Enrolled Agent Special Enrollment Exam
Practice Questions And Correct Answers
(Verified Answers) Plus Rationale 2026
Q&A| Instant Download Pdf
1. A taxpayer receives wages, interest income, and unemployment
compensation during the year. Which of the following best describes
what is included in gross income for federal income tax purposes?
A. Only wages and interest income
B. Only wages and unemployment compensation
C. Only interest income and unemployment compensation
D. Wages, interest income, and unemployment compensation
D. Wages, interest income, and unemployment compensation
Gross income includes all income from whatever source derived
unless specifically excluded by law, including wages, interest, and
unemployment compensation.
2. Which filing status generally provides the lowest tax rates for a
taxpayer who is unmarried and maintains a household for a qualifying
dependent?
A. Single
B. Married Filing Jointly
C. Head of Household
D. Married Filing Separately
, C. Head of Household
Head of Household status provides more favorable tax brackets and
a higher standard deduction than Single for qualifying taxpayers
maintaining a home for a dependent.
3. What is the primary purpose of Form 2848?
A. To request a tax refund
B. To authorize direct deposit
C. To appoint a representative before the IRS
D. To request installment agreement
C. To appoint a representative before the IRS
Form 2848 authorizes an individual, such as an Enrolled Agent, to
represent a taxpayer before the IRS.
4. Which of the following is NOT deductible as an itemized deduction for
individual taxpayers?
A. Mortgage interest on qualified residence
B. State and local taxes subject to limitation
C. Personal living expenses
D. Charitable contributions
C. Personal living expenses
Personal, non-business living expenses are generally nondeductible
under federal tax law.
5. What is the standard deduction primarily intended to replace?
A. Tax credits
B. Itemized deductions
C. Gross income exclusions
D. Above-the-line deductions
B. Itemized deductions
The standard deduction simplifies filing by replacing the need to
itemize deductions for many taxpayers.
, 6. A taxpayer sells stock for more than its adjusted basis. What type of
income results?
A. Ordinary income
B. Passive income
C. Capital gain
D. Earned income
C. Capital gain
A sale of capital assets such as stock produces capital gain when sold
above basis.
7. Which entity is generally considered a pass-through entity for federal
tax purposes?
A. C Corporation
B. Sole proprietorship
C. S Corporation
D. All corporations
C. S Corporation
S Corporations pass income, deductions, and credits through to
shareholders.
8. What is the penalty for substantial understatement of tax generally
based on?
A. 5% of tax due
B. 20% of underpayment
C. 50% of tax owed
D. Fixed $500 penalty
B. 20% of underpayment
The IRS generally imposes a 20% penalty on substantial
understatement of tax liability.
9. Which credit is partially refundable?
A. Child Tax Credit
Practice Questions And Correct Answers
(Verified Answers) Plus Rationale 2026
Q&A| Instant Download Pdf
1. A taxpayer receives wages, interest income, and unemployment
compensation during the year. Which of the following best describes
what is included in gross income for federal income tax purposes?
A. Only wages and interest income
B. Only wages and unemployment compensation
C. Only interest income and unemployment compensation
D. Wages, interest income, and unemployment compensation
D. Wages, interest income, and unemployment compensation
Gross income includes all income from whatever source derived
unless specifically excluded by law, including wages, interest, and
unemployment compensation.
2. Which filing status generally provides the lowest tax rates for a
taxpayer who is unmarried and maintains a household for a qualifying
dependent?
A. Single
B. Married Filing Jointly
C. Head of Household
D. Married Filing Separately
, C. Head of Household
Head of Household status provides more favorable tax brackets and
a higher standard deduction than Single for qualifying taxpayers
maintaining a home for a dependent.
3. What is the primary purpose of Form 2848?
A. To request a tax refund
B. To authorize direct deposit
C. To appoint a representative before the IRS
D. To request installment agreement
C. To appoint a representative before the IRS
Form 2848 authorizes an individual, such as an Enrolled Agent, to
represent a taxpayer before the IRS.
4. Which of the following is NOT deductible as an itemized deduction for
individual taxpayers?
A. Mortgage interest on qualified residence
B. State and local taxes subject to limitation
C. Personal living expenses
D. Charitable contributions
C. Personal living expenses
Personal, non-business living expenses are generally nondeductible
under federal tax law.
5. What is the standard deduction primarily intended to replace?
A. Tax credits
B. Itemized deductions
C. Gross income exclusions
D. Above-the-line deductions
B. Itemized deductions
The standard deduction simplifies filing by replacing the need to
itemize deductions for many taxpayers.
, 6. A taxpayer sells stock for more than its adjusted basis. What type of
income results?
A. Ordinary income
B. Passive income
C. Capital gain
D. Earned income
C. Capital gain
A sale of capital assets such as stock produces capital gain when sold
above basis.
7. Which entity is generally considered a pass-through entity for federal
tax purposes?
A. C Corporation
B. Sole proprietorship
C. S Corporation
D. All corporations
C. S Corporation
S Corporations pass income, deductions, and credits through to
shareholders.
8. What is the penalty for substantial understatement of tax generally
based on?
A. 5% of tax due
B. 20% of underpayment
C. 50% of tax owed
D. Fixed $500 penalty
B. 20% of underpayment
The IRS generally imposes a 20% penalty on substantial
understatement of tax liability.
9. Which credit is partially refundable?
A. Child Tax Credit
