ENROLLED AGENT PART 1 FINAL EXAMS ACTUAL
QUESTIONS AND ANSWERS SURE A+
✔✔IRA MAGI Phaseouts: Taxpayer is eligible through employer. Single or HOH -
✔✔$63,000 (full deduction). More than $73,000 (no deduction)
✔✔IRA MAGI Phaseouts: Taxpayer is eligible through employer. MFJ or Qualifying
Widower - ✔✔$101,000 or less (full deduction). More than $121,000 (no deduction)
✔✔IRA MAGI Phaseouts: Taxpayer is eligible through employer and Spouse is or is not
eligible. MFS - ✔✔Less than $10,000 (partial deduction). $10,000 or more (no
deduction)
✔✔IRA Deduction MAGI Phaseouts: Taxpayer is NOT eligible through employer.
Single, HOH, qualifying Widower - ✔✔Any amount (full deduction)
✔✔IRA Deduction MAGI Phaseouts: Taxpayer and Spouse NOT eligible through
employer. MFJ. - ✔✔Any amount (full deduction)
✔✔IRA Deduction MAGI Phaseouts: Taxpayer is NOT eligible through employer.
Spouse is eligible through employer. MFJ - ✔✔$189,000 or less (full deduction). More
than $199,000 (no deduction)
, ✔✔MAGI is - ✔✔AGI without regard to Passive Activity Losses, Social Security
Benefits, and qualified retirement contributions.
✔✔Dr. J has adjusted gross income for the current year of $130,000 before the
deduction for a $5,500 contribution to his IRA, and before any potential deduction for
$40,000 of losses from rental real estate activities in which he actively participates. How
much of the rental losses may he deduct if the rental real estate activities were acquired
in the current year? - ✔✔The $25,000 allowance of losses from active participation in
real estate activities against nonpassive income is reduced by 50% of the amount by
which MAGI exceeds $100,000. So $30,000*50% = $15,000. $25,000 - $15,000 =
$10,000 allowable to deduct against nonpassive income.
✔✔Who do passive activity rules NOT apply to? - ✔✔grantor trusts, partnerships, and S
corporations. however, they do apply to owners of these entities.
✔✔Who do passive activity rules apply to? - ✔✔individuals, estates, trusts, personal
service corporations, closely hld corporations
✔✔What types of income do passive activity rules NOT apply to? - ✔✔active
income/loss/credit. portfolio income/loss/credit. casualty and theft loss, vacation home
rental, qualified home mortgage interest, business use of home, or a working interest in
an oil or gas well held through an entity that does not limit personal liability.
✔✔What is active income/loss/credit? - ✔✔Income attributable to active business
operations, including gain on inventory sales and compensation for personal services
like wages, salary, bonuses, etc.
✔✔What is portfolio income/loss/credit? - ✔✔Income attributable to other than the
ordinary course of trade or business, including items such as income from dividends,
interest, annuities, and royalties, related expenses and interest expenses and
gains/losses on disposition of property that produces the above income.
✔✔What are the two types of passive activities? - ✔✔(1) Trade or business activities in
which the taxpayer does not materially participate and (2) rental activities, unless the
taxpayer is a real estate professional.
✔✔Who do "At Risk" Rules apply to? - ✔✔Individuals, partners in partnerships,
members in LLC's, shareholders of S corps, trusts, estates, and closely held C corps.
✔✔Who do "At Risk" Rules NOT apply to? - ✔✔Personal holding companies, foreign
personal holding companies, and personal service corporations
QUESTIONS AND ANSWERS SURE A+
✔✔IRA MAGI Phaseouts: Taxpayer is eligible through employer. Single or HOH -
✔✔$63,000 (full deduction). More than $73,000 (no deduction)
✔✔IRA MAGI Phaseouts: Taxpayer is eligible through employer. MFJ or Qualifying
Widower - ✔✔$101,000 or less (full deduction). More than $121,000 (no deduction)
✔✔IRA MAGI Phaseouts: Taxpayer is eligible through employer and Spouse is or is not
eligible. MFS - ✔✔Less than $10,000 (partial deduction). $10,000 or more (no
deduction)
✔✔IRA Deduction MAGI Phaseouts: Taxpayer is NOT eligible through employer.
Single, HOH, qualifying Widower - ✔✔Any amount (full deduction)
✔✔IRA Deduction MAGI Phaseouts: Taxpayer and Spouse NOT eligible through
employer. MFJ. - ✔✔Any amount (full deduction)
✔✔IRA Deduction MAGI Phaseouts: Taxpayer is NOT eligible through employer.
Spouse is eligible through employer. MFJ - ✔✔$189,000 or less (full deduction). More
than $199,000 (no deduction)
, ✔✔MAGI is - ✔✔AGI without regard to Passive Activity Losses, Social Security
Benefits, and qualified retirement contributions.
✔✔Dr. J has adjusted gross income for the current year of $130,000 before the
deduction for a $5,500 contribution to his IRA, and before any potential deduction for
$40,000 of losses from rental real estate activities in which he actively participates. How
much of the rental losses may he deduct if the rental real estate activities were acquired
in the current year? - ✔✔The $25,000 allowance of losses from active participation in
real estate activities against nonpassive income is reduced by 50% of the amount by
which MAGI exceeds $100,000. So $30,000*50% = $15,000. $25,000 - $15,000 =
$10,000 allowable to deduct against nonpassive income.
✔✔Who do passive activity rules NOT apply to? - ✔✔grantor trusts, partnerships, and S
corporations. however, they do apply to owners of these entities.
✔✔Who do passive activity rules apply to? - ✔✔individuals, estates, trusts, personal
service corporations, closely hld corporations
✔✔What types of income do passive activity rules NOT apply to? - ✔✔active
income/loss/credit. portfolio income/loss/credit. casualty and theft loss, vacation home
rental, qualified home mortgage interest, business use of home, or a working interest in
an oil or gas well held through an entity that does not limit personal liability.
✔✔What is active income/loss/credit? - ✔✔Income attributable to active business
operations, including gain on inventory sales and compensation for personal services
like wages, salary, bonuses, etc.
✔✔What is portfolio income/loss/credit? - ✔✔Income attributable to other than the
ordinary course of trade or business, including items such as income from dividends,
interest, annuities, and royalties, related expenses and interest expenses and
gains/losses on disposition of property that produces the above income.
✔✔What are the two types of passive activities? - ✔✔(1) Trade or business activities in
which the taxpayer does not materially participate and (2) rental activities, unless the
taxpayer is a real estate professional.
✔✔Who do "At Risk" Rules apply to? - ✔✔Individuals, partners in partnerships,
members in LLC's, shareholders of S corps, trusts, estates, and closely held C corps.
✔✔Who do "At Risk" Rules NOT apply to? - ✔✔Personal holding companies, foreign
personal holding companies, and personal service corporations
