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Enrolled Agent - Part 2 Questions and
Answers (100% Correct Answers) Already
Graded A+
Adams owns a second residence that is used for both personal
and rental purposes. During Year 1, Adams used the second
residence for 50 days and rented the residence for 200 days.
Which of the following statements is correct? [ Ans: ] Utilities and
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maintenance on the property must be divided between personal
and rental use
Since Adams made rental use of the property more than 14 days
or 10% of the total rented days, he must allocate the total
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expenses between the rental use and personal use based on the
number of days used for each purpose.
Carmine is a self-employed consultant with one employee, Devin,
who earned $48,000 in 2022. Devin contributed the maximum
amount to his SIMPLE 401(k) plan under which an employee can
choose to make salary contributions of up to 15% of pay. Carmine
made a 3% matching contribution. Which of the following
correctly represents the amount that Carmine will deduct for
compensation and benefits paid to Devin in 2022? [ Ans: ]
$48,000 wages and $1,440 retirement plan contribution
-Although the employee can choose to make contributions in an
amount expressed as a percentage of the employee's
compensation, the amount cannot exceed $14,000 for 2022
-As a result, Carmine would deduct $48,000 wages and $1,440 (3%
of $48,000) retirement plan contribution as compensation and
benefits paid to Devin in 2022.
A taxpayer sold his rental house for $190,000 in May 2022. The
depreciation taken under MACRS was $67,840. If the taxpayer
had used the straight-line method, the depreciation would have
, 2
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been $64,960. How much Section 1250 gain did this taxpayer have
when the house was sold? [ Ans: ] Publication 544, page 26,
provides that IRC Section 1231 gains and losses are taxable gains
and losses from Section 1231 transactions but does not include
any of the gain that is ordinary income as a result of any
recapture provisions. In the case of a sale or exchange of real
property that is used in a trade or business and held longer than 1
year, the sale or exchange is a Section 1231 transaction.
In addition, all real property that is subject to an allowance for
depreciation and that is not and never has been IRC Section 1245
property (see Publication 544, pages 27 and 28, for Section 1245
property definition) is known as IRC Section 1250 property, and the
© 2025 Assignment Expert
gain on its disposition is treated as ordinary income to the extent
of additional depreciation allowed or allowable on the property
(Publication 544, page 29).
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The additional depreciation for Section 1250 property that is held
longer than 1 year is the actual depreciation adjustments that are
more than the depreciation figured using the straight-line method.
(Publication 544, pages 29)
In this problem, the taxpayer's Section 1250 gain is the difference
between the MACRS and straight-line depreciation, which is
$2,880 ($67,840 − $64,960).
John and Mary had a pipe burst in the basement of your rental
home. They were unable to reach you on vacation. They had the
plumber come out and repair the pipe and damage. They paid
the plumber $575. They deducted $575 from their rent of $5,000.
How much rent should be considered income that month? [ Ans:
] -5,000
If a tenant pays any of the rental property expenses, the
payments are treated as rental income by the property owner
and may be deducted as an expense by the property owner if
they are deductible rental expenses. (See pages 3-4 of Publication
527.)
, 3
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In this problem, the taxpayer includes the $5,000 ($4,425 actual
rent payment and $575 to repair the pipes).
When are estimated tax payments due for a corporation? [ Ans:
] By the 15th day of the 4th, 6th, 9th, and 12th months of a
corporation's tax year
Which of the following are not organizational costs that can be
amortized? [ Ans: ] Costs of issuing and selling stock
The costs for issuing and selling stock or securities, such as
commissions, professional fees, and printing costs, are not
organizational costs. They are capital expenses that the taxpayer
cannot amortize.
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Under which of the following situations does a corporation qualify
for the small business corporation exemption from alternative
minimum tax (AMT)? [ Ans: ] The Tax Cuts and Jobs Act made
major changes to the taxation of corporate taxpayers, including,
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but not limited to the repeal of the corporate alternative minimum
tax (AMT), effective for tax years beginning after 2017. Thus for
now, the small business corporation exemption from AMT does not
apply.
Which of the following statements is correct concerning the
distribution of stock rights (also known as "stock options") to
shareholders? [ Ans: ] They are distributions by a corporation of
rights to acquire its stock.
They are generally tax-free to shareholders.
Distributions by a corporation of its own stock are commonly
known as stock dividends. Stock rights (also known as "stock
options") are distributions by a corporation of rights to acquire its
stock. Distributions of stock rights are generally tax-free to
shareholders.
However, there are situations whereby the stock dividends and
stock rights become taxable. For example, if any shareholder has
the choice to receive cash or other property instead of stock or
stock rights, the stock and stock rights are treated as property and
, 4
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are governed by different rules. For other taxable situations, see
Publication 542, page 18.
Christopher wants to create a revocable grantor trust that will own
all of his stocks and rental properties. Which statement regarding
income of the trust is true? [ Ans: ] Christopher will be taxed on
all income of the trust, regardless of distributions.
A trust is a grantor trust if the grantor retains certain powers or
ownership benefits. This also can apply to only a portion of a trust.
In general, a grantor trust is ignored for tax purposes and all of the
income, deductions, etc. are treated as belonging directly to the
grantor.
© 2025 Assignment Expert
In addition, the grantor is treated as an owner of any portion of a
trust in which he or she has a reversionary interest in either the
income or corpus therefrom, if, as of the inception of that portion
of the trust, the value of the reversionary interest is more than 5%
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of the value of that portion. This rule also applies in the case of the
owner's spouse.
Note: The grantor is treated as holding any power or interest that
was held by either the grantor's spouse at the time that the power
or interest was created or who became the grantor's spouse after
the creation of that power or interest.
As a result, all of the income from Christopher's revocable grantor
trust will be taxed to him, regardless of distributions.
A businessman can deduct up to $2,000 per year of expenses for
attending conventions, seminars, or similar meetings held on cruise
ships. All of the following requirements must be met, except: [
Ans: ] -the cruise ship company provides a statement that it has
adequate facilities to accommodate the needs of the
convention, seminar, or meetings.
-However, a taxpayer can deduct these expenses only if all five of
the following requirements are met:
the convention, seminar, or meeting is directly related to his or her
trade or business,
For Expert help and assignment solutions, +254707240657
Enrolled Agent - Part 2 Questions and
Answers (100% Correct Answers) Already
Graded A+
Adams owns a second residence that is used for both personal
and rental purposes. During Year 1, Adams used the second
residence for 50 days and rented the residence for 200 days.
Which of the following statements is correct? [ Ans: ] Utilities and
© 2025 Assignment Expert
maintenance on the property must be divided between personal
and rental use
Since Adams made rental use of the property more than 14 days
or 10% of the total rented days, he must allocate the total
Guru01 - Stuvia
expenses between the rental use and personal use based on the
number of days used for each purpose.
Carmine is a self-employed consultant with one employee, Devin,
who earned $48,000 in 2022. Devin contributed the maximum
amount to his SIMPLE 401(k) plan under which an employee can
choose to make salary contributions of up to 15% of pay. Carmine
made a 3% matching contribution. Which of the following
correctly represents the amount that Carmine will deduct for
compensation and benefits paid to Devin in 2022? [ Ans: ]
$48,000 wages and $1,440 retirement plan contribution
-Although the employee can choose to make contributions in an
amount expressed as a percentage of the employee's
compensation, the amount cannot exceed $14,000 for 2022
-As a result, Carmine would deduct $48,000 wages and $1,440 (3%
of $48,000) retirement plan contribution as compensation and
benefits paid to Devin in 2022.
A taxpayer sold his rental house for $190,000 in May 2022. The
depreciation taken under MACRS was $67,840. If the taxpayer
had used the straight-line method, the depreciation would have
, 2
For Expert help and assignment solutions, +254707240657
been $64,960. How much Section 1250 gain did this taxpayer have
when the house was sold? [ Ans: ] Publication 544, page 26,
provides that IRC Section 1231 gains and losses are taxable gains
and losses from Section 1231 transactions but does not include
any of the gain that is ordinary income as a result of any
recapture provisions. In the case of a sale or exchange of real
property that is used in a trade or business and held longer than 1
year, the sale or exchange is a Section 1231 transaction.
In addition, all real property that is subject to an allowance for
depreciation and that is not and never has been IRC Section 1245
property (see Publication 544, pages 27 and 28, for Section 1245
property definition) is known as IRC Section 1250 property, and the
© 2025 Assignment Expert
gain on its disposition is treated as ordinary income to the extent
of additional depreciation allowed or allowable on the property
(Publication 544, page 29).
Guru01 - Stuvia
The additional depreciation for Section 1250 property that is held
longer than 1 year is the actual depreciation adjustments that are
more than the depreciation figured using the straight-line method.
(Publication 544, pages 29)
In this problem, the taxpayer's Section 1250 gain is the difference
between the MACRS and straight-line depreciation, which is
$2,880 ($67,840 − $64,960).
John and Mary had a pipe burst in the basement of your rental
home. They were unable to reach you on vacation. They had the
plumber come out and repair the pipe and damage. They paid
the plumber $575. They deducted $575 from their rent of $5,000.
How much rent should be considered income that month? [ Ans:
] -5,000
If a tenant pays any of the rental property expenses, the
payments are treated as rental income by the property owner
and may be deducted as an expense by the property owner if
they are deductible rental expenses. (See pages 3-4 of Publication
527.)
, 3
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In this problem, the taxpayer includes the $5,000 ($4,425 actual
rent payment and $575 to repair the pipes).
When are estimated tax payments due for a corporation? [ Ans:
] By the 15th day of the 4th, 6th, 9th, and 12th months of a
corporation's tax year
Which of the following are not organizational costs that can be
amortized? [ Ans: ] Costs of issuing and selling stock
The costs for issuing and selling stock or securities, such as
commissions, professional fees, and printing costs, are not
organizational costs. They are capital expenses that the taxpayer
cannot amortize.
© 2025 Assignment Expert
Under which of the following situations does a corporation qualify
for the small business corporation exemption from alternative
minimum tax (AMT)? [ Ans: ] The Tax Cuts and Jobs Act made
major changes to the taxation of corporate taxpayers, including,
Guru01 - Stuvia
but not limited to the repeal of the corporate alternative minimum
tax (AMT), effective for tax years beginning after 2017. Thus for
now, the small business corporation exemption from AMT does not
apply.
Which of the following statements is correct concerning the
distribution of stock rights (also known as "stock options") to
shareholders? [ Ans: ] They are distributions by a corporation of
rights to acquire its stock.
They are generally tax-free to shareholders.
Distributions by a corporation of its own stock are commonly
known as stock dividends. Stock rights (also known as "stock
options") are distributions by a corporation of rights to acquire its
stock. Distributions of stock rights are generally tax-free to
shareholders.
However, there are situations whereby the stock dividends and
stock rights become taxable. For example, if any shareholder has
the choice to receive cash or other property instead of stock or
stock rights, the stock and stock rights are treated as property and
, 4
For Expert help and assignment solutions, +254707240657
are governed by different rules. For other taxable situations, see
Publication 542, page 18.
Christopher wants to create a revocable grantor trust that will own
all of his stocks and rental properties. Which statement regarding
income of the trust is true? [ Ans: ] Christopher will be taxed on
all income of the trust, regardless of distributions.
A trust is a grantor trust if the grantor retains certain powers or
ownership benefits. This also can apply to only a portion of a trust.
In general, a grantor trust is ignored for tax purposes and all of the
income, deductions, etc. are treated as belonging directly to the
grantor.
© 2025 Assignment Expert
In addition, the grantor is treated as an owner of any portion of a
trust in which he or she has a reversionary interest in either the
income or corpus therefrom, if, as of the inception of that portion
of the trust, the value of the reversionary interest is more than 5%
Guru01 - Stuvia
of the value of that portion. This rule also applies in the case of the
owner's spouse.
Note: The grantor is treated as holding any power or interest that
was held by either the grantor's spouse at the time that the power
or interest was created or who became the grantor's spouse after
the creation of that power or interest.
As a result, all of the income from Christopher's revocable grantor
trust will be taxed to him, regardless of distributions.
A businessman can deduct up to $2,000 per year of expenses for
attending conventions, seminars, or similar meetings held on cruise
ships. All of the following requirements must be met, except: [
Ans: ] -the cruise ship company provides a statement that it has
adequate facilities to accommodate the needs of the
convention, seminar, or meetings.
-However, a taxpayer can deduct these expenses only if all five of
the following requirements are met:
the convention, seminar, or meeting is directly related to his or her
trade or business,
