REG Exam UPDATED Exam Questions and
CORRECT Answers
If a taxpayer wants to litigate a tax position that is not tax-technical but has high emotional
appeal, in which of the following courts should the taxpayer choose if he or she wants to request
a jury trial? - CORRECT ANSWER - US District court
Which of the following assets would be included in a debtor's bankruptcy estate in a liquidation
proceeding? - CORRECT ANSWER - Proceeds from a life insurance policy received 90
days after the petition was filed.
Before the provision for federal income tax, Karas Corporation had book income of $400,000 for
year 3. The book income included $100,000 of dividends received from a taxable unaffiliated
domestic corporation. What was Karas Corporation's taxable income for year 3? - CORRECT
ANSWER - book income 400,000 - DRD 50,000 = 350,000
*since unaffiliated dividends received automatic 50% deduction (100,000 *50%) = 50,000
Smith purchased a table from Rex Furniture Store. Rex tendered delivery of the table after
receiving payment in full from Smith. Smith informed Rex that Smith would be unable to take
possession of the table until later that day. Thieves stole the table before Smith returned. The risk
of loss: - CORRECT ANSWER - Remained with Rex because Smith had not yet taken
possession of the table.
Larry plans to gift his daughter $25,000 during the taxable year. Further if she graduates college
he will also gift her $100,000. Which of the gifts are completed/incomplete? - CORRECT
ANSWER - $25,000 is complete
$100,000 is incomplete
Charlie purchased an apartment building on November 16, Year 1, for $1,000,000. Determine
the cost recovery for Year 20.
a.$36,360
b.$32,100
, c.$45,500
d.$331,850 - CORRECT ANSWER - $36,360
Rental real property - 27.5 years
(.5) = .03636
.03636 * 1,000,000= 36,360
In computing the ordinary income of a partnership, a deduction is allowed for - CORRECT
ANSWER - Guaranteed Payments to partners
Wok Corp. has decided to expand the scope of its business. In this connection, it contemplates
engaging several agents. Which of the following agency relationships is within the statute of
frauds and thus should be contained in a signed writing? - CORRECT ANSWER - An
agency for the forthcoming calendar year that is entered into in Mid-december of the prior year.
With regard to an agreement for the sale of real estate, the statute of frauds - CORRECT
ANSWER - does not require that the agreement be signed by all parties.
A corporation that has been an S corporation from its inception may: - CORRECT
ANSWER - Have both passive & nonpassive income: yes
Be owned by a bankruptcy estate: yes
if a piece of machinery is sold, use the following - CORRECT ANSWER - 1231 gain/loss
= sold for - basis
to establish the defense of fraud in the inducement, one of the elements the party must generally
prove is that: - CORRECT ANSWER - the other party made a false representation of a
material fact
Wally, a CPA and a neighbor of Rita's offered to sell his chain saw for $400 to Rita. Rita knew
nothing about it and Wally assured her it "would do the job". Relying on Wally's assurance, Rita
purchased the saw. Wally has created a warranty that: - CORRECT ANSWER - the saw is
capable of cutting trees in Rita's backyard
CORRECT Answers
If a taxpayer wants to litigate a tax position that is not tax-technical but has high emotional
appeal, in which of the following courts should the taxpayer choose if he or she wants to request
a jury trial? - CORRECT ANSWER - US District court
Which of the following assets would be included in a debtor's bankruptcy estate in a liquidation
proceeding? - CORRECT ANSWER - Proceeds from a life insurance policy received 90
days after the petition was filed.
Before the provision for federal income tax, Karas Corporation had book income of $400,000 for
year 3. The book income included $100,000 of dividends received from a taxable unaffiliated
domestic corporation. What was Karas Corporation's taxable income for year 3? - CORRECT
ANSWER - book income 400,000 - DRD 50,000 = 350,000
*since unaffiliated dividends received automatic 50% deduction (100,000 *50%) = 50,000
Smith purchased a table from Rex Furniture Store. Rex tendered delivery of the table after
receiving payment in full from Smith. Smith informed Rex that Smith would be unable to take
possession of the table until later that day. Thieves stole the table before Smith returned. The risk
of loss: - CORRECT ANSWER - Remained with Rex because Smith had not yet taken
possession of the table.
Larry plans to gift his daughter $25,000 during the taxable year. Further if she graduates college
he will also gift her $100,000. Which of the gifts are completed/incomplete? - CORRECT
ANSWER - $25,000 is complete
$100,000 is incomplete
Charlie purchased an apartment building on November 16, Year 1, for $1,000,000. Determine
the cost recovery for Year 20.
a.$36,360
b.$32,100
, c.$45,500
d.$331,850 - CORRECT ANSWER - $36,360
Rental real property - 27.5 years
(.5) = .03636
.03636 * 1,000,000= 36,360
In computing the ordinary income of a partnership, a deduction is allowed for - CORRECT
ANSWER - Guaranteed Payments to partners
Wok Corp. has decided to expand the scope of its business. In this connection, it contemplates
engaging several agents. Which of the following agency relationships is within the statute of
frauds and thus should be contained in a signed writing? - CORRECT ANSWER - An
agency for the forthcoming calendar year that is entered into in Mid-december of the prior year.
With regard to an agreement for the sale of real estate, the statute of frauds - CORRECT
ANSWER - does not require that the agreement be signed by all parties.
A corporation that has been an S corporation from its inception may: - CORRECT
ANSWER - Have both passive & nonpassive income: yes
Be owned by a bankruptcy estate: yes
if a piece of machinery is sold, use the following - CORRECT ANSWER - 1231 gain/loss
= sold for - basis
to establish the defense of fraud in the inducement, one of the elements the party must generally
prove is that: - CORRECT ANSWER - the other party made a false representation of a
material fact
Wally, a CPA and a neighbor of Rita's offered to sell his chain saw for $400 to Rita. Rita knew
nothing about it and Wally assured her it "would do the job". Relying on Wally's assurance, Rita
purchased the saw. Wally has created a warranty that: - CORRECT ANSWER - the saw is
capable of cutting trees in Rita's backyard
