot nbe nrequired nto nrecognize ngain nfrom na ntransfer, nas nlong nas nhe
nhas nownership nof nover n80% nof nthe
corporation's nstock nafter nthe ntransfer nis ncomplete. n- nCorrect nAnswers n-B
7. nAlex nsold nhis noffice nbuilding nto nCassandra, na nreal nestate ninvestor, nwho nplans
nto nuse nit nas na nbusiness nrental
property. nAlex nwas nliable nfor n$2,000 nin ndelinquent nreal nestate ntaxes non nthe
nproperty, nwhich nCassandra nagreed
to npay. nWhich nof nthe nfollowing nstatements nis ncorrect?
A. nCassandra ncan ndeduct nthese ntaxes nas na nbusiness nexpense.
8. nCassandra ncannot ndeduct nthese ntaxes nas na ncurrent nexpense, nbut nshould
ninstead nadd nthe namount nto nher nbasis
in nthe nproperty.
C. nAlex ncan ndeduct nthese ntaxes nas nan nexpense nbecause nhe nwas nthe nowner nof
nthe nproperty.
D. nThe nexpense nmust nbe ndivided nequally nbetween nAlex nand nCassandra nin norder
nto nbe ndeductible. n- nCorrect nAnswers n-B
, 8. nWhich nof nthe nfollowing ncannot nbe na nshareholder nin nan nS ncorporation?
A. nA nbank.
8. nA nU.S. nresident nwho nis nnot nan nAmerican ncitizen.
C. nA nnonresident nalien.
D. nA n501(c)(3) nexempt nentity nthat nis nalso na ncorporation. n- nCorrect nAnswers n-C
9. nLisa nis nthe nsole nbeneficiary nof na ntrust nthat nher nfather, nIsaac, nset nup nbefore nhis
ndeath. nGiven nthe nfollowing
information nrelated nto nactivity nfollowing nher nfather's ndeath nin n2015, nhow nmuch
nincome nrelated nto nthe ntrust, nif
any, nmust nLisa nreport non nher ntax nreturn?
Taxable nincome n$27,000
Tax-exempt ninterest n3,000
Distributable nnet nincome n30,000
Required ndistributions n15,000
Discretionary ndistributions n7,500
A. n$15,000
B. n$22,500
C. n$27,000
D. n$30,000 n- nCorrect nAnswers n-B
10. nQuicker nRelay nCorporation nis ngoing nthrough na nfinal nliquidation nand ndistributes
nproperty nwith na nfair nmarket
value nof n$500,000 nand nan nadjusted nbasis nof n$190,000. nThe nproperty nis
nencumbered nby nan nexisting nmortgage nof
$620,000. nHow nmuch ngain n{or nloss) nwould nQuicker nRelay nrecognize nin nthis
ndistribution?
A. n$430,000 ngain
B. n$120,000 nloss
C. n$310,000 ngain
D. n$180,000 nloss n- nCorrect nAnswers n-A
11. nThe nSutter nPartners nhip's nfiscal nyear-end nis nSeptember n30. nWhen nis nits n2015
npartnership ntax nreturn ndue?
A. nJanuary n15, n2016
B. nApril n15, n2016
C. nMay n15, n2016
D. nMarch n15, n2016 n- nCorrect nAnswers n-A
12. nIleana nis na nself-employed ntax npreparer nwho nfiles na nSchedule nC nto nreport nher
nbusiness nincome. nIn n2015, nshe
has nthe nfollowing npurchases, nall nof nwhich nare n100% nbusiness-use. nShe nfiles non
nthe ncash nbasis. nIgnoring nany
income nlimitations, nwhat nis nher nsection n179 ndeduction nfor n2015?
New ncomputer nsystem n$4,600
New nmulti-line nphone nsystem n3,600
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