TAX CREDIT SPECIALIST MAIN EXAMINATION 2025/2026
QUESTIONS WITH ANSWERS TAGGED A+
✔✔Which of the following accurately completes the following statement? An individual
who is not personally liable for a debt does not have ordinary income from the
cancellation of the debt unless:
A) The individual retains the collateral.
B) The individual retains the collateral and the lender offers a discount for the early
payment of the debt.
C) The individual returns the collateral to the lender.
D) The individual returns the collateral and the lender agrees to a loan modification,
reducing the principal balance of the debt. - ✔✔NOT D) The individual returns the
collateral and the lender agrees to a loan modification, reducing the principal balance of
the debt.
NOT A) The individual retains the collateral.
✔✔Choose the correct answer to complete the following sentence. Recourse debt is
debt:
A) For which the debtor is not personally liable.
B) For which the debtor is personally liable.
C) That is secured by property.
D) That is unsecured by property. - ✔✔B) For which the debtor is personally liable.
✔✔Choose the correct answer to complete the following statement: Canceled debt is
______________.
A) Included in gross income when the debt is discharged in a Title 11 bankruptcy case.
B) Included in gross income if the debt is discharged when the taxpayer is insolvent.
C) Not included in gross income when the debt is canceled as a gift.
D) Included in gross income when the debt is discharged as an inheritance. - ✔✔NOT
A) Included in gross income when the debt is discharged in a Title 11 bankruptcy case.
✔✔You must file a Form 1099-C if you cancel a debt of _______ or more, assuming
you meet all of the other requirements.
A) $0
B) $100
C) $600
D) $1,000 - ✔✔C) $600
✔✔What is a purchase price reduction?
A) When the buyer and seller agree to reduce the purchase price of real property after
agreeing on price terms, but before the sale is closed.
B) When an insolvent buyer receives credit from a seller for the purchase of property,
and the seller later reduces the purchase price and relieves the buyer of some of the
debt associated with the original purchase.
, C) When the buyer and seller agree to reduce the purchase price of real property after
the sale has closed, and the seller returns the agreed-upon amount to the buyer.
D) When a solvent buyer receives credit from a seller for the purchase of property, and
the seller later reduces the purchase price and relieves the buyer of some of the debt
associated with the original purchase. - ✔✔D) When a solvent buyer receives credit
from a seller for the purchase of property, and the seller later reduces the purchase
price and relieves the buyer of some of the debt associated with the original purchase.
✔✔What are tax attributes?
A) Amounts of canceled debt that would be deductible if paid.
B) The basis of certain assets, tax credits, carryovers, or transactions that have value
but must be reduced due to discharge of a taxpayer's debt.
C) Restructured mortgage payments that reduce the principal balance of a home loan
for insolvent taxpayers.
D) Student loan debt cancellation (that is exempt from income) for recent graduates of
medical and dental school who agree to work in rural or blighted urban areas. - ✔✔B)
The basis of certain assets, tax credits, carryovers, or transactions that have value but
must be reduced due to discharge of a taxpayer's debt.
✔✔What is the amount of tax calculated and shown on Holly's Qualified Dividends and
Capital Gain Tax Worksheet,?
A) $0
B) $87
C) $92
D) $122 - ✔✔NOT A) $0
✔✔What is the total amount of Holly's itemized deductions?
A) $7,750
B) $10,300
C) $21,349
D) $21,639 - ✔✔C) $21,349
✔✔What is the amount of Holly's long-term capital gain reported on her Schedule D?
A) $0
B) $150
C) $170
D) $6,550 - ✔✔C) $170
✔✔What is the amount of job expenses and certain miscellaneous deductions that Holly
can deduct according to her Schedule A?
A) $0
B) $4,644
C) $5,874
D) $7,714 - ✔✔C) $5,874
QUESTIONS WITH ANSWERS TAGGED A+
✔✔Which of the following accurately completes the following statement? An individual
who is not personally liable for a debt does not have ordinary income from the
cancellation of the debt unless:
A) The individual retains the collateral.
B) The individual retains the collateral and the lender offers a discount for the early
payment of the debt.
C) The individual returns the collateral to the lender.
D) The individual returns the collateral and the lender agrees to a loan modification,
reducing the principal balance of the debt. - ✔✔NOT D) The individual returns the
collateral and the lender agrees to a loan modification, reducing the principal balance of
the debt.
NOT A) The individual retains the collateral.
✔✔Choose the correct answer to complete the following sentence. Recourse debt is
debt:
A) For which the debtor is not personally liable.
B) For which the debtor is personally liable.
C) That is secured by property.
D) That is unsecured by property. - ✔✔B) For which the debtor is personally liable.
✔✔Choose the correct answer to complete the following statement: Canceled debt is
______________.
A) Included in gross income when the debt is discharged in a Title 11 bankruptcy case.
B) Included in gross income if the debt is discharged when the taxpayer is insolvent.
C) Not included in gross income when the debt is canceled as a gift.
D) Included in gross income when the debt is discharged as an inheritance. - ✔✔NOT
A) Included in gross income when the debt is discharged in a Title 11 bankruptcy case.
✔✔You must file a Form 1099-C if you cancel a debt of _______ or more, assuming
you meet all of the other requirements.
A) $0
B) $100
C) $600
D) $1,000 - ✔✔C) $600
✔✔What is a purchase price reduction?
A) When the buyer and seller agree to reduce the purchase price of real property after
agreeing on price terms, but before the sale is closed.
B) When an insolvent buyer receives credit from a seller for the purchase of property,
and the seller later reduces the purchase price and relieves the buyer of some of the
debt associated with the original purchase.
, C) When the buyer and seller agree to reduce the purchase price of real property after
the sale has closed, and the seller returns the agreed-upon amount to the buyer.
D) When a solvent buyer receives credit from a seller for the purchase of property, and
the seller later reduces the purchase price and relieves the buyer of some of the debt
associated with the original purchase. - ✔✔D) When a solvent buyer receives credit
from a seller for the purchase of property, and the seller later reduces the purchase
price and relieves the buyer of some of the debt associated with the original purchase.
✔✔What are tax attributes?
A) Amounts of canceled debt that would be deductible if paid.
B) The basis of certain assets, tax credits, carryovers, or transactions that have value
but must be reduced due to discharge of a taxpayer's debt.
C) Restructured mortgage payments that reduce the principal balance of a home loan
for insolvent taxpayers.
D) Student loan debt cancellation (that is exempt from income) for recent graduates of
medical and dental school who agree to work in rural or blighted urban areas. - ✔✔B)
The basis of certain assets, tax credits, carryovers, or transactions that have value but
must be reduced due to discharge of a taxpayer's debt.
✔✔What is the amount of tax calculated and shown on Holly's Qualified Dividends and
Capital Gain Tax Worksheet,?
A) $0
B) $87
C) $92
D) $122 - ✔✔NOT A) $0
✔✔What is the total amount of Holly's itemized deductions?
A) $7,750
B) $10,300
C) $21,349
D) $21,639 - ✔✔C) $21,349
✔✔What is the amount of Holly's long-term capital gain reported on her Schedule D?
A) $0
B) $150
C) $170
D) $6,550 - ✔✔C) $170
✔✔What is the amount of job expenses and certain miscellaneous deductions that Holly
can deduct according to her Schedule A?
A) $0
B) $4,644
C) $5,874
D) $7,714 - ✔✔C) $5,874
