Enrolled Agent Exam Prep - Part 2 exam COMPREHENSIVE QUESTIONS WITH MULTIPLE
CHOICES |VERIFIED & REVISED ANSWERS (NEW) 2025
A cash-basis taxpayer should report gross income
A. Only for the year in which income is actually received in cash.
B. For the year in which income is either actually or constructively received in cash only.
C. Only for the year in which income is actually received whether in cash or in property.
D. For the year in which income is either actually or constructively received, whether in
cash or in property. - ✔✔ D
A domestic LLC with at least two members that does not file Form 8832, Entity
Classification Election, is classified as
A. An entity disregarded as an entity separate from its owners by applying the rules in
Regulations Section 301.7701-3
B. A partnership
C. A corporation
D. A non-entity that requires members to report the income and related expenses on
Form 1040 - ✔✔ B
A tornado destroyed Ian's forklift in 2016. Ian had purchased the forklift for $8,000 and
had correctly deducted $6,000 of depreciation. Ian's adjusted basis in the forklift was
$2,000. Ian's insurance company reimbursed him $9,000, and he spent $7,500 for a new
forklift. How much ordinary income should Ian report on his 2016 income tax return?
A. $0
B. $1,500
C. $6,000
D. $7,000 - ✔✔ B
Based on the following information, what is the amount of Beth's self-employment
income?
,Salary from her S corp $15000
Partnership income (general partner) $8000
Corporate director's fees $1500
Payment from insurance company
for lost income $10000
A. $1500
B. $9500
C. $19500
D. $24500 - ✔✔ C
Bobby Rice is an unincorporated grain farmer in Louisiana with a calendar year end. Bobby
does not live or farm in a disaster area. Bobby computed an estimated tax liability of
$25000 for 2016. To avoid the failure to pay estimated tax penalty, Bobby should
A. Make his first 2016 estimated tax payment by March 1, 2017
B. Pay all his 2016 estimated taxes by February 15, 2017, and file his tax return by April 15,
2017
C. Include any alternative minimum tax he expects to owe in his calculation of 2016
estimated taxes
D. Pay all of his 2016 estimated taxes by the due date of his return. - ✔✔ C
Dan, a calendar-year taxpayer, has the following amounts of gross income for 2016:
Wages $10,000
Interest $2000
Farm Income $200,000
Dan has tax, including self-employment tax, of $20,000, and withholding of $1000. To
avoid any filing or estimated tax penalties, Dan must
, A. File an estimated tax payment by January 15, 2017, and pay 60% of the tax due
B. File his tax return and pay all the tax due by March 1, 2017
C. File an estimated tax payment by March 1, 2017, and pay 66 2/3% of the tax due
D. File his tax return and pay all the tax due by April 15, 2017 - ✔✔ B
During 2016, Ms. Smith had the following expenditures relating to commercial real estate
she owns:
County property tax, $1,975
State property tax, $980
Assessment for sewer construction, $1,500
Charges for sewer and water service, $810
What is the amount Ms. Smith may deduct as real estate taxes on her commercial real
estate for 2016?
A. $2,955
B. $4,455
C. $3,765
D. $5,265 - ✔✔ A
Erin earned $1000 in interest in 2014. Erin withdrew $700 in 2015 and $300 in 2016. How
much of the original $1000 should Erin report as interest earned in 2016?
A. $0
B. $300
C. $700
D. $1000 - ✔✔ A
CHOICES |VERIFIED & REVISED ANSWERS (NEW) 2025
A cash-basis taxpayer should report gross income
A. Only for the year in which income is actually received in cash.
B. For the year in which income is either actually or constructively received in cash only.
C. Only for the year in which income is actually received whether in cash or in property.
D. For the year in which income is either actually or constructively received, whether in
cash or in property. - ✔✔ D
A domestic LLC with at least two members that does not file Form 8832, Entity
Classification Election, is classified as
A. An entity disregarded as an entity separate from its owners by applying the rules in
Regulations Section 301.7701-3
B. A partnership
C. A corporation
D. A non-entity that requires members to report the income and related expenses on
Form 1040 - ✔✔ B
A tornado destroyed Ian's forklift in 2016. Ian had purchased the forklift for $8,000 and
had correctly deducted $6,000 of depreciation. Ian's adjusted basis in the forklift was
$2,000. Ian's insurance company reimbursed him $9,000, and he spent $7,500 for a new
forklift. How much ordinary income should Ian report on his 2016 income tax return?
A. $0
B. $1,500
C. $6,000
D. $7,000 - ✔✔ B
Based on the following information, what is the amount of Beth's self-employment
income?
,Salary from her S corp $15000
Partnership income (general partner) $8000
Corporate director's fees $1500
Payment from insurance company
for lost income $10000
A. $1500
B. $9500
C. $19500
D. $24500 - ✔✔ C
Bobby Rice is an unincorporated grain farmer in Louisiana with a calendar year end. Bobby
does not live or farm in a disaster area. Bobby computed an estimated tax liability of
$25000 for 2016. To avoid the failure to pay estimated tax penalty, Bobby should
A. Make his first 2016 estimated tax payment by March 1, 2017
B. Pay all his 2016 estimated taxes by February 15, 2017, and file his tax return by April 15,
2017
C. Include any alternative minimum tax he expects to owe in his calculation of 2016
estimated taxes
D. Pay all of his 2016 estimated taxes by the due date of his return. - ✔✔ C
Dan, a calendar-year taxpayer, has the following amounts of gross income for 2016:
Wages $10,000
Interest $2000
Farm Income $200,000
Dan has tax, including self-employment tax, of $20,000, and withholding of $1000. To
avoid any filing or estimated tax penalties, Dan must
, A. File an estimated tax payment by January 15, 2017, and pay 60% of the tax due
B. File his tax return and pay all the tax due by March 1, 2017
C. File an estimated tax payment by March 1, 2017, and pay 66 2/3% of the tax due
D. File his tax return and pay all the tax due by April 15, 2017 - ✔✔ B
During 2016, Ms. Smith had the following expenditures relating to commercial real estate
she owns:
County property tax, $1,975
State property tax, $980
Assessment for sewer construction, $1,500
Charges for sewer and water service, $810
What is the amount Ms. Smith may deduct as real estate taxes on her commercial real
estate for 2016?
A. $2,955
B. $4,455
C. $3,765
D. $5,265 - ✔✔ A
Erin earned $1000 in interest in 2014. Erin withdrew $700 in 2015 and $300 in 2016. How
much of the original $1000 should Erin report as interest earned in 2016?
A. $0
B. $300
C. $700
D. $1000 - ✔✔ A
