ENROLLED AGENT REVIEW EXAMS TEST
QUESTIONS AND ANSWERS SURE A+
✔✔In 2015 the Birch Company had gross income of $163,000, a bad debt deduction of
$5000, and other allowable deductions of $58500. Birch uses the accrual method of
accounting and the specific charge-off method for bad debts. In 2016, Birch recovered
$1600 of the bad debt that had been deducted in 2015. What portion of the bad debt
recovery should be included in Birch's income for 2016?
A. $0
B. $1600
C. $3400
D. $5000 - ✔✔B
✔✔Which type of income is not subject to self-employment tax?
A. Wages, salaries, and tips received as an employee
B. Non-employee compensation
C. Net profits from sole proprietorship
D. Distributive share of partnership income - ✔✔A
✔✔Mike owns a four-family apartment building and actively participates in the rental
activity. Mike advertised, rented the apartments to the tenants, collected rents, and
, made repairs. His brother, Bryan, also owns an apartment building. Bryan spends more
than half his time developing, constructing, renting, managing, and operating his
apartment building as well as providing regular cleaning, linen service, and made
service for the convenience of the tenants. Which brother has self-employment income
from the apartment building?
A. Mike
B. Bryan
C. Both
D. Neither - ✔✔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
✔✔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
✔✔The receipt of agricultural program payments by a farmer for refraining from growing
crops should be reported as
A. Miscellaneous income on Form 1040
B. Farm income, not subject to self-employment tax
C. Rental income, not subject to self-employment tax
QUESTIONS AND ANSWERS SURE A+
✔✔In 2015 the Birch Company had gross income of $163,000, a bad debt deduction of
$5000, and other allowable deductions of $58500. Birch uses the accrual method of
accounting and the specific charge-off method for bad debts. In 2016, Birch recovered
$1600 of the bad debt that had been deducted in 2015. What portion of the bad debt
recovery should be included in Birch's income for 2016?
A. $0
B. $1600
C. $3400
D. $5000 - ✔✔B
✔✔Which type of income is not subject to self-employment tax?
A. Wages, salaries, and tips received as an employee
B. Non-employee compensation
C. Net profits from sole proprietorship
D. Distributive share of partnership income - ✔✔A
✔✔Mike owns a four-family apartment building and actively participates in the rental
activity. Mike advertised, rented the apartments to the tenants, collected rents, and
, made repairs. His brother, Bryan, also owns an apartment building. Bryan spends more
than half his time developing, constructing, renting, managing, and operating his
apartment building as well as providing regular cleaning, linen service, and made
service for the convenience of the tenants. Which brother has self-employment income
from the apartment building?
A. Mike
B. Bryan
C. Both
D. Neither - ✔✔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
✔✔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
✔✔The receipt of agricultural program payments by a farmer for refraining from growing
crops should be reported as
A. Miscellaneous income on Form 1040
B. Farm income, not subject to self-employment tax
C. Rental income, not subject to self-employment tax
