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| Section | Weight | Objectives |
|---|---|---|
| Federal Taxation of Property Transactions | 12-22% | - Basis and holding periods of assets - Like-kind exchanges and involuntary conversions - Capital vs ordinary asset classification - Recognition of gains and losses - Cost recovery, depreciation, and amortization |
| Federal Taxation of Entities | 28-38% | - Partnerships and LLCs - C Corporations - Book-tax differences and distributions - S Corporations - Tax-exempt organizations |
| Ethics, Professional Responsibilities, and Federal Tax Procedures | 10-20% | - Treasury Department Circular 230 rules - IRS audit, appeals, and collection procedures - Ethics and responsibilities in tax practice - Licensing and disciplinary systems - Tax preparer penalties and due diligence |
| Business Law | 10-20% | - Business structure legal framework - Agency relationships - Secured transactions (UCC Article 9) - Debtor-creditor relationships and bankruptcy - Contracts and UCC Article 2 |
| Federal Taxation of Individuals | 15-25% | - Adjustments, deductions, and credits - Loss limitations and tax computation - Gross income inclusions and exclusions - Pass-through entity income reporting - Filing status and exemptions |
For a cash basis taxpayer, gain or loss on a year-end sale of listed stock arises on the:
Correct Answer: A 🗳️
Explanation: Only visible for RealExamFree members. You can sign-up / login (it's free).
Ryan, age 57, is single with no dependents. On July 1, 1997, Ryan's principal residence was sold for the
net amount of $500,000 after all selling expenses. Ryan bought the house in 1963 and occupied it until
sold. On the date of sale, the house had a basis of $180,000. Ryan does not intend to buy another
residence. What is the maximum exclusion of gain on sale of the residence that may be claimed in Ryan's
1 997 income tax return?
Correct Answer: C 🗳️
Explanation: Only visible for RealExamFree members. You can sign-up / login (it's free).
Tom and Joan Moore, both CPAs, filed a joint 1994 federal income tax return showing $70,000 in taxable
income. During 1994, Tom's daughter Laura, age 16, resided with Tom. Laura had no income of her own
and was Tom's dependent.
Determine the amount of income or loss, if any that should be included on page one of the Moores' 1994
Form 1040.
The Moores received a stock dividend in 1994 from Ace Corp. They had the option to receive either cash
or Ace stock with a fair market value of $900 as of the date of distribution. The par value of the stock was
$ 500.
Correct Answer: E 🗳️
Explanation: Only visible for RealExamFree members. You can sign-up / login (it's free).
Don Wolf became a general partner in Gata Associates on January 1, 1989, with a 5% interest in Gata's
profits, losses, and capital. Gata is a distributor of auto parts. Wolf does not materially participate in the
partnership business. For the year ended December 31, 1989, Gata had an operating loss of $100,000.
In addition, Gata earned interest of $20,000 on a temporary investment. Gata has kept the principal
temporarily invested while awaiting delivery of equipment that is presently on order. The principal will be
used to pay for this equipment. Wolf's passive loss for 1989 is:
Correct Answer: D 🗳️
Explanation: Only visible for RealExamFree members. You can sign-up / login (it's free).
Parker, whose spouse died during the preceding year, has not remarried. Parker maintains a home for a
dependent child. What is Parker's most advantageous filing status?
Correct Answer: D 🗳️
Explanation: Only visible for RealExamFree members. You can sign-up / login (it's free).
Viewing page 1 out of 14 pages.
Viewing questions 1-5 out of 70 questions.
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CPA Business Environment and Concepts
Certified Public Accountant CPA Regulation
CPA Financial Accounting and Reporting
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