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| Section | Weight | Objectives |
|---|---|---|
| Topic 1: Federal Taxation of Individuals | 15-25% | - Gross income inclusions and exclusions - Filing status and exemptions - Pass-through entity income reporting - Loss limitations and tax computation - Adjustments, deductions, and credits |
| Topic 2: Federal Taxation of Entities | 28-38% | - Book-tax differences and distributions - C Corporations - S Corporations - Partnerships and LLCs - Tax-exempt organizations |
| Topic 3: Federal Taxation of Property Transactions | 12-22% | - Capital vs ordinary asset classification - Recognition of gains and losses - Basis and holding periods of assets - Cost recovery, depreciation, and amortization - Like-kind exchanges and involuntary conversions |
| Topic 4: Business Law | 10-20% | - Debtor-creditor relationships and bankruptcy - Agency relationships - Contracts and UCC Article 2 - Secured transactions (UCC Article 9) - Business structure legal framework |
| Topic 5: Ethics, Professional Responsibilities, and Federal Tax Procedures | 10-20% | - Tax preparer penalties and due diligence - IRS audit, appeals, and collection procedures - Licensing and disciplinary systems - Treasury Department Circular 230 rules - Ethics and responsibilities in tax practice |
On December 1, 1992, Michaels, a self-employed cash basis taxpayer, borrowed $100,000 to use in her
business. The loan was to be repaid on November 30, 1993. Michaels paid the entire interest of $12,000
on December 1, 1992. What amount of interest was deductible on Michaels' 1993 income tax return?
Correct Answer: C 🗳️
Explanation: Only visible for DumpsTests 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.
In 1994, Joan received $3,500 as beneficiary of the death benefit, which was provided by her brother's
employer. Joan's brother did not have a nonforfeitable right to receive the money while living.
Correct Answer: L 🗳️
Explanation: Only visible for DumpsTests members. You can sign-up / login (it's free).
In the current year Jensen had the following items:
What is Jensen's AGI for the current year?
Correct Answer: B 🗳️
Explanation: Only visible for DumpsTests members. You can sign-up / login (it's free).
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 DumpsTests members. You can sign-up / login (it's free).
Which of the following statements is the best definition of real property?
Correct Answer: A 🗳️
Explanation: Only visible for DumpsTests members. You can sign-up / login (it's free).
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