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| Section | Weight | Objectives |
|---|---|---|
| Topic 1: Ethics, Professional Responsibilities and Federal Tax Procedures | 10-20% | - Ethics and responsibilities in tax practice (Treasury Department Circular 230) - Federal tax procedures, disclosures, penalties, and appeals - Licensing and disciplinary systems for CPA practice |
| Topic 2: Business Law | 15-25% | - Legal duties and responsibilities in business transactions - Agency, contracts, and debtor-creditor relationships - Business structures and federal business regulations |
| Topic 3: Federal Taxation of Individuals | 22-32% | - Adjustments, deductions, exemptions and credits - Individual taxable income and tax compliance - Tax filing requirements and procedures |
| Topic 4: Federal Taxation of Entities | 23-33% | - Tax compliance for corporations, partnerships, LLCs, and S corporations - Entity-level tax planning and reporting requirements |
| Topic 5: Federal Taxation of Property Transactions | 5-15% | - Gains and losses on disposition of assets - Basis, cost recovery (depreciation and amortization) |
In the current year Jensen had the following items:
What is Jensen's AGI for the current year?
Correct Answer: C 🗳️
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Under the uniform capitalization rules applicable to property acquired for resale, which of the following
costs should be capitalized with respect to inventory if no exceptions are met?
Correct Answer: D 🗳️
Explanation: Only visible for DumpsActual members. You can sign-up / login (it's free).
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.
Correct Answer: J 🗳️
Explanation: Only visible for DumpsActual members. You can sign-up / login (it's free).
Fred Berk bought a plot of land with a cash payment of $40,000 and a mortgage of $50,000. In addition,
Berk paid $200 for a title insurance policy. Berk's basis in this land is:
Correct Answer: C 🗳️
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Allen owns 100 shares of Prime Corp., a publicly-traded company, which Allen purchased on January 1,
2 001, for $10,000. On January 1, 2003, Prime 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 Prime stock was $62
per share. On February 1, 2003, Allen had his broker specifically sell the 100 shares of Prime stock
received in the split when the FMV of the stock was $65 per share. What amount should Allen recognize
as long-term capital gain income on his Form 1040, U.S. Individual Income Tax Return, for 2003?
Correct Answer: D 🗳️
Explanation: Only visible for DumpsActual members. You can sign-up / login (it's free).
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