CPA-Regulation Exam Dumps – Reliable Way to Pass and Get Certified

1. Freeman, a single individual, reported the following income in the current year:

Guaranteed payment from services rendered to a partnership $50,000

Ordinary income from a S corporation $20,000

What amount of Freeman's income is subject to self-employment tax?

2. Don Wolf became a general partner in Gata Associates on January 1, 1989, with a 5% interest in Gata's profits, losses, and capital. Gata is a distributor of auto parts. Wolf does not materially participate in the partnership business. For the year ended December 31, 1989, Gata had an operating loss of $100,000.

In addition, Gata earned interest of $20,000 on a temporary investment. Gata has kept the principal temporarily invested while awaiting delivery of equipment that is presently on order. The principal will be used to pay for this equipment.

Wolf's passive loss for 1989 is:

3. On December 31, 1989, a building owned by Pine Corp. was totally destroyed by fire. The building had fire insurance coverage up to $500,000.

Other pertinent information as of December 31, 1989 follows:





During January 1990, before the 1989 financial statements were issued, Pine received insurance proceeds of $500,000.

On what amount should Pine base the determination of its loss on involuntary conversion?

4. A cash basis taxpayer should report gross income:

5. Which of the following is subject to the Uniform Capitalization Rules of Code Sec. 263A?

6. On February 1, 1993, Hall learned that he was bequeathed 500 shares of common stock under his father's will. Hall's father had paid $2,500 for the stock in 1990. Fair market value of the stock on February 1, 1993, the date of his father's death, was $4,000 and had increased to $5,500 six months later. The executor of the estate elected the alternate valuation date for estate tax purposes. Hall sold the stock for $4,500 on June 1, 1993, the date that the executor distributed the stock to him.

How much income should Hall include in his 1993 individual income tax return for the inheritance of the 500 shares of stock, which he received from his father's estate?

7. Which of the following sales should be reported as a capital gain?

8. Greller owns 100 shares of Arden Corp., a publicly-traded company, which Greller purchased on January 1, 2001, for $10,000. On January 1, 2003, Arden declared a 2-for-1 stock split when the fair market value (FMV) of the stock was $120 per share. Immediately following the split, the FMV of Arden stock was $62 per share. On February 1, 2003, Greller had his broker specifically sell the 100 shares of Arden stock received in the split when the FMV of the stock was $65 per share.

What is the basis of the 100 shares of Arden sold?

9. Clark bought Series EE U.S. Savings Bonds after 1989. Redemption proceeds will be used for payment of college tuition for Clark's dependent child.

One of the conditions that must be met for tax exemption of accumulated interest on these bonds is that the:

10. In evaluating the hierarchy of authority in tax law, which of the following carries the greatest authoritative value for tax planning of transactions?

11. Adams owns a second residence that is used for both personal and rental purposes. During 2001, Adams used the second residence for 50 days and rented the residence for 200 days.

Which of the following statements is correct?

12. Wallace purchased 500 shares of Kingpin, Inc. 15 years ago for $25,000. Wallace has worked as an owner/employee and owned 40% of the company throughout this time. This year, Kingpin, which is not an S corporation, redeemed 100% of Wallace's stock for $200,000.

What is the treatment and amount of income or gain that Wallace should report?

13. Tom and Joan Moore, both CPAs, filed a joint 1994 federal income tax return showing $70,000 in taxable income. During 1994, Tom’s daughter Laura, age 16, resided with Tom. Laura had no income of her own and was Tom’s dependent.

Determine the amount of income or loss, if any that should be included on page one of the Moores’ 1994 Form 1040.

In 1994, Joan received $1,300 in unemployment compensation benefits. Her employer made a $100 contribution to the unemployment insurance fund on her behalf.

14. Tom and Joan Moore, both CPAs, filed a joint 1994 federal income tax return showing $70,000 in taxable income. During 1994, Tom’s daughter Laura, age 16, resided with Tom. Laura had no income of her own and was Tom’s dependent.

Determine the amount of income or loss, if any that should be included on page one of the Moores’ 1994 Form 1040.

The Moores received a $500 security deposit on their rental property in 1994. They are required to return the amount to the tenant.

15. Elm Corp. is an accrual-basis calendar-year C corporation with 100,000 shares of voting common stock issued and outstanding as of December 28, 1996. On Friday, December 29, 1996, Hall surrendered 2,000 shares of Elm stock to Elm in exchange for $33,000 cash. Hall had no direct or indirect interest in Elm after the stock surrender.

Additional information follows:





What amount of income did Hall recognize from the stock surrender?

16. Tom and Joan Moore, both CPAs, filed a joint 1994 federal income tax return showing $70,000 in taxable income. During 1994, Tom’s daughter Laura, age 16, resided with Tom. Laura had no income of her own and was Tom’s dependent.

Determine the amount of income or loss, if any that should be included on page one of the Moores’ 1994 Form 1040.

The Moores received $8,400 in gross receipts from their rental property during 1994.

The expenses for the residential rental property were:

17. Tom and Joan Moore, both CPAs, filed a joint 1994 federal income tax return showing $70,000 in taxable income. During 1994, Tom’s daughter Laura, age 16, resided with Tom. Laura had no income of her own and was Tom’s dependent.

Determine the amount of income or loss, if any that should be included on page one of the Moores’ 1994 Form 1040.

The Moores received a stock dividend in 1994 from Ace Corp. They had the option to receive either cash or Ace stock with a fair market value of $900 as of the date of distribution. The par value of the stock was $500.

18. Smith made a gift of property to Thompson. Smith's basis in the property was $1,200. The fair market value at the time of the gift was $1,400. Thompson sold the property for $2,500.

What was the amount of Thompson's gain on the disposition?

19. Hall, a divorced person and custodian of her 12-year old child, filed her 1990 federal income tax return as head of a household.

She submitted the following information to the CPA who prepared her 1990 return:

• In 1990, Hall sold an antique that she bought in 1980 to display in her home. Hall paid $800 for the antique and sold it for $1,400, using the proceeds to pay a court ordered judgment.

The $600 gain that Hall realized on the sale of the antique should be treated as:

20. Dale received $1,000 in 1990 for jury duty. In exchange for regular compensation from her employer during the period of jury service, Dale was required to remit the entire $1,000 to her employer in 1990.

In Dale's 1990 income tax return, the $1,000 jury duty fee should be: