Enrolled Agent Part 1 LATEST EXAM QUESTIONS WITH
100% VERIFIED ANSWERS//// 2025 UPDATED VERSION
Funeral expenses paid out of the estate.
would be allowed as deductions from the gross estate in
computing the taxable estate
True or False=====True
=====
Which of the following types of interest payments, not
allowed because of one of the limitations, may be carried
over to the next year?=====Interest on money borrowed
to buy stocks.
Clyde, a single person, sold his principal residence for
$700,000. He purchased his home 10 years ago for
$150,000 and lived there until he sold it. He paid for
capital improvements of $75,000, real estate
commissions of $36,000, and other settlement costs of
$4,000. How much taxable gain must Clyde
report?=====185,000
,A taxpayer may exclude up to $250,000 ($500,000 for a
joint return) of a gain on the sale of a principal residence
if (s)he primarily resided in this home for 2 years of a 5-
year period before the sale of the home. The gain is
determined by subtracting from the amount realized,
$660,000, ($700,000 - $36,000 -$4,000) the adjusted
basis, $225,000 ($150,000 + $75,000). This yields a gain
of $435,000. Clyde only has to claim $185,000 ($435,000
- $250,000) as a gain (Sec. 121).
With regard to claiming a dependent, all of the following
statements are true EXCEPT
A. To meet the citizenship test, a person must be a U.S.
citizen or resident, or a resident of Canada or Mexico.
B. A person does not meet the member-of-the-household
test if at any time during the tax year the relationship
between the taxpayer and that person violates local law.
C. A person who died during the year, but was a member
of your household until death, will meet the member-of-
the-household test.
, D. In calculating a person's total support, do not include
tax-exempt income used to support that person.=====D -
A taxpayer must furnish more than one-half of the total
support provided during the calendar year before
claiming an exemption for a dependent. The support may
come from taxable income, tax-exempt receipts, or loans
(Publication 501).
Ms. X, a cash-method taxpayer, received notice from her
mutual fund that it has realized a long-term capital gain
on her behalf in the amount of $2,500. It also advised her
that it has paid a tax of $500 on this gain. The mutual
fund indicated that it will not distribute the net amount
but will credit the amount to her account. All of the
following statements are true EXCEPT
A. X is allowed a $500 credit for the tax since it is
considered paid by X.
B. X does not report a long-term capital gain because
nothing was paid to her.
C. X is allowed to increase her basis in the stock by
$2,000.
100% VERIFIED ANSWERS//// 2025 UPDATED VERSION
Funeral expenses paid out of the estate.
would be allowed as deductions from the gross estate in
computing the taxable estate
True or False=====True
=====
Which of the following types of interest payments, not
allowed because of one of the limitations, may be carried
over to the next year?=====Interest on money borrowed
to buy stocks.
Clyde, a single person, sold his principal residence for
$700,000. He purchased his home 10 years ago for
$150,000 and lived there until he sold it. He paid for
capital improvements of $75,000, real estate
commissions of $36,000, and other settlement costs of
$4,000. How much taxable gain must Clyde
report?=====185,000
,A taxpayer may exclude up to $250,000 ($500,000 for a
joint return) of a gain on the sale of a principal residence
if (s)he primarily resided in this home for 2 years of a 5-
year period before the sale of the home. The gain is
determined by subtracting from the amount realized,
$660,000, ($700,000 - $36,000 -$4,000) the adjusted
basis, $225,000 ($150,000 + $75,000). This yields a gain
of $435,000. Clyde only has to claim $185,000 ($435,000
- $250,000) as a gain (Sec. 121).
With regard to claiming a dependent, all of the following
statements are true EXCEPT
A. To meet the citizenship test, a person must be a U.S.
citizen or resident, or a resident of Canada or Mexico.
B. A person does not meet the member-of-the-household
test if at any time during the tax year the relationship
between the taxpayer and that person violates local law.
C. A person who died during the year, but was a member
of your household until death, will meet the member-of-
the-household test.
, D. In calculating a person's total support, do not include
tax-exempt income used to support that person.=====D -
A taxpayer must furnish more than one-half of the total
support provided during the calendar year before
claiming an exemption for a dependent. The support may
come from taxable income, tax-exempt receipts, or loans
(Publication 501).
Ms. X, a cash-method taxpayer, received notice from her
mutual fund that it has realized a long-term capital gain
on her behalf in the amount of $2,500. It also advised her
that it has paid a tax of $500 on this gain. The mutual
fund indicated that it will not distribute the net amount
but will credit the amount to her account. All of the
following statements are true EXCEPT
A. X is allowed a $500 credit for the tax since it is
considered paid by X.
B. X does not report a long-term capital gain because
nothing was paid to her.
C. X is allowed to increase her basis in the stock by
$2,000.
