AICPA REG EXAM |ACTUAL QUESTIONS AND
VERIFIED ANSWERS|BRAND NEW 2026-2027
UPDATE|GRADED A+
Question 1
Gertie owns an apartment building. Out of the rents received each month, she pays
herself a management fee. Where should she report her income?
A.
Schedule C only
B.
Schedule E only
C.
Both schedules C & E
D.
None of the above
CORRECT ANSWER
C.
Both schedules C & E
Gertie's rental income is reported on Schedule E, as is the deduction for the management
fee. Her management fee income is properly reported on Schedule C as business income.
Question 2
Under the Secured Transactions Article of the UCC, which of the following security
agreements does not need to be in writing to be enforceable?
1
,A.
A security agreement collateralizing a debt of less than $500.
B.
A security agreement where the collateral is highly perishable or subject to wide price
fluctuations.
C.
A security agreement where the collateral is in the possession of the secured party.
D.
A security agreement involving a purchase money security interest.
CORRECT ANSWER
C.
A security agreement where the collateral is in the possession of the secured party.
Question 3
Which of the following situations would most likely be a violation of the Treasury Circular
230 solicitation guidelines by a CPA, assuming that there are no violations of federal or
state laws or other rules?
A.
The CPA sends unsolicited e-mails to potential clients guaranteeing tax refunds from the
Internal Revenue Service.
B.
The CPA mails solicitation letters, clearly identified as such, to randomly selected business
firms from a local directory, disclosing how the firms were selected to be contacted.
2
,Question 4
C.
The CPA records a radio advertising broadcast that fails to disclose the fee charged for an
initial consultation.
D.
The CPA advertises in a local newspaper as providing accounting and tax services without
disclosing fee information.
CORRECT ANSWER
A.
The CPA sends unsolicited e-mails to potential clients guaranteeing tax refunds from the
Internal Revenue Service.
Under Circular 230, tax practitioners may not make false, fraudulent, or coercive
statements or claims. Solicitations must be clearly identified and must indicate the
source of the information used to select recipients. Practitioners may, but are not
required to, disseminate information about fees.
Question 5
Under Treasury Circular 230, in which of the following situations is a CPA prohibited from
giving written advice concerning one or more federal tax issues?
A.
The CPA takes into account the possibility that a tax return will not be audited.
B.
The CPA reasonably relies upon representations of the client.
C.
The CPA considers all relevant facts that are known.
D.
The CPA considers assumptions about future events related to relevant facts.
CORRECT ANSWER
3
, A.
The CPA takes into account the possibility that a tax return will not be audited.
When giving written advice, a practitioner must not rely on the client's representations,
statements, findings, or documents (eg, appraisals) if relying on them would be
unreasonable. The practitioner can rely on these only if it is reasonable to do so.
Question 6
Under Treasury Circular 230, which of the following actions of a CPA tax adviser is
characteristic of a best practice in rendering tax advice?
A.
Requesting a review of a tax memorandum by an attorney who is familiar with the particular
tax issues discussed in the memorandum.
B.
Requesting a review of a tax memorandum by an IRS advisory committee.
C.
Establishing relevant facts, evaluating the reasonableness of assumptions and
representations, and arriving at a conclusion supported by the law and facts in a tax
memorandum.
D.
Requiring a client to supply a written representation, signed under penalties of perjury,
concerning the facts and statements provided to the CPA for preparing a tax memorandum.
CORRECT ANSWER
C.
Establishing relevant facts, evaluating the reasonableness of assumptions and
representations, and arriving at a conclusion supported by the law and facts in a tax
memorandum.
As part of best practices when giving tax advice, a tax practitioner is required by Treasury
Circular 230 to establish the facts relevant to a tax issue, evaluate the reasonableness of
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VERIFIED ANSWERS|BRAND NEW 2026-2027
UPDATE|GRADED A+
Question 1
Gertie owns an apartment building. Out of the rents received each month, she pays
herself a management fee. Where should she report her income?
A.
Schedule C only
B.
Schedule E only
C.
Both schedules C & E
D.
None of the above
CORRECT ANSWER
C.
Both schedules C & E
Gertie's rental income is reported on Schedule E, as is the deduction for the management
fee. Her management fee income is properly reported on Schedule C as business income.
Question 2
Under the Secured Transactions Article of the UCC, which of the following security
agreements does not need to be in writing to be enforceable?
1
,A.
A security agreement collateralizing a debt of less than $500.
B.
A security agreement where the collateral is highly perishable or subject to wide price
fluctuations.
C.
A security agreement where the collateral is in the possession of the secured party.
D.
A security agreement involving a purchase money security interest.
CORRECT ANSWER
C.
A security agreement where the collateral is in the possession of the secured party.
Question 3
Which of the following situations would most likely be a violation of the Treasury Circular
230 solicitation guidelines by a CPA, assuming that there are no violations of federal or
state laws or other rules?
A.
The CPA sends unsolicited e-mails to potential clients guaranteeing tax refunds from the
Internal Revenue Service.
B.
The CPA mails solicitation letters, clearly identified as such, to randomly selected business
firms from a local directory, disclosing how the firms were selected to be contacted.
2
,Question 4
C.
The CPA records a radio advertising broadcast that fails to disclose the fee charged for an
initial consultation.
D.
The CPA advertises in a local newspaper as providing accounting and tax services without
disclosing fee information.
CORRECT ANSWER
A.
The CPA sends unsolicited e-mails to potential clients guaranteeing tax refunds from the
Internal Revenue Service.
Under Circular 230, tax practitioners may not make false, fraudulent, or coercive
statements or claims. Solicitations must be clearly identified and must indicate the
source of the information used to select recipients. Practitioners may, but are not
required to, disseminate information about fees.
Question 5
Under Treasury Circular 230, in which of the following situations is a CPA prohibited from
giving written advice concerning one or more federal tax issues?
A.
The CPA takes into account the possibility that a tax return will not be audited.
B.
The CPA reasonably relies upon representations of the client.
C.
The CPA considers all relevant facts that are known.
D.
The CPA considers assumptions about future events related to relevant facts.
CORRECT ANSWER
3
, A.
The CPA takes into account the possibility that a tax return will not be audited.
When giving written advice, a practitioner must not rely on the client's representations,
statements, findings, or documents (eg, appraisals) if relying on them would be
unreasonable. The practitioner can rely on these only if it is reasonable to do so.
Question 6
Under Treasury Circular 230, which of the following actions of a CPA tax adviser is
characteristic of a best practice in rendering tax advice?
A.
Requesting a review of a tax memorandum by an attorney who is familiar with the particular
tax issues discussed in the memorandum.
B.
Requesting a review of a tax memorandum by an IRS advisory committee.
C.
Establishing relevant facts, evaluating the reasonableness of assumptions and
representations, and arriving at a conclusion supported by the law and facts in a tax
memorandum.
D.
Requiring a client to supply a written representation, signed under penalties of perjury,
concerning the facts and statements provided to the CPA for preparing a tax memorandum.
CORRECT ANSWER
C.
Establishing relevant facts, evaluating the reasonableness of assumptions and
representations, and arriving at a conclusion supported by the law and facts in a tax
memorandum.
As part of best practices when giving tax advice, a tax practitioner is required by Treasury
Circular 230 to establish the facts relevant to a tax issue, evaluate the reasonableness of
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