FlexiQuiz - Enrolled Agent Review Questions: "PART 2

1. Generally, corporations must file Form 1128 - Application To Adopt, Change, or Retain a Tax Year to adopt, change, or retain a tax year. However, a corporation does not file Form 1128 for all of the following circumstances except

A. If the corporation is adopting its first tax year

B. If the corporation is required to change its tax year to file a consolidated return with its new common parent

C. If a foreign sales corporation (FSC) or an interest charge domestic international sales corporation (IC-DISC) is changing to the tax year of the U.S. shareholder with the highest percentage of voting power

D. If the corporation wants to request automatic approval to change a tax year under Revenue Procedure 2006-45

2. In 2023, Lola bought 15 feeder calves for $15,000 for resale. She sold them in 2024 for $24,000. What amount of profit will Lola report her on 2024 Schedule F?

A. $0

B. $9,000

C. $15,000

D. $24,000

3. Self-employment tax applies to which of the following?

A. Individuals who report only interest and dividend income

B. Corporations that report less than $50,000 in gross receipts

C. Independent contractors reporting net earnings from self-employment of $100

D. Independent contractors reporting net earnings from self-employment of $400 or more

4. Tommy and Gina form a cash basis general partnership with cash contributions of $30,000 each. Under the partnership agreement, they share all partnership profits and losses equally. The partnership borrows $70,000 and purchases depreciable business equipment. This debt is included in the partners' basis in the partnership because incurring it creates an additional $70,000 of basis in the partnership's depreciable property. If Gina is required to pay the creditor if the partnership defaults, she has an economic risk of loss in the liability. Her basis in the partnership would be what amount?

A. $30,000

B. $40,000

C. $70,000

D. $100,000

5. Bluesky Corporation, a domestic corporation, has total assets of $11,210 million. Which form should the corporation use to reconcile its income per books with income per its tax return?

A. Form 1120

B. Schedule M-1

C. Schedule M-3

D. Schedule L

6. Generally, an election specifying an LLC’s classification cannot take effect more than 75 days prior to the date the election is filed, nor can it take effect later than how many months after the date the election is filed?

A. 3 months

B. 6 months

C. 9 months

D. 12 months

7. All of the following are true regarding a corporation’s election to deduct business start-up and organizational costs except:

A. A corporation can elect to deduct up to $5,000 of business start-up costs paid or incurred after October 22, 2004

B. Remaining costs (above the $5,000 maximum) must be amortized ratably over a 180-month period

C. The $5,000 deduction is reduced (but not below zero) by the amount the total costs exceed $50,000

D. If the total costs are $75,000 or more, the deduction is reduced to zero

8. In order to determine the MACRS deduction using the percentage tables, all of the following must be determined except:

A. Declining balance rate

B. Basis of the property

C. Placed in service date

D. Recovery Period

9. Paul's brother sold stock to him for $8,400. His cost basis was $11,000. His loss of $2,600 was not deductible. Paul later sells the same stock to an unrelated party for $7,300. What is Paul's recognized loss?

A. $0

B. $1,100

C. $2,600

D. $3,700

10. For decedents who died in 2024, Form 706 must be filed by the executor of the estate of every U.S. citizen or resident whose gross estate, plus adjusted taxable gifts and specific exemption, is more than what amount?

A. $4,000,000

B. $6,120,000

C. $12,920,000

D. $13,610,000

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Enrolled Agent Review Questions: "PART 2 - BUSINESSES"