ENROLLED AGENT 2026 TEST QUESTIONS AND
ANSWERS SURE A+
✔✔Who of the following may use farm income averaging, assuming farm income rules
are met?
A. A natural person filling a Form 1040, a partner in a partnership, and a shareholder in
an S Corp
B. A natural person filing a Form 1040, a partnership, an S corp, and a C corp
C. A natural person filing a Form 1040, a partner in a partnership, and a shareholder in
a C corp
D. A natural person filing a Form 1040, a partner in a partnership, an estate, and a trust
- ✔✔A
✔✔Farm income averaging is computed on Schedule J, which may be filed
A. For the current year when a taxpayer files Schedule F showing a farm loss
B. For the current year that includes Schedule F showing net income from farming
C. Only by IRS after the taxpayer's return is completed and reviewed
D. On a family farming corporation with less than $25 million in gross receipts - ✔✔B
, ✔✔Frank files a joint return with his wife, Rose. Frank incurred a loss of $125,00 on the
sale of his qualifying small business stock (Sec. 1244) in 2016. How much of this loss is
deductible on their joint return as an ordinary loss?
A. $125,000
B. $3000
C. $100,00
D. $50,000 - ✔✔C - because it is a joint return
✔✔Which of the following transactions qualifies as a like-kind exchange?
A. The exchange of a copyright on a novel for a copyright on a song
B. An exchange of the "goodwill or going concern value" of a business for the "goodwill
or going concern value" of another business
C. An exchange of land improved with an apartment house for land improved with a
store building
D. An exchange of personal property used predominantly in the US for personal
property used predominantly outside the US - ✔✔C
✔✔Nelson, Inc owned a manufacturing building with a fair market value of $95,000 and
an adjusted basis of $75,000. Nelson, Inc entered into an agreement to exchange the
manufacturing building for a warehouse with an adjusted basis of $80,000 and a fair
market value of $90,000 with Roberts Corporation. In addition, Nelson, Inc would pay
Roberts Corporation $5,000 in cash. Nelson, Inc also incurred and paid attorney and
deed prep fees of $5,000 on this exchange. What is Nelson's basis in the warehouse it
received in this like-kind exchange?
A. $85,000
B. $90,000
C. $95,000
D. $100,000 - ✔✔A
✔✔Joe traded a truck with an adjusted basis of $10,000 and received a new truck with
a fair market value of $9,000 and $1,500 cash. What is the basis of Joe's new truck?
A. $8,500
B. $10,500
C. $10,000
D. $9,000 - ✔✔D
✔✔The Post and Rail Partnership traded a piece of farm land with an adjusted basis of
$4,000 for a farm tractor that has a fair market value of $9,000 and an adjusted basis of
$8,000. What is the recognized gain or loss?
A. $5,000
ANSWERS SURE A+
✔✔Who of the following may use farm income averaging, assuming farm income rules
are met?
A. A natural person filling a Form 1040, a partner in a partnership, and a shareholder in
an S Corp
B. A natural person filing a Form 1040, a partnership, an S corp, and a C corp
C. A natural person filing a Form 1040, a partner in a partnership, and a shareholder in
a C corp
D. A natural person filing a Form 1040, a partner in a partnership, an estate, and a trust
- ✔✔A
✔✔Farm income averaging is computed on Schedule J, which may be filed
A. For the current year when a taxpayer files Schedule F showing a farm loss
B. For the current year that includes Schedule F showing net income from farming
C. Only by IRS after the taxpayer's return is completed and reviewed
D. On a family farming corporation with less than $25 million in gross receipts - ✔✔B
, ✔✔Frank files a joint return with his wife, Rose. Frank incurred a loss of $125,00 on the
sale of his qualifying small business stock (Sec. 1244) in 2016. How much of this loss is
deductible on their joint return as an ordinary loss?
A. $125,000
B. $3000
C. $100,00
D. $50,000 - ✔✔C - because it is a joint return
✔✔Which of the following transactions qualifies as a like-kind exchange?
A. The exchange of a copyright on a novel for a copyright on a song
B. An exchange of the "goodwill or going concern value" of a business for the "goodwill
or going concern value" of another business
C. An exchange of land improved with an apartment house for land improved with a
store building
D. An exchange of personal property used predominantly in the US for personal
property used predominantly outside the US - ✔✔C
✔✔Nelson, Inc owned a manufacturing building with a fair market value of $95,000 and
an adjusted basis of $75,000. Nelson, Inc entered into an agreement to exchange the
manufacturing building for a warehouse with an adjusted basis of $80,000 and a fair
market value of $90,000 with Roberts Corporation. In addition, Nelson, Inc would pay
Roberts Corporation $5,000 in cash. Nelson, Inc also incurred and paid attorney and
deed prep fees of $5,000 on this exchange. What is Nelson's basis in the warehouse it
received in this like-kind exchange?
A. $85,000
B. $90,000
C. $95,000
D. $100,000 - ✔✔A
✔✔Joe traded a truck with an adjusted basis of $10,000 and received a new truck with
a fair market value of $9,000 and $1,500 cash. What is the basis of Joe's new truck?
A. $8,500
B. $10,500
C. $10,000
D. $9,000 - ✔✔D
✔✔The Post and Rail Partnership traded a piece of farm land with an adjusted basis of
$4,000 for a farm tractor that has a fair market value of $9,000 and an adjusted basis of
$8,000. What is the recognized gain or loss?
A. $5,000
