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Last Updated: Jul 28, 2026
No. of Questions: 70 Questions & Answers with Testing Engine
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| Section | Weight | Objectives |
|---|---|---|
| Business Law | 10–20% | - Business structure law
|
| Ethics, Professional Responsibilities, and Federal Tax Procedures | 15–25% | - Federal tax procedures
|
| Federal Taxation of Property Transactions | 12–22% | - Property transactions
|
| Federal Taxation of Individuals | 15–25% | - Individual income taxation
|
| Federal Taxation of Entities | 18–28% | - Business entity taxation
|
1. Which of the following sales should be reported as a capital gain?
A) Sale of equipment.
B) Real property subdivided and sold by a dealer.
C) Government bonds sold by an individual investor.
D) Sale of inventory.
2. Gibson purchased stock with a fair market value of $14,000 from Gibson's adult child for $12,000. The
child's cost basis in the stock at the date of sale was $16,000. Gibson sold the same stock to an unrelated
party for $18,000. What is Gibson's recognized gain from the sale?
A) $6,000
B) $4,000
C) $2,000
D) $0
3. An individual had the following capital gains and losses for the year:
What will be the net gain (loss) reported by the individual and at what applicable tax rate(s)?
A) Short-term loss of $3,000 at the ordinary rate and long-term capital gain of $86,000 at the 15% rate.
B) Long-term capital gain of $3,000 at the 15% rate, collectibles gain of $10,000 at the 28% rate, and
Section 1250 gain of $56,000 at the 25% rate.
C) Short-term loss of $3,000 at the ordinary rate, long-term capital gain of $10,000 at the 15% rate,
collectibles gain of $10,000 at the 28% rate, and Section 1250 gain of $56,000 at the 25% rate.
D) Long-term gain of $16,000 at the 15% rate.
4. Which of the following statements is the best definition of real property?
A) Real property is all tangible property including land.
B) Real property is land and everything permanently attached to it.
C) Real property is land and intangible property in realized form.
D) Real property is only land.
5. Which payment(s) is(are) included in a recipient's gross income?
I. Payment to a graduate assistant for a part-time teaching assignment at a university. Teaching is not a
requirement toward obtaining the degree.
II. A grant to a Ph.D. candidate for his participation in a university-sponsored research project for the
benefit of the university.
A) Neither I nor II.
B) Both I and II.
C) II only.
D) I only.
Solutions:
| Question # 1 Answer: C | Question # 2 Answer: C | Question # 3 Answer: D | Question # 4 Answer: B | Question # 5 Answer: B |
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