Enrolled Agent - Exam 1
"positive receipt" - ANS-A charge on a sale of real belongings became located in escrow
pending settlement, at which period name would be conveyed.
Income, even though now not clearly in a taxpayer's ownership, is constructively received in the
taxable year all through which it's miles credited to his or her account, set aside for him or her,
or otherwise made available so that (s)he can also draw upon it at any time or so that (s)he
should have drawn upon it all through the taxable yr if word of goal to withdraw have been given
(Reg. 1.451-2). However, profits isn't always constructively obtained if the taxpayer's manage of
its receipt is challenge to full-size obstacles or restrictions (Publication 538). Since the
taxpayer's manage of the receipt of the price range inside the escrow account is considerably
restrained till the transaction has closed, the taxpayer has not constructively obtained the
income until the ultimate of the transaction in the following yr.
1: In order to qualify as an responsible plan for reimbursement of tour charges, the employer
plan ought to fulfill all the following: - ANS-The worker ought to well timed return any excess
reimbursements.
The worker need to make an adequate and timely accounting to the agency.
The fees have a enterprise connection.
3.Mr. And Mrs. Black acquired the following earnings for 2021. How a lot income have to be
pronounced on their 2021 joint return?
1. W-2 earnings for Mrs. Black for wages of $30,000.
2. W-2 for Mrs. Black for $2,000, the value of fringe benefits no longer included inside the above
W-2. Mrs. Black did no longer pay for the fringe benefits.
3. Benefits of $5,000 paid to Mr. Black from a fitness and coincidence plan for which the rates
have been paid by way of his enterprise but protected in his profits. - ANS-$32,000
A under-marketplace demand mortgage - ANS-A below-market demand mortgage is a
mortgage on which interest is payable at a price lower than the applicable federal charge. The
excess of the hobby that would were payable in that year beneath the applicable federal fee
over the real interest payable is dealt with as imputed hobby.
A underneath-marketplace term mortgage is a mortgage in which the amount lent exceeds the
existing value of all payments due beneath the loan
A nonresident alien acquired a $50,000 scholarship from a U.S. Enterprise to go to a college
inside the character's resident united states, which has a 20% flat tax. How tons U.S. Tax should
be paid at the scholarship? - ANS-$0
,This will now not be handled as US income; $zero taxes
Additional Standard Deduction - ANS-An man or woman who has attained the age of 65 or is
blind is entitled to the amount.
The man or woman is entitled to the amount if (s)he attains age 65 earlier than the end of the
tax yr
A person who will become blind on or before the remaining day of the taxable 12 months is
entitled to the amount.
All of the subsequent taxes are deductible on Schedule A (Form 1040) EXCEPT
a. State or nearby inheritance tax
b. State earnings tax.
C. State actual property tax on a private residence.
D. Foreign profits tax. - ANS-a. State or local inheritance tax
Amounts paid for certified medical expenses that exceed -- - ANS-7.5% of AGI may be
deducted. Amounts paid to fashionable health are not deductible.
AMT - ANS-alternative minimal tax
Amy offered shares within the Oppenheimer Mutual Fund for $250. She received a capital gain
distribution, also called a capital advantage dividend, of $90 on Form 1099-DIV for the
modern-day 12 months. How have to Amy report the capital benefit dividend on her tax go
back? - ANS-Report the $ninety as lengthy-time period capital benefit.
A capital advantage dividend is a distribution by a regulated investment organisation, or mutual
fund, of capital gains realized from the sale of investments within the fund. Capital benefit
dividends are long-term no matter how long the shareholder has owned the stock of the
regulated funding agency
An employer (e.G., sole owner) reviews the reimbursed costs on - ANS-Schedule C
An cost should be each - ANS-regular and necessary to be deductible.
An man or woman begins paying student loan interest within the cutting-edge 12 months. For
how many years may also the individual deduct a part of the pupil loan hobby? - ANS-The
duration of the time that hobby is paid up $2,500 in keeping with yr.
Bank Corp., a calendar-year organisation, reimburses personnel for correctly substantiated
qualifying enterprise meal fees provided by a restaurant. The personnel are present at the food,
,that are neither lavish nor extravagant, and the repayment isn't handled as wages challenge to
withholdings. What percentage of the meal price can also Bank deduct? - ANS-one hundred%
Bernie is a self-hired accountant in 2021. He said internet income of $fifty four,150 on his
Schedule C for 2021. During the yr, Bernie paid the subsequent: $five,two hundred in baby
assist, $5,000 in alimony (pre-2019 divorce), $6,000 in health insurance rates, self-employment
tax of $7,650, and $2,000 to his IRA plan. What amounts are deductible in arriving at adjusted
gross profits? - ANS-$sixteen,825
Alimony
50% of self employment taxes
IRA contributions
Bethany and Michael (wife and husband) are itemizing their Schedule A expenses on their 2021
return. Michael, an employee, traveled to Japan for his corporation but turned into no longer
reimbursed. His meal prices totaled $500. How a lot can Michael deduct for food? - ANS-$zero
The quantity deductible for meal fees furnished with the aid of a restaurant is a hundred% of the
actual price. The restriction additionally applies to the taxpayer's very own meals. The fee ought
to be ordinary and essential for the enterprise. However, the unreimbursed prices of personnel
are nondeductible. Thus, Michael's deduction is zero
Bill took out a $a hundred,000 non-recourse loan and bought an rental constructing. The
building is not security for the mortgage. Bill spent $25,000 of his personal money on repairs
before he rented the condominium building to the general public. Bill is unmarried, works
full-time, and earns $80,000 in line with year. Bill's loss from the condo actual estate interest,
wherein he actively participates, is $30,000. He has no passive earnings. For what quantity is
Bill at-risk, and how much of Bill's passive loss from his condo interest is deductible? -
ANS-$25k - at risk
$25k - passive profits loss (he is not over $100k)
A taxpayer isn't considered at risk for his or her proportion of any nonrecourse mortgage used to
finance an hobby or to collect property used inside the activity until the loan is secured with the
aid of property no longer used inside the hobby. Bill is at threat for the $25,000 in repairs using
his very own money.
Commercial enterprise terrible debt - ANS-Is one incurred or acquired in connection with the
taxpayer's alternate or business
-Partially worthless enterprise debts can be deducted to the volume they're worthless and
particularly written off.
-Treated as ordinary loss
Business Gifts - Deductions - ANS-Up to $25 consistent with gift is the max
, Caitlin served as a kindergarten aide for 1,000 hours. She incurred $350 in costs for books and
supplies used inside the school room and was not reimbursed by the faculty. What amount is
Caitlin entitled to as the educator's expense deduction on her profits tax go back? - ANS-$250
Primary and Secondary school educators can also declare a deduction of as much as $250
yearly for unreimbursed costs paid for books/supplies inside the lecture room.
Casualty profits from the loss of private property are considered to be - ANS-Capital
Chris flew to Chicago for surgical operation. He incurred the subsequent costs in connection
with the trip:
Round-journey airfare - $350
Lodging ($100/night time × 2 nights) - $2 hundred
Restaurant meals = $eighty
Hospital and health care provider - $five,000
What is Chris's clinical expense? - ANS-$5,450
You can declare airfare, $50/night time, and the medical associated expense
Chris, age 35, contributes the following quantities to his self-best Health Savings Account:
$500 on April 30, 2021
$300 on September sixteen, 2021
$750 on December 31, 2021
$1,000 on February five, 2022
$1,550 on April 30, 2022
What quantities are considered contributions to the Health Savings Account for 2021? -
ANS-$2,550
Contributions for to HSA for 2021 can be made till April 15, 2022
Cindy is a shop clerk hired by using a window manufacturing business enterprise, and she
travels to various locations to sell her merchandise. She drives 12,000 miles a year. She
correctly accounts to her enterprise for her business costs. Her company reimburses her $4,200
for the mileage driven at 35 cents consistent with mile. Based on the standard mileage price of
fifty six cents according to mile, her rate turned into $6,720. Cindy is entitled to deduct on
Schedule A, Itemized Deductions, transportation fees of - ANS-$zero - due to the fact the
unreimbursed fees of an employee are non-deductible
Clarence, a actual estate professional, owned 10 apartment properties. Clarence's real property
activities are his sole occupation, which he works in any respect 12 months. Throughout 2021,
Clarence changed into worried inside the operation of all residences on a regular, continuous,
and enormous foundation. At the end of the 12 months, his actual estate operations ended in a
"positive receipt" - ANS-A charge on a sale of real belongings became located in escrow
pending settlement, at which period name would be conveyed.
Income, even though now not clearly in a taxpayer's ownership, is constructively received in the
taxable year all through which it's miles credited to his or her account, set aside for him or her,
or otherwise made available so that (s)he can also draw upon it at any time or so that (s)he
should have drawn upon it all through the taxable yr if word of goal to withdraw have been given
(Reg. 1.451-2). However, profits isn't always constructively obtained if the taxpayer's manage of
its receipt is challenge to full-size obstacles or restrictions (Publication 538). Since the
taxpayer's manage of the receipt of the price range inside the escrow account is considerably
restrained till the transaction has closed, the taxpayer has not constructively obtained the
income until the ultimate of the transaction in the following yr.
1: In order to qualify as an responsible plan for reimbursement of tour charges, the employer
plan ought to fulfill all the following: - ANS-The worker ought to well timed return any excess
reimbursements.
The worker need to make an adequate and timely accounting to the agency.
The fees have a enterprise connection.
3.Mr. And Mrs. Black acquired the following earnings for 2021. How a lot income have to be
pronounced on their 2021 joint return?
1. W-2 earnings for Mrs. Black for wages of $30,000.
2. W-2 for Mrs. Black for $2,000, the value of fringe benefits no longer included inside the above
W-2. Mrs. Black did no longer pay for the fringe benefits.
3. Benefits of $5,000 paid to Mr. Black from a fitness and coincidence plan for which the rates
have been paid by way of his enterprise but protected in his profits. - ANS-$32,000
A under-marketplace demand mortgage - ANS-A below-market demand mortgage is a
mortgage on which interest is payable at a price lower than the applicable federal charge. The
excess of the hobby that would were payable in that year beneath the applicable federal fee
over the real interest payable is dealt with as imputed hobby.
A underneath-marketplace term mortgage is a mortgage in which the amount lent exceeds the
existing value of all payments due beneath the loan
A nonresident alien acquired a $50,000 scholarship from a U.S. Enterprise to go to a college
inside the character's resident united states, which has a 20% flat tax. How tons U.S. Tax should
be paid at the scholarship? - ANS-$0
,This will now not be handled as US income; $zero taxes
Additional Standard Deduction - ANS-An man or woman who has attained the age of 65 or is
blind is entitled to the amount.
The man or woman is entitled to the amount if (s)he attains age 65 earlier than the end of the
tax yr
A person who will become blind on or before the remaining day of the taxable 12 months is
entitled to the amount.
All of the subsequent taxes are deductible on Schedule A (Form 1040) EXCEPT
a. State or nearby inheritance tax
b. State earnings tax.
C. State actual property tax on a private residence.
D. Foreign profits tax. - ANS-a. State or local inheritance tax
Amounts paid for certified medical expenses that exceed -- - ANS-7.5% of AGI may be
deducted. Amounts paid to fashionable health are not deductible.
AMT - ANS-alternative minimal tax
Amy offered shares within the Oppenheimer Mutual Fund for $250. She received a capital gain
distribution, also called a capital advantage dividend, of $90 on Form 1099-DIV for the
modern-day 12 months. How have to Amy report the capital benefit dividend on her tax go
back? - ANS-Report the $ninety as lengthy-time period capital benefit.
A capital advantage dividend is a distribution by a regulated investment organisation, or mutual
fund, of capital gains realized from the sale of investments within the fund. Capital benefit
dividends are long-term no matter how long the shareholder has owned the stock of the
regulated funding agency
An employer (e.G., sole owner) reviews the reimbursed costs on - ANS-Schedule C
An cost should be each - ANS-regular and necessary to be deductible.
An man or woman begins paying student loan interest within the cutting-edge 12 months. For
how many years may also the individual deduct a part of the pupil loan hobby? - ANS-The
duration of the time that hobby is paid up $2,500 in keeping with yr.
Bank Corp., a calendar-year organisation, reimburses personnel for correctly substantiated
qualifying enterprise meal fees provided by a restaurant. The personnel are present at the food,
,that are neither lavish nor extravagant, and the repayment isn't handled as wages challenge to
withholdings. What percentage of the meal price can also Bank deduct? - ANS-one hundred%
Bernie is a self-hired accountant in 2021. He said internet income of $fifty four,150 on his
Schedule C for 2021. During the yr, Bernie paid the subsequent: $five,two hundred in baby
assist, $5,000 in alimony (pre-2019 divorce), $6,000 in health insurance rates, self-employment
tax of $7,650, and $2,000 to his IRA plan. What amounts are deductible in arriving at adjusted
gross profits? - ANS-$sixteen,825
Alimony
50% of self employment taxes
IRA contributions
Bethany and Michael (wife and husband) are itemizing their Schedule A expenses on their 2021
return. Michael, an employee, traveled to Japan for his corporation but turned into no longer
reimbursed. His meal prices totaled $500. How a lot can Michael deduct for food? - ANS-$zero
The quantity deductible for meal fees furnished with the aid of a restaurant is a hundred% of the
actual price. The restriction additionally applies to the taxpayer's very own meals. The fee ought
to be ordinary and essential for the enterprise. However, the unreimbursed prices of personnel
are nondeductible. Thus, Michael's deduction is zero
Bill took out a $a hundred,000 non-recourse loan and bought an rental constructing. The
building is not security for the mortgage. Bill spent $25,000 of his personal money on repairs
before he rented the condominium building to the general public. Bill is unmarried, works
full-time, and earns $80,000 in line with year. Bill's loss from the condo actual estate interest,
wherein he actively participates, is $30,000. He has no passive earnings. For what quantity is
Bill at-risk, and how much of Bill's passive loss from his condo interest is deductible? -
ANS-$25k - at risk
$25k - passive profits loss (he is not over $100k)
A taxpayer isn't considered at risk for his or her proportion of any nonrecourse mortgage used to
finance an hobby or to collect property used inside the activity until the loan is secured with the
aid of property no longer used inside the hobby. Bill is at threat for the $25,000 in repairs using
his very own money.
Commercial enterprise terrible debt - ANS-Is one incurred or acquired in connection with the
taxpayer's alternate or business
-Partially worthless enterprise debts can be deducted to the volume they're worthless and
particularly written off.
-Treated as ordinary loss
Business Gifts - Deductions - ANS-Up to $25 consistent with gift is the max
, Caitlin served as a kindergarten aide for 1,000 hours. She incurred $350 in costs for books and
supplies used inside the school room and was not reimbursed by the faculty. What amount is
Caitlin entitled to as the educator's expense deduction on her profits tax go back? - ANS-$250
Primary and Secondary school educators can also declare a deduction of as much as $250
yearly for unreimbursed costs paid for books/supplies inside the lecture room.
Casualty profits from the loss of private property are considered to be - ANS-Capital
Chris flew to Chicago for surgical operation. He incurred the subsequent costs in connection
with the trip:
Round-journey airfare - $350
Lodging ($100/night time × 2 nights) - $2 hundred
Restaurant meals = $eighty
Hospital and health care provider - $five,000
What is Chris's clinical expense? - ANS-$5,450
You can declare airfare, $50/night time, and the medical associated expense
Chris, age 35, contributes the following quantities to his self-best Health Savings Account:
$500 on April 30, 2021
$300 on September sixteen, 2021
$750 on December 31, 2021
$1,000 on February five, 2022
$1,550 on April 30, 2022
What quantities are considered contributions to the Health Savings Account for 2021? -
ANS-$2,550
Contributions for to HSA for 2021 can be made till April 15, 2022
Cindy is a shop clerk hired by using a window manufacturing business enterprise, and she
travels to various locations to sell her merchandise. She drives 12,000 miles a year. She
correctly accounts to her enterprise for her business costs. Her company reimburses her $4,200
for the mileage driven at 35 cents consistent with mile. Based on the standard mileage price of
fifty six cents according to mile, her rate turned into $6,720. Cindy is entitled to deduct on
Schedule A, Itemized Deductions, transportation fees of - ANS-$zero - due to the fact the
unreimbursed fees of an employee are non-deductible
Clarence, a actual estate professional, owned 10 apartment properties. Clarence's real property
activities are his sole occupation, which he works in any respect 12 months. Throughout 2021,
Clarence changed into worried inside the operation of all residences on a regular, continuous,
and enormous foundation. At the end of the 12 months, his actual estate operations ended in a
