FEDERAL TAXES TEST 3 LATEST EXAM
2026 WITH 150 QUESTIONS AND
VERIFIED CORRECT ANSWERS | MCQS
| ALREADY GRADED A+ | GUARANTEED
SUCCESS | FEDERAL TAXES FINAL
EXAM 2026 [BRAND NEW]
Frankie is a truck driver who is also a licensed return preparer and specializes in
preparing income tax returns claiming the Earned Income Credit (EIC). Frankie
will not be subject to a preparer penalty for an erroneously claimed EIC if he
complies with which one of the following?
A. Completion of an eligibility checklist based upon information
provided by the client.
B. Completion of the computation worksheet for the EIC based upon
information provided by the client.
C. Knowledge or reason to know that the information used to
determine eligibility for an amount of the EIC is correct.
D. All of the above. - ANSWER-D
If a preparer penalty is likely to be assessed pursuant to 26 U.S.C. Sec. 6694
(Understatement of taxpayer's liability by tax return preparer), the tax preparer:
,A. Can appeal the penalty before it is imposed.
B. Cannot appeal the penalty.
C. Can only resolve the penalty by pursuing the post-assessment
procedure.
D. Can file a claim for refund within thirty days of his receipt of the
notice and demand. - ANSWER-A
You own a firm in a small town in Missouri. A couple comes to you to prepare
their tax return. They plan to claim a $10,000 payment for fixing up their house as
a medical expense. You have explained that you do not feel that this claim will be
allowed but they believe it is appropriate and want it to be included. Which of the
following statements is true?
A. The return cannot be filed until you have determined whether the
claim will be allowed or not.
B. If you believe that there is at least a 33 percent chance that the
deduction will be allowed if examined, then you should complete
the return and adequately disclose the expense.
C. The return belongs to these taxpayers and you should complete it
as instructed.
D. If there is not at least a 51 percent chance of this deduction being
allowed, you should refuse to take the engagement. - ANSWER-B
A tax preparer must include in records involving a taxpayer's claim for Earned
Income Tax Credit a record of how, when, and from whom the information used in
completing the claim was obtained.
True or False - ANSWER-True
,Which of the following may a tax return preparer use as identifying information to
include with his or her signature on a return or claim for refund?
A. Social security number
B. Birth date and name
C. PTIN
D. All of the above - ANSWER-C
Which of the following is a proof of payment?
A. An invoice from a doctor reflecting the cost of a medical
procedure.
B. Bank statement showing withdrawals.
C. Cash receipt.
D. All of the above. - ANSWER-C
A calendar-year taxpayer has W-2 wages and withholds taxes through the year. He
files his 2018 return and writes the IRS a check for his remaining 2018 tax liability
on May 1, 2020. He discovers a mistake in his favor and wants to amend the return
to claim a full refund, until when can he do so?
A. April 15, 2022
B. May 1, 2022
C. May 1, 2023
D. April 15, 2023 - ANSWER-A
How long should a taxpayer keep copies of her sales slips and expense receipts?
A. If she records the information in a checkbook, ledger, or computer
program, she can discard the receipts immediately after
transcribing the information.
, B. She can discard the documents once she files her tax return.
C. She can discard the documents once she receives her refund.
D. She should keep each document for as long as it may be needed
for the administration of any provision of the tax code. - ANSWER-D
Taxpayers should keep supporting documents for items shown on a return,
generally:
A. Until the end of the calendar year following the year for which the
return was filed
B. Three years from the latest of the due date of the return or the
date the return was filed
C. Five years from the due date of the return or the date the return
was filed
D. Seven years from the due date of the return or the date the return
was filed - ANSWER-B
A taxpayer who timely filed a return wants to claim a loss for worthless securities.
Until when can he do so?
A. Three years from the due date of the return.
B. Six years from the due date of the return.
C. Seven years from the due date of the return.
D. Ten years from the due date of the return. - ANSWER-C
How long should you keep your tax records?
A. 3 years if you owe additional tax.
B. 7 years if you file a claim for a loss from worthless securities.
2026 WITH 150 QUESTIONS AND
VERIFIED CORRECT ANSWERS | MCQS
| ALREADY GRADED A+ | GUARANTEED
SUCCESS | FEDERAL TAXES FINAL
EXAM 2026 [BRAND NEW]
Frankie is a truck driver who is also a licensed return preparer and specializes in
preparing income tax returns claiming the Earned Income Credit (EIC). Frankie
will not be subject to a preparer penalty for an erroneously claimed EIC if he
complies with which one of the following?
A. Completion of an eligibility checklist based upon information
provided by the client.
B. Completion of the computation worksheet for the EIC based upon
information provided by the client.
C. Knowledge or reason to know that the information used to
determine eligibility for an amount of the EIC is correct.
D. All of the above. - ANSWER-D
If a preparer penalty is likely to be assessed pursuant to 26 U.S.C. Sec. 6694
(Understatement of taxpayer's liability by tax return preparer), the tax preparer:
,A. Can appeal the penalty before it is imposed.
B. Cannot appeal the penalty.
C. Can only resolve the penalty by pursuing the post-assessment
procedure.
D. Can file a claim for refund within thirty days of his receipt of the
notice and demand. - ANSWER-A
You own a firm in a small town in Missouri. A couple comes to you to prepare
their tax return. They plan to claim a $10,000 payment for fixing up their house as
a medical expense. You have explained that you do not feel that this claim will be
allowed but they believe it is appropriate and want it to be included. Which of the
following statements is true?
A. The return cannot be filed until you have determined whether the
claim will be allowed or not.
B. If you believe that there is at least a 33 percent chance that the
deduction will be allowed if examined, then you should complete
the return and adequately disclose the expense.
C. The return belongs to these taxpayers and you should complete it
as instructed.
D. If there is not at least a 51 percent chance of this deduction being
allowed, you should refuse to take the engagement. - ANSWER-B
A tax preparer must include in records involving a taxpayer's claim for Earned
Income Tax Credit a record of how, when, and from whom the information used in
completing the claim was obtained.
True or False - ANSWER-True
,Which of the following may a tax return preparer use as identifying information to
include with his or her signature on a return or claim for refund?
A. Social security number
B. Birth date and name
C. PTIN
D. All of the above - ANSWER-C
Which of the following is a proof of payment?
A. An invoice from a doctor reflecting the cost of a medical
procedure.
B. Bank statement showing withdrawals.
C. Cash receipt.
D. All of the above. - ANSWER-C
A calendar-year taxpayer has W-2 wages and withholds taxes through the year. He
files his 2018 return and writes the IRS a check for his remaining 2018 tax liability
on May 1, 2020. He discovers a mistake in his favor and wants to amend the return
to claim a full refund, until when can he do so?
A. April 15, 2022
B. May 1, 2022
C. May 1, 2023
D. April 15, 2023 - ANSWER-A
How long should a taxpayer keep copies of her sales slips and expense receipts?
A. If she records the information in a checkbook, ledger, or computer
program, she can discard the receipts immediately after
transcribing the information.
, B. She can discard the documents once she files her tax return.
C. She can discard the documents once she receives her refund.
D. She should keep each document for as long as it may be needed
for the administration of any provision of the tax code. - ANSWER-D
Taxpayers should keep supporting documents for items shown on a return,
generally:
A. Until the end of the calendar year following the year for which the
return was filed
B. Three years from the latest of the due date of the return or the
date the return was filed
C. Five years from the due date of the return or the date the return
was filed
D. Seven years from the due date of the return or the date the return
was filed - ANSWER-B
A taxpayer who timely filed a return wants to claim a loss for worthless securities.
Until when can he do so?
A. Three years from the due date of the return.
B. Six years from the due date of the return.
C. Seven years from the due date of the return.
D. Ten years from the due date of the return. - ANSWER-C
How long should you keep your tax records?
A. 3 years if you owe additional tax.
B. 7 years if you file a claim for a loss from worthless securities.
