1.
A business converts a warehouse to a restaurant and capitalizes build-out costs. Which cost recovery generally applies?
2.
Advertising standards under Circular 230 require that your marketing:
3.
Written advice standards (Circular 230 §10.37) require you to:
4.
Why can’t a business deduct all interest currently?
5.
A retailer has $900,000 gross receipts and $540,000 COGS. Before other items, what is gross income from sales?
6.
C-corp distributions and E&P—character to shareholders?
7.
A homeowner meets the 2-out-of-5-year ownership and use tests when selling a principal residence at a large gain.
8.
Which form requests innocent spouse relief from joint liability due to the other spouse’s erroneous items?
9.
A partnership sells land (capital asset) held for investment at a gain. How is it reported to partners?
10.
Due-diligence checklists/forms for credits must be:
11.
Employer provided car used 70% business, 30% personal. What records are needed?
12.
You discover a conflict of interest representing two spouses during an audit. They both want you to continue. What must happen?
13.
Donating appreciated stock (>1-year holding) to a public charity—what’s the deduction base?
14.
A business uses the cash method and receives prepayment for services next year. Federal tax treatment?
15.
A taxpayer wants you to represent them in an office audit for Form 1040 Schedule C. Which authorization is correct and what does it permit?
16.
Incompetence or disreputable conduct may result in:
17.
A partner receives a nonliquidating distribution of inventory. Immediate gain?
18.
When may you rely on client information without further verification?
19.
After selling depreciated equipment at a gain, how is the gain characterized?
20.
SALT payments are large, but mortgage interest/charity are small. Itemize or take the standard deduction?
21.
Confidentiality rules allow disclosure of client information when:
22.
A hobbyist sells handmade items sporadically, breaks even, and wants to deduct hobby expenses.
23.
A teacher with small educator expenses, HSA-eligible coverage, and a side gig asks which are typical adjustments to income.
24.
A crypto investor traded BTC→ETH and later sold ETH for USD at a gain. How to report?
25.
A corporation redeems a shareholder’s stock for cash. When is it treated as sale/exchange (capital) vs dividend?
26.
Proper written advice should:
27.
Must a reseller capitalize purchasing/handling/storage into inventory?
28.
A cash-basis Schedule C taxpayer asks about the de minimis safe harbor.
29.
Ex parte communication rules in Appeals mean:
30.
May you charge a contingent fee for representing a client in a claim for refund based on a carryback?
31.
A partnership pays a partner a fixed monthly amount for bookkeeping, regardless of profits. Treatment?
32.
Currently Not Collectible (CNC) status indicates:
33.
A taxpayer asks how to optimize filing status and avoid penalties after a mid-year separation and under-withholding.
34.
A reseller with average gross receipts under the small-business threshold asks whether UNICAP applies.
35.
A factory replaces a worn motor with a like-kind part that restores normal function. Capitalize or expense?
36.
A dependent student asks about the standard deduction and personal exemption on their own return.
37.
Above-the-line (adjustment) deductions vs. itemizing—what’s the key difference?
38.
An LLC with long-term rentals and minimal services reports losses. Why are losses limited?
39.
The Trust Fund Recovery Penalty (TFRP) applies to:
40.
Which form is used for injured spouse allocation when a joint refund is offset to the other spouse’s debt?
41.
Sole shareholder-employee takes no wages in a profitable S-corp year. Risk?
42.
The federally authorized tax practitioner privilege under §7525 applies to:
43.
When should you contact the Taxpayer Advocate Service (TAS)?
44.
A joint return overpayment was offset to the spouse’s past due debt; the non-debtor spouse asks for relief.
45.
Appeals conference formats typically include:
46.
A C-corp converts to S-status while holding appreciated assets and plans to sell them soon. What risk exists?
47.
Material participation for a member who worked 100 hours when no one else worked more—what matters?
48.
A valid POA (Form 2848) must specify:
49.
Exam proposes a deficiency. Your client disputes the facts and law and wants Appeals review. What is Appeals’ role?
50.
Net long-term capital gains are generally taxed…
51.
An S-corp’s AAA (accumulated adjustments account) is negative but it has E&P from C-corp years. Distribution order?
52.
A partner’s outside basis is $5,000. The partnership allocates $7,000 of loss. Partner materially participates. How much is currently deductible?
53.
An S-corp sells §1231 property at a net gain. How is it reported to shareholders?
54.
Electronic client records requested by the IRS must be:
55.
Why is the QBI deduction “below the line”?
56.
A retailer wants to change inventory method mid-year without filing anything.
57.
A joint refund is fully offset to the husband’s old federal student loan debt. The wife had her own income and withholding. What’s her immediate remedy?
58.
A sole proprietor reports $120,000 Schedule C profit. Which additional tax may apply?
59.
A 19-year-old full-time student claimed as a dependent has $6,000 in dividends and $2,000 in wages. They ask how the unearned income is taxed.
60.
For which items are preparer due-diligence penalties especially targeted?
61.
E-file signature authorization for individual returns is:
62.
The client asks for all original records back. They still owe your invoice. What must you do?
63.
May you charge a contingent fee in connection with an IRS refund claim?
64.
A taxpayer lived apart from their spouse for the last 6 months of the year, maintained a home for a 7-year-old child who lived with them more than half the year, and paid over half the home’s costs. They ask which status provides the most favorable outcome.
65.
The taxpayer received a 90-day Letter (Notice of Deficiency) but missed the Tax Court deadline. What option may still be available?
66.
A partner contributed $60,000 cash and personally guaranteed $140,000 of nonrecourse debt. The partnership reports a $90,000 loss. The partner asks how much they can deduct.
67.
A taxpayer sold gifted stock at a loss; donor’s basis exceeded FMV at gift date. Which basis rules apply?
68.
An S-corp shareholder receives distributions exceeding their stock basis. What result?
69.
Can you rely solely on a client’s statements?
70.
High-level description of the QBI deduction for a pass-through owner.
71.
Your client missed the filing deadline after a car accident and hospitalization; medical records confirm. They request penalty abatement. Which is true?
72.
A corporation buys machinery and asks about §179 vs bonus depreciation in year one.
73.
When does the Net Investment Income Tax (NIIT) apply?
74.
An S-corporation with two shareholder-employees (each 50%) provides software implementation services. In the first profitable year, they want to minimize payroll tax by taking only distributions and no wages. What is the best course of action?
75.
A manufacturer considers §199A QBI and has significant W-2 wages and UBIA (qualified property). Why do these matter?
76.
You’re preparing a complex return. The client’s organizer omits several 1099s shown in last year’s transcript, and some numbers contradict bank statements. Under Circular 230, what must you do before filing?
77.
Where are IRS summons enforcement actions brought?
78.
A partnership distributed cash exceeding a partner’s outside basis. Consequence?
79.
A small manufacturer capitalizes direct labor and factory overhead into inventory. They ask what UNICAP requires.
80.
When do preparer penalties arise?
81.
The general statute of limitations for assessment (absent fraud/large omission/consent) is:
82.
A student’s scholarship pays tuition, mandatory fees, required books from the campus bookstore, and a separate housing stipend. What’s the federal tax treatment?
83.
A taxpayer thinks foreign stocks via a U.S. broker mean no FBAR risk.
84.
Your client asks about an installment agreement (IA). Which statement is accurate?
85.
A taxpayer wonders why educator expenses, SE health insurance, and HSA contributions mattered so much.
86.
A taxpayer changed jobs mid-year and under-withheld. How to avoid underpayment penalties?
87.
An investor sells stock at a loss on June 15 and buys substantially identical shares on July 5 in the same account. They want to deduct the loss this year.
88.
A taxpayer took an early traditional IRA distribution but qualifies for an exception (e.g., certain medical, first-home, education). What must they do?
89.
Audit reconsideration is appropriate when:
90.
A company sells business real property at a loss after holding >1 year. Treatment?
91.
A prospective client offers you a contingent fee to prepare an original Form 1040 that they believe will yield a large refund. Under Circular 230, what’s correct?
92.
A child inherits company stock and sells it six weeks after the decedent’s death at a gain.
93.
In an identity theft case, what helps prevent fraudulent e-filing in future years?
94.
A single filer has wages (W-2), bank interest (1099-INT), and casino winnings (W-2G). Which items are included in gross income?
95.
A W-2 wage earner with foreign stocks held via a U.S. broker had foreign tax withheld on dividends. Any mitigation?
96.
A contractor receives per-diem reimbursements under an accountable plan with proper substantiation.
97.
Collection Information Statement for individuals (used for OIC/IAs) is typically:
98.
A company contemplates a like-kind exchange of business real property. Current treatment?
99.
A partner contributes appreciated property to a partnership; later, that property is sold at a gain. Who is taxed on the built-in gain?
100.
What constitutes willful or reckless conduct for preparer-penalty purposes?
