Final FPQP® Tax Model Implication Certification Study Guide
Exam Questions with Certified for Accuracy Answers
2025/2026
In January 2018, Phan purchased Alpha stock for $3,000, which included a broker's
commission. In October 2020, he sold the position and netted $7,400 after deducting
the broker's commission. In January 2020, Phan bought a position in Gamma stock for
$4,900. In September 2020, he sold the position and netted $4,500. Which of these
describes the Phan's net capital gain or loss?
A)
A net long-term capital gain of $4,000
B)
A net long-term capital gain of $4,400 and a net short-term capital loss of $400
C)
A net short-term capital gain of $4,000
D)
An ordinary loss of $400 and a capital gain of $4,400 - correct answer A net long-term
capital gain of $4,000
The gain is characterized as a net long-term capital gain of $4,000. $7,400 - $3,000 =
$4,400 long-term capital gain (LTCG). $4,900 - $4,500 = $400 short-term capital loss
(STCL). Net the two results: $4,400 LTCG - $400 STCL = $4,000 net long-term capital
gain (LTCG).
On which of the following schedules are itemized deductions reported?
A)
Schedule D
B)
Schedule A
C)
Schedule C
, D)
Schedule B - correct answer schedule a
Itemized deductions are reported on Schedule A of Form 1040. Interest earned and
dividends received are reported on Schedule B. Sole proprietorship income and
expenses are reported on Schedule C. Capital gains are reported on Schedule D.
Which of these statements about the Lifetime Learning and American Opportunity
education tax credits is CORRECT?
A)
Both the American Opportunity and Lifetime Learning tax credits are available for life.
B)
Both the American Opportunity and Lifetime Learning tax credits are available for
daycare expenses.
C)
The Lifetime Learning and American Opportunity tax credits reduce gross income.
D)
Both the Lifetime Learning and American Opportunity tax credits are phased out at
higher income levels. - correct answer Both the Lifetime Learning and American
Opportunity tax credits are phased out at higher income levels.
Which of the following correctly describes the tax consequences of tax credits?
A)
Tax credits reduce a taxpayer's actual tax liability on a dollar-for-dollar basis.
B)
Tax credits have a significantly smaller impact on a taxpayer's tax liability than tax
deductions.
C)
Tax credits reduce a taxpayer's actual tax liability based on the taxpayer's marginal tax
bracket.
D)
Exam Questions with Certified for Accuracy Answers
2025/2026
In January 2018, Phan purchased Alpha stock for $3,000, which included a broker's
commission. In October 2020, he sold the position and netted $7,400 after deducting
the broker's commission. In January 2020, Phan bought a position in Gamma stock for
$4,900. In September 2020, he sold the position and netted $4,500. Which of these
describes the Phan's net capital gain or loss?
A)
A net long-term capital gain of $4,000
B)
A net long-term capital gain of $4,400 and a net short-term capital loss of $400
C)
A net short-term capital gain of $4,000
D)
An ordinary loss of $400 and a capital gain of $4,400 - correct answer A net long-term
capital gain of $4,000
The gain is characterized as a net long-term capital gain of $4,000. $7,400 - $3,000 =
$4,400 long-term capital gain (LTCG). $4,900 - $4,500 = $400 short-term capital loss
(STCL). Net the two results: $4,400 LTCG - $400 STCL = $4,000 net long-term capital
gain (LTCG).
On which of the following schedules are itemized deductions reported?
A)
Schedule D
B)
Schedule A
C)
Schedule C
, D)
Schedule B - correct answer schedule a
Itemized deductions are reported on Schedule A of Form 1040. Interest earned and
dividends received are reported on Schedule B. Sole proprietorship income and
expenses are reported on Schedule C. Capital gains are reported on Schedule D.
Which of these statements about the Lifetime Learning and American Opportunity
education tax credits is CORRECT?
A)
Both the American Opportunity and Lifetime Learning tax credits are available for life.
B)
Both the American Opportunity and Lifetime Learning tax credits are available for
daycare expenses.
C)
The Lifetime Learning and American Opportunity tax credits reduce gross income.
D)
Both the Lifetime Learning and American Opportunity tax credits are phased out at
higher income levels. - correct answer Both the Lifetime Learning and American
Opportunity tax credits are phased out at higher income levels.
Which of the following correctly describes the tax consequences of tax credits?
A)
Tax credits reduce a taxpayer's actual tax liability on a dollar-for-dollar basis.
B)
Tax credits have a significantly smaller impact on a taxpayer's tax liability than tax
deductions.
C)
Tax credits reduce a taxpayer's actual tax liability based on the taxpayer's marginal tax
bracket.
D)
