Tax Preparer Final Exam Review Latest 2026/2027 Questions
and Correct Detailed Answers Already Graded A+
If one spouse refuses to file a joint return, can the other spouse do anything
about it? - CORRECT ANSWER-No Both will have to file using the married filing
separately status unless one or both qualifies to be considered unmarried.
What kinds of property may be expensed using the Section 179 deduction? -
CORRECT ANSWER-New or used tangible personal property (usually
equipment or office furniture) purchased for use in a trade or business. (17.2)
How is the MACRS deduction computed in the year of disposition for property
being depreciated using the half-year convention? - CORRECT ANSWER-HALF
of the normal depreciation is allowed. (17.9)
How is the MACRS deduction for the year of disposition computed if the property
is being depreciated using the mid-quarter convention? - CORRECT ANSWER-
Depreciation for the entire year, multiplied by a PERCENTAGE for quarter of
disposition:
12.5% First
37.5% Second
,62.5% Third
87.5% Fourth
(17.9)
Which form is used to report the sale of a business asset? - CORRECT
ANSWER-Form 4797 (17.10)
What special treatment is available to self-employed taxpayers with regard to
health insurance premiums they pay? - CORRECT ANSWER-They may deduct
their premiums as an adjustment to income, if they qualify. (17.17)
Carol has a home office. When she is not using the office, she lets her children
play video games on an old television she keeps there. Can Carol deduct home-
office expenses? - CORRECT ANSWER-No. The space must be used exclusively
for the business. (17.21)
An employee has an office where he works, but his work load demands that he
bring home work on evenings and weekends. He uses a room of his home
regularly and exclusively for his work. May he deduct home-office expenses? -
CORRECT ANSWER-No, the employer provides a work office. (17.23)
, What activities are considered farming activities? - CORRECT ANSWER-•
Cultivating land, operating dairy farms, fruit farms, nurseries, orchards, poultry
farms, fish farms, plantations, ranches, stock farms, truck farms;breeding and
raising fur-bearing animals or laboratory animals.
• Does NOT include breeding, raising dogs, cats or pets. (17.28)
Matthew breeds Cocker Spaniels for sale as pets. What schedule will Matthew use
to determine his profit or loss? - CORRECT ANSWER-Schedule C (17.28)
What are some general types of itemized deductions that are subject to the 2%-
of-AGI floor? - CORRECT ANSWER-• Transportation Expenses
• Education Expenses
• Job-Seeking Expenses
• Tax Preparation Fees
• Investment Expenses
• Hobby Expenses
(13.9)
What are some miscellaneous itemized deductions that are not subject to the 2%-
of-AGI limitation? - CORRECT ANSWER-• Gambling Losses
• Impairment-Related Work Expenses
and Correct Detailed Answers Already Graded A+
If one spouse refuses to file a joint return, can the other spouse do anything
about it? - CORRECT ANSWER-No Both will have to file using the married filing
separately status unless one or both qualifies to be considered unmarried.
What kinds of property may be expensed using the Section 179 deduction? -
CORRECT ANSWER-New or used tangible personal property (usually
equipment or office furniture) purchased for use in a trade or business. (17.2)
How is the MACRS deduction computed in the year of disposition for property
being depreciated using the half-year convention? - CORRECT ANSWER-HALF
of the normal depreciation is allowed. (17.9)
How is the MACRS deduction for the year of disposition computed if the property
is being depreciated using the mid-quarter convention? - CORRECT ANSWER-
Depreciation for the entire year, multiplied by a PERCENTAGE for quarter of
disposition:
12.5% First
37.5% Second
,62.5% Third
87.5% Fourth
(17.9)
Which form is used to report the sale of a business asset? - CORRECT
ANSWER-Form 4797 (17.10)
What special treatment is available to self-employed taxpayers with regard to
health insurance premiums they pay? - CORRECT ANSWER-They may deduct
their premiums as an adjustment to income, if they qualify. (17.17)
Carol has a home office. When she is not using the office, she lets her children
play video games on an old television she keeps there. Can Carol deduct home-
office expenses? - CORRECT ANSWER-No. The space must be used exclusively
for the business. (17.21)
An employee has an office where he works, but his work load demands that he
bring home work on evenings and weekends. He uses a room of his home
regularly and exclusively for his work. May he deduct home-office expenses? -
CORRECT ANSWER-No, the employer provides a work office. (17.23)
, What activities are considered farming activities? - CORRECT ANSWER-•
Cultivating land, operating dairy farms, fruit farms, nurseries, orchards, poultry
farms, fish farms, plantations, ranches, stock farms, truck farms;breeding and
raising fur-bearing animals or laboratory animals.
• Does NOT include breeding, raising dogs, cats or pets. (17.28)
Matthew breeds Cocker Spaniels for sale as pets. What schedule will Matthew use
to determine his profit or loss? - CORRECT ANSWER-Schedule C (17.28)
What are some general types of itemized deductions that are subject to the 2%-
of-AGI floor? - CORRECT ANSWER-• Transportation Expenses
• Education Expenses
• Job-Seeking Expenses
• Tax Preparation Fees
• Investment Expenses
• Hobby Expenses
(13.9)
What are some miscellaneous itemized deductions that are not subject to the 2%-
of-AGI limitation? - CORRECT ANSWER-• Gambling Losses
• Impairment-Related Work Expenses
