SEE Enrolled Agent Exam Part 2
Lambers Adaptive Drill Exam Questions
with 100% Correct Answers
How do partners in a partnership report their income? - ✔✔Partners income
flow through form 1065 to their personal return on form K1. Partners of a
partnership cannot be on payroll/receive a W2.
What is form 8832 used for? - ✔✔This form is used by an LLC to elect to be
classified as a corporation, a partnership, or an entity disregarded as separate
from its owner.
What are bad business debts? - ✔✔Bad business debts are losses from the
worthlessness of a debt that was either:
- Created or acquired in its business, or
- Closely related to its business, when it became partly or totally worthless.
Business bad debts are deductible
What section of the revenue code are like kind exchanges covered in? -
✔✔Section 1031
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©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
,When do you report as income when you receive goods or services in exchange
for your goods or services (bartering)? - ✔✔This is called bartering income and
you report the FMV of the goods or services at the time of receipt.
How do you capitalize costs of section 197 intangibles and what are they? -
✔✔Section 197 intangibles are:
- Goodwill
- Going concern value
- Workforce in place
- Business books and records
- A covenant non to compete
- A franchise, trademark, or trade name (including renewals)
Section 197 intangibles must be amortized over a period of 15 years.
If an estate has a net operating loss carryover and an unused capital loss
carryover how does it take the deduction? - ✔✔An unused net operating loss
carryover or capital loss carryover existing upon termination of the estate is
allowed to the beneficiaries succeeding to the property of the estate. Both types
of carryovers generally keep their same character for the beneficiary as they
had for the estate. However, if the beneficiary of a capital loss carryover is a
corporation, the corporation will treat the carryover as a short-term capital loss.
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©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
, This loss is taken by the beneficiary in the tax year in which the estate
terminates. If the loss can be carried to more than one tax year, the first year
counts as two years because it is used by the estate and the beneficiary.
What happens when someone has a net operating loss in the year that they die?
- ✔✔A decedent's net operating loss from a prior year and any capital loss can
be deducted only on the decedent's final income tax return. An NOL on the
decedent's final income tax return can be carried back to prior years. Any
unused NOL is lost.
What is a grantor trust? - ✔✔A grantor type trust is a legal entity under state
law. Since the grantor or substantial owners have not relinquished complete
control over the trust, it is not recognized as a separate taxable entity for
income tax purposes. All income, deductions, etc. are treated as belonging
directly to the grantor. The trust usually files form 1041 which shows no dollar
amounts. Dollar amounts taxable to the grantor are shown on an attachment.
What do private schools need to provide to the IRS when submitting an
application for tax exempt status? - ✔✔1. The racial composition of the student
body and of the faculty as of the current year
2. The amount of scholarship and loan funds, if any, awarded to students
enrolled, and the racial composition of students who have received awards
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©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
Lambers Adaptive Drill Exam Questions
with 100% Correct Answers
How do partners in a partnership report their income? - ✔✔Partners income
flow through form 1065 to their personal return on form K1. Partners of a
partnership cannot be on payroll/receive a W2.
What is form 8832 used for? - ✔✔This form is used by an LLC to elect to be
classified as a corporation, a partnership, or an entity disregarded as separate
from its owner.
What are bad business debts? - ✔✔Bad business debts are losses from the
worthlessness of a debt that was either:
- Created or acquired in its business, or
- Closely related to its business, when it became partly or totally worthless.
Business bad debts are deductible
What section of the revenue code are like kind exchanges covered in? -
✔✔Section 1031
Page 1 of 26
©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
,When do you report as income when you receive goods or services in exchange
for your goods or services (bartering)? - ✔✔This is called bartering income and
you report the FMV of the goods or services at the time of receipt.
How do you capitalize costs of section 197 intangibles and what are they? -
✔✔Section 197 intangibles are:
- Goodwill
- Going concern value
- Workforce in place
- Business books and records
- A covenant non to compete
- A franchise, trademark, or trade name (including renewals)
Section 197 intangibles must be amortized over a period of 15 years.
If an estate has a net operating loss carryover and an unused capital loss
carryover how does it take the deduction? - ✔✔An unused net operating loss
carryover or capital loss carryover existing upon termination of the estate is
allowed to the beneficiaries succeeding to the property of the estate. Both types
of carryovers generally keep their same character for the beneficiary as they
had for the estate. However, if the beneficiary of a capital loss carryover is a
corporation, the corporation will treat the carryover as a short-term capital loss.
Page 2 of 26
©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
, This loss is taken by the beneficiary in the tax year in which the estate
terminates. If the loss can be carried to more than one tax year, the first year
counts as two years because it is used by the estate and the beneficiary.
What happens when someone has a net operating loss in the year that they die?
- ✔✔A decedent's net operating loss from a prior year and any capital loss can
be deducted only on the decedent's final income tax return. An NOL on the
decedent's final income tax return can be carried back to prior years. Any
unused NOL is lost.
What is a grantor trust? - ✔✔A grantor type trust is a legal entity under state
law. Since the grantor or substantial owners have not relinquished complete
control over the trust, it is not recognized as a separate taxable entity for
income tax purposes. All income, deductions, etc. are treated as belonging
directly to the grantor. The trust usually files form 1041 which shows no dollar
amounts. Dollar amounts taxable to the grantor are shown on an attachment.
What do private schools need to provide to the IRS when submitting an
application for tax exempt status? - ✔✔1. The racial composition of the student
body and of the faculty as of the current year
2. The amount of scholarship and loan funds, if any, awarded to students
enrolled, and the racial composition of students who have received awards
Page 3 of 26
©JOSHCLAY 2025/2026. YEAR PUBLISHED 2025.
