Enrolled Agent Exam Prep Part 2 With
Correct Questions And Answers
(UNIT 1) Business and Requirements ...ANSWER......
Solo Proprietorship ...ANSWER...can't be passed to a new owner, must be sold
qualified joint venture - only married couples business
-file separate Schedules C and separate Schedule SE
Statutory employees, disregarded entities also must file Schedule C
Partnerships ...ANSWER...-must have at least 1 general partner
joint undertaking to share expenses is not a partnership
From 1065 amd K-1 to each partner (not W 2)
limited partner may not sign return or represent before IRS
Limited Liability Partnership (LLC) partner only at risk for his interest in partnership
assets
C Corporations ...ANSWER...From 1120
board of directors oversight of company and has shareholders
S Corporations ...ANSWER...S corp must
-be domestic
-shareholders (may not be partnerships, corporations, non resident aliens)
-no more than 100 shareholders
-one class of stock (voting and non are same stock)
-not be ineligible type corporation
Limited Liability Companies (LLC) ...ANSWER...taxed as partnership
corporation protection and avoids double taxation
Personal Service Corporations (PSC) ...ANSWER...taxed at flat rate of 35%
CLOSELY HELD CORP
-can offset passive losses with any active income
PERSONAL SERVICE CORP can't offset passive losses with any active income
,when at least 95% of stock held by owners performing personal services.
Farmers and Fishermen ...ANSWER...may be partnership or corporation
Tax-Exempt Orgs (non profit entities) ...ANSWER...Form 1023 application for
regognition of exemption
by default non profit: churches, synagogues, mosques, temples
Form 990 file annually
Entity Classification Election Rules ...ANSWER...can choose to be classified for tax
purposes
not before 75 days or after 12 months.
election cannot be changed for 5yrs (60 months)
Employer Identification Number (EIN) ...ANSWER...Request for EIN From SS-4
must have if:
have employees
excise tax
alcohol, tobacco, firearms
If solo no employees, not required EIN
Business Recordkeeping ...ANSWER...Later of 3 years when due or filed
payroll employment info 4 years
Income Statement
Balance Sheet
Business Reporting Requirements ...ANSWER...Form 8300 - cash transaction $10,000
or more (report 15th day after day of transaction)
W-4 employee's withholding allowance certificate
W-2 wages and tax statement (if file over 250 must file electronically)
Form 1099 contractors, self employed if paid $600 or more (no need for one if personal
payments, paint my house)
Employment Taxes and Self-Employment Tax ...ANSWER...Form 944
SS 6.2% Medicare 1.45%
Additional Medicare Tax 0.9%
if not file 944, must file 941 each quarter regardless if paid wages or not
Only Options: by Mail or E-file
Trust Fund Recovery Penalty (TFRP) ...ANSWER...penalty 100% can apply to everyone
who is responsible.
responsible and willfully fails
, Federal Unemployment (FUTA) Tax ...ANSWER...6% on first $7,000 of each employee
can later get credit of 5.4% on Form 940 so true tax is 0.6%
Employee and Worker Classification ...ANSWER...Test: behavior control, financial
control, type of relationship
employee
statutory employee - life insurance salespeople, traveling salespeople, director of corps,
commissioned truck drivers,
statutory non employee - direct sales and licensed real estate agents
independent contractor
Employing Family Members ...ANSWER...corp, estate, partnership with one parent a
partner
-child payment subject to all taxes
Solo or each is partner in partnership
under 18 only income tax withheld
under 21 no FUTA tax withheld
(UNIT 2) Accounting Periods and Methods ...ANSWER......
Tax Year ...ANSWER...short tax year less than 12 months. taxpayers death marks end
of final tax year
Required Tax Year ...ANSWER...used by partnerships, S corps and PSC. 50% or more
of partners must use that required tax year
Section 444 Election ...ANSWER...request to use other than required tax year
Filing Due Dates for Entities ...ANSWER...CORP march 15, 15th day of third month
INDIV and Partnerships april 15
Non Profit may 15
Accounting Methods ...ANSWER...Cash, Accrual, Special, Hybrid
Cash Method ...ANSWER...Corp or Partner (not S corp) annual gross receipts less than
$5 million
any business if has inventory less than $1 million
Accrual Method ...ANSWER......
Hybrid Accounting Method ...ANSWER......
Correct Questions And Answers
(UNIT 1) Business and Requirements ...ANSWER......
Solo Proprietorship ...ANSWER...can't be passed to a new owner, must be sold
qualified joint venture - only married couples business
-file separate Schedules C and separate Schedule SE
Statutory employees, disregarded entities also must file Schedule C
Partnerships ...ANSWER...-must have at least 1 general partner
joint undertaking to share expenses is not a partnership
From 1065 amd K-1 to each partner (not W 2)
limited partner may not sign return or represent before IRS
Limited Liability Partnership (LLC) partner only at risk for his interest in partnership
assets
C Corporations ...ANSWER...From 1120
board of directors oversight of company and has shareholders
S Corporations ...ANSWER...S corp must
-be domestic
-shareholders (may not be partnerships, corporations, non resident aliens)
-no more than 100 shareholders
-one class of stock (voting and non are same stock)
-not be ineligible type corporation
Limited Liability Companies (LLC) ...ANSWER...taxed as partnership
corporation protection and avoids double taxation
Personal Service Corporations (PSC) ...ANSWER...taxed at flat rate of 35%
CLOSELY HELD CORP
-can offset passive losses with any active income
PERSONAL SERVICE CORP can't offset passive losses with any active income
,when at least 95% of stock held by owners performing personal services.
Farmers and Fishermen ...ANSWER...may be partnership or corporation
Tax-Exempt Orgs (non profit entities) ...ANSWER...Form 1023 application for
regognition of exemption
by default non profit: churches, synagogues, mosques, temples
Form 990 file annually
Entity Classification Election Rules ...ANSWER...can choose to be classified for tax
purposes
not before 75 days or after 12 months.
election cannot be changed for 5yrs (60 months)
Employer Identification Number (EIN) ...ANSWER...Request for EIN From SS-4
must have if:
have employees
excise tax
alcohol, tobacco, firearms
If solo no employees, not required EIN
Business Recordkeeping ...ANSWER...Later of 3 years when due or filed
payroll employment info 4 years
Income Statement
Balance Sheet
Business Reporting Requirements ...ANSWER...Form 8300 - cash transaction $10,000
or more (report 15th day after day of transaction)
W-4 employee's withholding allowance certificate
W-2 wages and tax statement (if file over 250 must file electronically)
Form 1099 contractors, self employed if paid $600 or more (no need for one if personal
payments, paint my house)
Employment Taxes and Self-Employment Tax ...ANSWER...Form 944
SS 6.2% Medicare 1.45%
Additional Medicare Tax 0.9%
if not file 944, must file 941 each quarter regardless if paid wages or not
Only Options: by Mail or E-file
Trust Fund Recovery Penalty (TFRP) ...ANSWER...penalty 100% can apply to everyone
who is responsible.
responsible and willfully fails
, Federal Unemployment (FUTA) Tax ...ANSWER...6% on first $7,000 of each employee
can later get credit of 5.4% on Form 940 so true tax is 0.6%
Employee and Worker Classification ...ANSWER...Test: behavior control, financial
control, type of relationship
employee
statutory employee - life insurance salespeople, traveling salespeople, director of corps,
commissioned truck drivers,
statutory non employee - direct sales and licensed real estate agents
independent contractor
Employing Family Members ...ANSWER...corp, estate, partnership with one parent a
partner
-child payment subject to all taxes
Solo or each is partner in partnership
under 18 only income tax withheld
under 21 no FUTA tax withheld
(UNIT 2) Accounting Periods and Methods ...ANSWER......
Tax Year ...ANSWER...short tax year less than 12 months. taxpayers death marks end
of final tax year
Required Tax Year ...ANSWER...used by partnerships, S corps and PSC. 50% or more
of partners must use that required tax year
Section 444 Election ...ANSWER...request to use other than required tax year
Filing Due Dates for Entities ...ANSWER...CORP march 15, 15th day of third month
INDIV and Partnerships april 15
Non Profit may 15
Accounting Methods ...ANSWER...Cash, Accrual, Special, Hybrid
Cash Method ...ANSWER...Corp or Partner (not S corp) annual gross receipts less than
$5 million
any business if has inventory less than $1 million
Accrual Method ...ANSWER......
Hybrid Accounting Method ...ANSWER......
