2024 Becker CPA Review REG Qbank MCQS, Mock Exam and Simulated Exam

QUESTION 1
Mark and Molly met at a New Year's Eve party held December 31, Year 1. They instantly
bonded, fell madly in love, and were married at 11:38 p.m. that night. Identify Mark's filing
status for Year 1.
A. Head of household
B. Surviving spouse
C. Married filing jointly
D. Single
QUESTION 2
Mort and Mindy met at a New Year's Eve party held December 31, Year 1. They instantly
bonded, fell madly in love, and were married at 11:38 p.m. that night. Sadly, Mort passed
away November 15, Year 2. What filing status should Mindy use for Year 2?
A. Single.
B. Head of household.
C. Married filing jointly.
D. Surviving spouse.
QUESTION 3
John earned $500,000 in his business during the current year, and his wife received
investment income of $15,000. John provides more than half of the support of his 50-year-
old widowed sister, who lives with John and earned $45,000 in salary in the current
year. John also provides full support for his two children, an 18-year-old daughter and a
20-year-old son, who is a full-time college student. The family employs a live-in
housekeeper and a live-in butler to assist them with their residence. Both the live-in
housekeeper and the live-in butler provided all of their own support. How many people
qualify as either a qualifying child or qualifying relative for John?
A. Five
B. Four
C. Zero
D. Two
QUESTION 4
Jonathan Jones is a 19-year-old full-time college student at the local community college.
He lives in an apartment near campus during the school year and returns home for the
summer break and holidays. Jonathan earned $5,000 this year working at the campus
bookstore. His parents gave him $20,000 and his grandparents gave him $10,000 this year
in support. Which of the following statements is true?
A. Jonathan’s grandparents can claim him as a dependent.
B. Jonathan’s parents can claim him as a dependent.
C. Jonathan does not qualify as a dependent for his parents because his gross
income is too high.
D. Jonathan does not meet the residency test for qualifying child.
QUESTION 5
Parker, whose spouse died during the preceding year, has not remarried. Parker maintains
a home for a dependent child. What is Parker's most advantageous filing status?
A. Single
B. Married filing separately
C. Head of household
D. Qualifying widow(er) with dependent child

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QUESTION 6
away November 15, Year 2. In January, Year 3, Mindy gave birth to triplets Mark, Mandy,
and Maureen. The triplets live with Mindy and she provides all of their support. Assuming
Mindy has not remarried, what filing status should she use for Year 5?
A. Single.
C. Surviving spouse.
D. Married filing jointly.

QUESTION 7
In which of the following situations may taxpayers file as married filing jointly?
A. Taxpayers who were married but lived apart during the year.
B. Taxpayers who were married but lived under a legal separation agreement at
the end of the year.
C. Taxpayers who were divorced during the year.
D. Taxpayers who were legally separated but lived together for the entire year.
QUESTION 8
In Year 4, after Mindy's three children have grown and moved out of the house, Mindy
(unmarried) moved her mother, Mary, into an assisted living facility for which Mindy pays
75% of the cost. Mindy had not previously lived with Mary, and Mary paid for her own
living expenses while she lived in her own home. What filing status should Mindy use for
Year 4, assuming Mary moved into the assisted living facility on January 1, Year 4?
A. Single.
B. Married filing jointly.
C. Head of household.
QUESTION 9
As of December 31, the Mitchells were legally separated and maintained separate
households for the entire year. The Mitchells have no children. What filing status should
Mr. Mitchell claim for the year?
A. Single
D. Married filing jointly

QUESTION 10
Nicole and Andrew Harris contribute to more than half of the support of their three
children, Travis, Luke, and John. Travis, age 20, worked full time at the local deli and
earned $20,000. Luke, 18, is a part-time college student who earned $5,000 working as a
resident assistant in the student dormitory where he lived half of the year. John, age 25, is
an aspiring actor who lives at home with Nicole and Andrew. John earned $2,500 for the
three commercials he starred in. Who qualifies as a dependent for Nicole and Andrew
under either the rules of qualifying child or qualifying relative?
A. Luke and John
B. Travis, Luke, and John
C. Travis and Luke
D. Travis
QUESTION 11
Where is the deduction for qualified business income (QBI) applied in the individual tax
formula?
A. As an itemized deduction
B. As an alternative to the standard deduction
C. As an adjustment to arrive at adjusted gross income
D. As a deduction from adjusted gross income separate from the standard

deduction and itemized deductions
QUESTION 12
The Clarks have a 21-year-old son, Alex, who is a full-time student at the state university.
Alex received $10,000 in scholarships this year for academic achievement. He also works
part time at the university bookstore and earned $5,400 this year. The Clarks paid $7,000
to support Alex this year. Alex was home for two months in the summer and at school for
the rest of the year. Alex used the scholarship, the earnings from the part-time job, and the
money from his parents as his only source of support this year. Which of the following
definitions does Alex meet for the Clarks?
A. Qualifying person
B. Exemption
C. Qualifying relative
D. Qualifying child
QUESTION 13
Four years ago, when Cox's spouse died, Cox filed a joint tax return for that year. Cox did
not remarry, but continued to provide full support for a minor child who has been living
with Cox. What is Cox's most advantageous filing status for the current year?
A. Single.
B. Surviving spouse.
C. Married filing separately.
D. Head of household.
QUESTION 14
John and Theresa are in the process of obtaining a divorce. Although they are not legally
separated, John moved out of the family home in October of Year 1 and moved into an
apartment nearby. John and Theresa's two children, Jenna and Stella, lived with Theresa
in the family home for more than half of the tax year. What filing status can Theresa use to
file her Year 1 tax return?
A. Head of household.
B. Married filing jointly/separately.
C. Surviving spouse (qualifying widow).
D. Single.
QUESTION 15
A taxpayer's spouse dies in August of the current year. Which of the following is the
taxpayer's filing status for the current year?
A. Married filing jointly.
C. Qualified widow(er).
D. Single.
QUESTION 16
In which of the following scenarios would the head of household filing status be available
to the taxpayer?
A. A taxpayer with no dependents is the surviving spouse of an individual who died

in the current year.
B. A single taxpayer maintains a separate home for his parent, who qualifies as a
dependent.
C. A single taxpayer maintains a household that is the principal home for five
months of the year for his disabled child.
D. An unmarried taxpayer maintains a household with a 28-year-old son, who

earned $10,000 during the tax year.
QUESTION 17
Which of the following is (are) among the requirements to enable a taxpayer to be
classified as a "qualifying widow(er)"?
I. A dependent has lived with the taxpayer for six months.
II. The taxpayer has maintained the cost of the principal residence for six months.
A. Neither I nor II.
B. Both I and II.
C. II only.
D. I only.
QUESTION 18
and Maureen. Assuming that Mindy has not remarried, what filing status should she use
for Year 4?
B. Single.
C. Qualifying widow(er) with dependent child.

QUESTION 19
Year 4, assuming Mary moved into the assisted living facility on August 1, Year 4?
C. Single.
QUESTION 20
Gail and Mark James contributed to the support of their two children, Jack and Jill, as well
as Mark’s mother, Betty. Jack is a 19-year-old full time student who earned $5,000 this year
working at a coffee shop on campus. Jill is 24 years old and worked full-time as a librarian
and earned $25,000. Jack comes home during the summer and holidays. Jill lives at home
year-round. Betty lives in an apartment in town and received $2,000 in municipal bond
interest, $6,000 in dividend income, and $4,000 in nontaxable Social Security benefits.
Jack, Jill, and Betty are U.S. citizens and unmarried. Gail and Mark provided more than
half of the support for Jack, Jill, and Betty. How many people qualify as dependents on
Gail and Mark's tax return?
A. Zero
B. Two
C. One
D. Three
QUESTION 21
Susie, John, Luke, and Will provide support for their 80-year-old mother, Joyce. Joyce lives
by herself in an apartment in Miami, Florida. Joyce earned $4,000 this year working at her
church. Joyce provides 10% of her own support. Susie provides 30% of Joyce’s support,
John provides 5% of Joyce’s support, Luke provides 15% of Joyce’s support, and Will
provides 40% of Joyce’s support. Under a multiple support agreement, who may claim
Joyce as a dependent?
A. Susie, Luke, and Will
B. Susie and Will
C. Will
D. Susie, Luke, John, and Will

QUESTION 22
Anderson, a computer engineer, and spouse, who is unemployed, provide more than half
of the support for their child, age 23, who is a full-time student and who earns $7,000. They
also provide more than half of the support for their older child, age 33, who earns $2,000
during the year. How many dependents meet qualifying relative or qualifying child rules
for the Andersons?
A. Two
B. One
C. Zero
D. Three
QUESTION 23
Molly Morris is 15 years old. Molly’s parents (James and Beth) divorced in May of the
current tax year. Molly lived with both parents until the divorce. Molly does not provide
more than half of her own support. After the divorce, Molly’s mother has custody of Molly,
but Molly lives equal time with both parents. James’ AGI is $40,000 and Beth’s AGI is
$35,000. Molly’s parents cannot decide who can claim Molly as a dependent for tax
purposes. Assuming neither parent waives their right to claim Molly as a dependent, which
statement is true?
A. Both parents may claim Molly as a dependent because she lives equal time with
each parent.
B. Beth may claim Molly as a dependent because her AGI is lower.
C. James may claim Molly as a dependent because his AGI is higher.
D. Beth and James must alternate claiming Molly as a dependent.

QUESTION 24
Thompson's spouse died in Year 1. Thompson did not remarry in Year 2 and lived alone the
entire year. What is Thompson's Year 2 filing status?
C. Single.
QUESTION 25
The spouse of a married taxpayer died on January 15, Year 1. The taxpayer's qualifying
child moved to live with grandparents in their home on August 30, Year 2. If the taxpayer
did not remarry before the end of Year 2, then which filing status should the taxpayer
choose for Year 2?
A. Married filing separately
B. Head of household
C. Surviving spouse

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QUESTION 26
Jim and Kay Ross contributed to the support of their two children, Dale and Kim, and Jim's
widowed parent, Grant. For Year 27, Dale, a 19-year-old full-time college student, earned
$4,500 as a babysitter. Kim, a 23-year-old bank teller, earned $12,000. Grant received
$5,000 in dividend income and $4,000 in nontaxable Social Security benefits. Grant and
Kim are U.S. citizens and were over one-half supported by Jim and Kay, but neither of the
two currently reside with Jim and Kay. Dale's main place of residence is with Jim and Kay,
and he is currently on a temporary absence to attend school. How many people meet the
definition of either qualifying child or qualifying relative on the Year 27 joint income tax
return for Jim and Kay Ross?
A. Three
B. Two
C. Zero
D. One
QUESTION 27
Bill and Anne Chambers are married and file a joint return. They have no children. Their
college friend, Ryan, lived with them for the entire current tax year. Ryan is 40 years old
and earned $2,000 at a part-time job and received $25,000 in municipal bond interest.
Ryan is a citizen of the United States and is unmarried. Which of the following statements
is true regarding claiming Ryan as a dependent on the Chambers' tax return?
A. Ryan qualifies as a dependent for the Chambers under the qualifying child rules.
B. If Ryan earns $15,000 in self-employment income in addition to the part-time job

and municipal bond interest, he would qualify as a dependent on the Chambers’
tax return.
C. Ryan qualifies as a dependent for the Chambers under the qualifying relative
rules as long as the Chambers provide more than half of Ryan’s support.
D. Ryan qualifies as a dependent for the Chambers under the qualifying relative
rules because he lived with the Chambers for the entire year, as long as Ryan
does not provide more than half of his own support.
QUESTION 28
Dave and Pam Stevens contributed to the support of their three children, Lisa, Tanya, and
Hannah, and Pam's divorced mother, Ellen. For the current year, Lisa, a 26-year-old sales
clerk, earned $27,000. Tanya, a 23-year-old, full-time college graduate student in
accounting, earned $35,000 working for a CPA firm. Hannah, a 20-year old artist, earned
nothing during the year, but is still aspiring to sell her first piece and has signed on with an
art studio. Ellen received $10,000 in nontaxable social security benefits and $2,000 in
dividend income. All are U.S. citizens and are over half supported by Dave and Pam. How
many dependents do Dave and Pam Stevens have under the qualifying child and
qualifying relative rules?
A. One
B. Three
C. Two
D. Zero
QUESTION 29
In the current tax year, Blake Smith provided more than half of the support for his cousin,
niece, and a close family friend. Blake lives alone and sends a monthly support check to
each person. None of the individuals whom Blake supports has any income or files a tax
return. All three individuals are U.S. citizens. Which of the three people that Blake supports
can he claim as a dependent on his tax return?
A. Niece
B. None
C. Family friend
D. Cousin
QUESTION 30
Heather is single and has one son, Rhett, who is 19 years old. Rhett lived at home for four
months of the current tax year before moving away to take a full-time job in another city.
Heather provided more than half of Rhett’s support for the taxable year. Rhett earned
$20,000 in gross income and is unmarried. Which of the following statements regarding
the dependency rules for Rhett is true?
A. Heather may claim Rhett as a dependent because he is a qualifying child.
B. Heather may claim Rhett as a dependent because he is a qualifying relative.
C. Rhett fails the age limit test for a qualifying child.
D. Rhett must live with Heather for the entire year to meet the qualifying relative
test.
QUESTION 31
Jackie is 21 years old and is a full-time student at the local community college. She is
married to Bill and they have no children. Jackie and Bill live in Jackie’s parents’ basement
while they both finish college. Bill is 25 years old and is also a full-time student. Jackie’s
parents pay more than half of Jackie and Bill’s support. Jackie has no gross income and
Bill has $2,000 from a part-time job. Bill and Jackie file a joint return and received a refund
because their tax liability is zero. Can Jackie’s parents claim Jackie and Bill as
dependents on their tax return?
A. Jackie’s parents cannot claim Jackie or Bill as dependents.
B. Jackie’s parents can claim both Jackie and Bill as dependents.
C. Jackie’s parents can only claim Bill, but not Jackie as a dependent.
D. Jackie’s parents can only claim Jackie, but not Bill as a dependent.
QUESTION 32
Which of the following taxpayers would not qualify for the filing status of head of
household?
A. A married taxpayer with a dependent child in the household who has lived apart
from the taxpayer's spouse for the entire year due to abandonment.
B. A single taxpayer whose spouse died in the preceding tax year and who has a
dependent child living in the household.
C. A single taxpayer who provides over one-half of the support for a dependent
parent in a nursing home but does not have a qualifying child in the household.
D. A single taxpayer who provides one-half of the support for a dependent child
who has lived almost the entire year at a U.S. university while pursuing an
undergraduate degree.
QUESTION 33
Jane is 20 years old and is a sophomore at Lake University. She is a full-time student and
does not have any gross income. Jane spends the holidays and summers at home with her
parents. Her total support for the current tax year is $30,000, including a scholarship for
$5,000 to cover her tuition. Jane used $12,000 of her savings and her grandparents
provided $13,000. Which of the following statements regarding the dependency rules for
Jane is true?
A. Jane does not qualify as a dependent for either her parents or grandparents.
B. If Jane’s parents (rather than her grandparents) provided the $13,000, then they
would not be able to claim Jane as a dependent because Jane provided more
than half of her own support.
C. Jane’s grandparents can claim her as a dependent because Jane did not
provide more than half of her own support.
D. Jane’s grandparents cannot claim her as a dependent because Jane provided

more than half of her own support.
QUESTION 1
Mark and Molly met at a New Year's Eve party held December 31, Year 1. They instantly
bonded, fell madly in love, and were married at 11:38 p.m. that night. Identify Mark's filing
status for Year 1.
A. Head of household
B. Surviving spouse
C. Married filing jointly
D. Single
Explanation
Choice "C" is correct. Mark and Molly were married as of midnight on December 31, Year 1.
Therefore, Mark's only options are to file as married either jointly or separately, and
because "jointly" is the only option presented that qualifies, it is the correct choice.
Choices "D", "A", and "B" are incorrect, based on the above explanation.
QUESTION 2
away November 15, Year 2. What filing status should Mindy use for Year 2?
A. Single.
C. Married filing jointly.
Explanation
Choice "C" is correct. Mindy will be able to use the married filing jointly status for the year
Mort passed away (Year 2) even though she was not married at year-end.
Choices "A", "B", and "D" are incorrect, based on the above explanation.
QUESTION 3
John earned $500,000 in his business during the current year, and his wife received
investment income of $15,000. John provides more than half of the support of his 50-year-
old widowed sister, who lives with John and earned $45,000 in salary in the current
year. John also provides full support for his two children, an 18-year-old daughter and a
20-year-old son, who is a full-time college student. The family employs a live-in
housekeeper and a live-in butler to assist them with their residence. Both the live-in
housekeeper and the live-in butler provided all of their own support. How many people
qualify as either a qualifying child or qualifying relative for John?
A. Five
B. Four
C. Zero
D. Two
Explanation
Choice "D" is correct. John's two children meet the requirements for qualifying child (QC)
under the CARES criteria. John's sister does not meet the age test for QC, nor is she a
qualifying relative (QR) because her taxable gross income of $45,000 exceeds the gross
income limit under SUPORT. The butler and housekeeper both fail the support tests for
both QC and QR because they provide all of their own support.
Choice "A" is incorrect. Only John's children meet dependency definitions. They both are
qualifying children. The sister, housekeeper, and butler all fail both QC and QR.
Choice "B" is incorrect. John's children meet the definition of QC. The sister, housekeeper,
and butler all fail both QC and QR.
Choice "C" is incorrect. John's children meet QC rules.

QUESTION 4
Jonathan Jones is a 19-year-old full-time college student at the local community college.
He lives in an apartment near campus during the school year and returns home for the
summer break and holidays. Jonathan earned $5,000 this year working at the campus
bookstore. His parents gave him $20,000 and his grandparents gave him $10,000 this year
in support. Which of the following statements is true?
A. Jonathan’s grandparents can claim him as a dependent.
B. Jonathan’s parents can claim him as a dependent.
C. Jonathan does not qualify as a dependent for his parents because his gross
income is too high.
D. Jonathan does not meet the residency test for qualifying child.
Explanation
Choice “B” is correct. Jonathan is a qualifying child of his parents. He meets all
requirements (CARES):
CARES Test (Qualifying Child)
Close Relative
Age Limit
Residency and Filing Requirements
Eliminate Gross Income Test
Support Test
Choice “A” is incorrect. Jonathan’s grandparents cannot claim Jonathan as a dependent

because he is a dependent of his parents.
Choice “C” is incorrect. Jonathan is a qualifying child of his parents. Qualifying child
status does not have a gross income limitation.
Choice “D” is incorrect. Jonathan meets the residency requirements for qualifying child
because he is away at college.
QUESTION 5
Parker, whose spouse died during the preceding year, has not remarried. Parker maintains
a home for a dependent child. What is Parker's most advantageous filing status?
A. Single
D. Qualifying widow(er) with dependent child
Explanation
Choice "D" is correct. A qualifying widow(er) is a taxpayer who may use the joint tax return
standard deduction and rates for each of two taxable years following the year of death of
his or her spouse, unless he or she remarries. The surviving spouse must maintain a
household that, for the entire taxable year, was the principal place of abode of a son,
stepson, daughter, or stepdaughter (whether by blood or adoption). The child must be
considered either a qualifying child or a qualifying relative. Parker may file as a qualifying
widow(er) because her spouse died in the previous tax year, she did not remarry, and she
maintained a home for a dependent child. Because qualifying widow(er) is the most
advantageous status and Parker qualifies, Parker would file as a qualifying widow(er).
Choice "A" is incorrect. Even though Parker would qualify as single, filing single would give
Parker a higher tax liability than the qualifying widow(er) status and therefore is not most
advantageous.
Choice "B" is incorrect. Parker would not qualify to file married filing separately.
Choice "C" is incorrect. Parker would not qualify as head of household for the first two
years after the death of Parker's spouse because one of the requirements for head of
household status is that the taxpayer is not a surviving spouse. (Also, note that the likely
reason for this requirement is that filing as head of household status would give the
qualifying surviving spouse taxpayer a higher tax liability than the qualifying widow(er)
status, which would be less advantageous.)
QUESTION 6
and Maureen. The triplets live with Mindy and she provides all of their support. Assuming
Mindy has not remarried, what filing status should she use for Year 5?
A. Single.
C. Surviving spouse.
Explanation
Choice "B" is correct. Mindy should file using the head of household status. She has
dependent children living with her, and no longer qualifies as married or as a surviving
spouse. Head of household is the most favorable filing status for which she qualifies.
Choice "A" is incorrect. Mindy qualifies for a more favorable filing status than single.
Choice "C" is incorrect. At Year 5, more than two years have passed since Mort's death so
Mindy no longer qualifies for surviving spouse (qualifying widow) status.
Choice "D" is incorrect. Mindy is no longer married and Mort did not die in Year 5, so she is
not eligible for the married filing jointly status.
QUESTION 7
In which of the following situations may taxpayers file as married filing jointly?
A. Taxpayers who were married but lived apart during the year.
B. Taxpayers who were married but lived under a legal separation agreement at
the end of the year.
C. Taxpayers who were divorced during the year.
D. Taxpayers who were legally separated but lived together for the entire year.
Explanation
In order to file a joint return, the parties must be married at the end of the year. Exception:
If the parties are married but are legally separated under the laws of the state in which
they reside, they cannot file a joint return (they will file either under the single or head of
household filing status).
Choice "A" is correct. Taxpayers who are married but lived apart during the year are
allowed to file a joint return for the year. The fact that they did not live together during the
year has no bearing on the issue.
Choice "B" is incorrect. Taxpayers who are married but lived under a legal separation
agreement at the end of the year may not file a joint return. They will generally file either
under the single or head of household filing status.
Choice "C" is incorrect. Taxpayers who were divorced during the year may not file a joint
return together, as they are not married at the end of the year. [Note, however, that they
may become married again in the year and file a joint return with the new spouse.]
Choice "D" is incorrect. Taxpayers who were legally separated but lived together for the
entire year may not file a joint return. They will generally file either under the single or head
of household filing status.
QUESTION 8
Year 4, assuming Mary moved into the assisted living facility on January 1, Year 4?
A. Single.
C. Head of household.
Explanation
Choice "C" is correct. Mindy qualifies for and should use head of household status in Year
4, because she maintained more than half of the upkeep on Mary's principal residence for
the entire taxable year (note that Mindy is not required to live with her mother to qualify for
head of household status). It is the most favorable filing status for which she qualifies.
Choice "A" is incorrect. Mindy qualifies for a more favorable filing status than single.
Choice "B" is incorrect. Mindy is not married.
Choice "D" is incorrect. Mindy has not had a spouse die in the past two years.
QUESTION 9
As of December 31, the Mitchells were legally separated and maintained separate
households for the entire year. The Mitchells have no children. What filing status should
Mr. Mitchell claim for the year?
A. Single
Explanation
Choice "A" is correct. Marital status for the tax year is determined as of the last day of the
year. Taxpayers who are divorced or legally separated are considered unmarried. Mr.
Mitchell is legally separated and does not have a qualifying dependent, so Mr. Mitchell's
filing status for the year is single.
Choice "B" is incorrect. Because the taxpayer is legally separated, he is considered

unmarried and does not qualify for married-filing-separately filing status.
Choice "C" is incorrect. The taxpayer does not qualify for head-of-household filing status
because he does not maintain a home for a qualifying dependent.
Choice "D" is incorrect. Because the taxpayer is legally separated, he is considered

unmarried and does not qualify for married-filing-jointly filing status.
QUESTION 10
Nicole and Andrew Harris contribute to more than half of the support of their three
children, Travis, Luke, and John. Travis, age 20, worked full time at the local deli and
earned $20,000. Luke, 18, is a part-time college student who earned $5,000 working as a
resident assistant in the student dormitory where he lived half of the year. John, age 25, is
an aspiring actor who lives at home with Nicole and Andrew. John earned $2,500 for the
three commercials he starred in. Who qualifies as a dependent for Nicole and Andrew
under either the rules of qualifying child or qualifying relative?
A. Luke and John
B. Travis, Luke, and John
C. Travis and Luke
D. Travis
Explanation
Choice "A" is correct. Luke and John satisfy dependency requirements:
Travis does not meet the age limit for qualifying child. His income is over the gross income
limitation for qualifying relative.
Luke meets the qualifying child rules (CARES). He is under the age of 19 and only lives
away from home while at college.
John meets the qualifying relative rules (SUPORT). His parents provide more than half of
his support and his gross income is under the limitation.
Choices "D", "C", and "B" are incorrect.

QUESTION 11
Where is the deduction for qualified business income (QBI) applied in the individual tax
formula?
A. As an itemized deduction
B. As an alternative to the standard deduction
C. As an adjustment to arrive at adjusted gross income
D. As a deduction from adjusted gross income separate from the standard

deduction and itemized deductions
Explanation
Choice "D" is correct. The QBI deduction is taken from adjusted gross income ("below the
line"). It is not part of the itemized deductions.
Choice "A" is incorrect. The QBI deduction is not an itemized deduction.
Choice "B" is incorrect. The QBI deduction is not an alternative to the standard deduction.
Choice "C" is incorrect. The QBI deduction is not an adjustment to arrive at adjusted gross
income.
QUESTION 12
The Clarks have a 21-year-old son, Alex, who is a full-time student at the state university.
Alex received $10,000 in scholarships this year for academic achievement. He also works
part time at the university bookstore and earned $5,400 this year. The Clarks paid $7,000
to support Alex this year. Alex was home for two months in the summer and at school for
the rest of the year. Alex used the scholarship, the earnings from the part-time job, and the
money from his parents as his only source of support this year. Which of the following
definitions does Alex meet for the Clarks?
A. Qualifying person
B. Exemption
C. Qualifying relative
D. Qualifying child
Explanation
Choice "D" is correct. Alex meets the definition of qualifying child for the Clarks. He meets
the close relative test because he is their son. He is under the age of 24 and is a full-time
student, so he meets the age limit. He meets the residency requirements because his
principal place of abode is his parents' home since he was only away from home as a
student. He also does not provide more than half of his own support. The scholarship does
not count as support provided by Alex.
Choice "A" is incorrect. Qualifying person is not a dependency definition type.
Choice "B" is incorrect. Alex is not an exemption for the Clarks. Exemptions for
dependents are not allowed for tax years 2018 and later.
Choice "C" is incorrect. Alex meets the definition of qualifying child of the Clarks. He does
not meet the definition of qualifying relative because his gross income is more than the
gross income limit under SUPORT.
QUESTION 13
Four years ago, when Cox's spouse died, Cox filed a joint tax return for that year. Cox did
not remarry, but continued to provide full support for a minor child who has been living
with Cox. What is Cox's most advantageous filing status for the current year?
A. Single.
B. Surviving spouse.
C. Married filing separately.
Explanation
Choice “D” is correct. Because Cox is not married, Cox cannot file as married filing
separately (or married filing jointly). Likewise, since Cox's spouse died more than two years
ago, Cox cannot file as a surviving spouse. Cox may file as single. In addition, since Cox is
not married, is not a surviving spouse, and maintains a home for a minor (presumably,
dependent) child, Cox may file as head of household. Because the head-of-household
status provides for a larger standard deduction and "wider" tax brackets than does the
single status, Cox's most advantageous filing status is head of household.
Choice “A” is incorrect. Cox qualifies as head of household because Cox is not married, is
not a surviving spouse, and maintains a home for a minor (presumably, dependent) child.
Because the head-of-household status provides for a larger standard deduction and
wider tax brackets than does the single status, Cox's most advantageous filing status is as
head of household.
Choice “B” is incorrect. Cox does not qualify as a surviving spouse because that filing
status may only be used in the two years following the death of the spouse, and Cox's
spouse died four years ago.
Choice “C” is incorrect. Cox is not married and therefore cannot file as married filing
separately.
QUESTION 14
John and Theresa are in the process of obtaining a divorce. Although they are not legally
separated, John moved out of the family home in October of Year 1 and moved into an
apartment nearby. John and Theresa's two children, Jenna and Stella, lived with Theresa
in the family home for more than half of the tax year. What filing status can Theresa use to
file her Year 1 tax return?
B. Married filing jointly/separately.
C. Surviving spouse (qualifying widow).
D. Single.
Explanation
Choice "B" is correct. John and Theresa are still married at year-end, not legally
separated, and have not lived apart for the last six months of the taxable year. Theresa
must file as married, but may choose to do so either jointly with John or separately.
Choice "A" is incorrect. Head of household status is not an option because the couple is
not legally separated at year-end and John did not live apart from Theresa for the last six
months of the taxable year.
Choice "C" is incorrect. Surviving spouse (qualifying widow) is not an option for Theresa,
as John is still alive.
Choice "D" is incorrect. Filing as single is not an option, because John and Theresa are still
married and not legally separated at year-end.
QUESTION 15
A taxpayer's spouse dies in August of the current year. Which of the following is the
taxpayer's filing status for the current year?
A. Married filing jointly.
C. Qualified widow(er).
D. Single.
Explanation
Choice "A" is correct. The surviving spouse is considered to be married (and thus able to
file as married filing jointly) for the entire current year even if the spouse dies earlier in the
year (in this case in August).
Choice "B" is incorrect. The filing status is not head of household for the current year.
Choice "C" is incorrect. The filing status is not qualified widow(er) for the current year.
Choice "D" is incorrect. The filing status is not single for the current year.
QUESTION 16
In which of the following scenarios would the head of household filing status be available
to the taxpayer?
A. A taxpayer with no dependents is the surviving spouse of an individual who died

in the current year.
B. A single taxpayer maintains a separate home for his parent, who qualifies as a
dependent.
C. A single taxpayer maintains a household that is the principal home for five
months of the year for his disabled child.
D. An unmarried taxpayer maintains a household with a 28-year-old son, who

earned $10,000 during the tax year.
Explanation
Choice "B" is correct. Head of household filing status is available to a single taxpayer who
maintains a separate home for a dependent parent. To qualify for head of household filing
status, a taxpayer must be unmarried as of the last day of the tax year and maintain a
home that is the principal residence of a qualifying person for more than half of the tax
year. A qualifying person includes a dependent child, parent, or relative. A dependent
parent is not required to live with the taxpayer, provided the taxpayer maintains a home
that was the principal residence of the parent for the entire year.
Choice "A" is incorrect. A taxpayer who has no dependents is not entitled to head of
household filing status. Because the taxpayer's spouse died in the current year, the
taxpayer is entitled to married filing jointly status for the current year.
Choice "C" is incorrect. The taxpayer is not entitled to head of household filing status. His
filing status is single. To qualify for head of household status, the taxpayer must maintain
a home that is the principal residence of a qualifying person for more than half the year.
Because the taxpayer maintains a household that is the principal home for his disabled
child for only five months of the year, his son is not a dependent child or relative and he
does not qualify for head of household status.
Choice "D" is incorrect. The taxpayer is not entitled to head of household filing status. Her
filing status is single. The taxpayer is unmarried and maintains a home for her son, but her
son is not a dependent child or dependent relative. Her son is not a qualifying child
dependent because he is over the age limit (under age 19, or under age 24 in the case of a
full-time student). He is not a qualifying relative dependent because his gross income of
$10,000 is more than the gross income threshold amount.
QUESTION 17
Which of the following is (are) among the requirements to enable a taxpayer to be
classified as a "qualifying widow(er)"?
I. A dependent has lived with the taxpayer for six months.
II. The taxpayer has maintained the cost of the principal residence for six months.
A. Neither I nor II.
B. Both I and II.
C. II only.
D. I only.
Explanation
Choice "A" is correct. The requirements that enable a taxpayer to be classified as a
"qualifying widow(er)" are:
1. The taxpayer's spouse died in one of the two previous years and the taxpayer did not
remarry in the current tax year;
2. The taxpayer has a child who can be claimed as a dependent;
3. This child lived in the taxpayer's home for all of the current tax year;
4. The taxpayer paid over half the cost of keeping up a home for the child; and
5. The taxpayer could have filed a joint return in the year the spouse died.
QUESTION 18
and Maureen. Assuming that Mindy has not remarried, what filing status should she use
for Year 4?
B. Single.
C. Qualifying widow(er) with dependent child.
Explanation
Choice "C" is correct. Because Mindy does not remarry and she maintains a principal
residence for her dependent children for the entire year, she may file using the qualifying
widow(er) with dependent child status for the two taxable years following Mort's death. In
Year 4, the second year after Mort's death, Mindy should file as a qualifying widow.
Choices "B", "D", and "A" are incorrect, based on the above explanation.
Hi,


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them!
Have a good day!

QUESTION 19
Year 4, assuming Mary moved into the assisted living facility on August 1, Year 4?
C. Single.
Explanation
Choice "C" is correct. Mindy should file using the single status. She does not qualify for
more favorable filing status.
Choice "A" is incorrect. Mindy does not qualify for head of household status. Had Mary
moved into the assisted living home for the entire year, Mindy would have been eligible for
head of household status. Mindy did not provide more than half of Mary's support and for
Year 4 is ineligible for head of household status.
Choice "B" is incorrect. Mindy is not married.
Choice "D" is incorrect. Mindy has not had a spouse die in the past two years.
QUESTION 20
Gail and Mark James contributed to the support of their two children, Jack and Jill, as well
as Mark’s mother, Betty. Jack is a 19-year-old full time student who earned $5,000 this year
working at a coffee shop on campus. Jill is 24 years old and worked full-time as a librarian
and earned $25,000. Jack comes home during the summer and holidays. Jill lives at home
year-round. Betty lives in an apartment in town and received $2,000 in municipal bond
interest, $6,000 in dividend income, and $4,000 in nontaxable Social Security benefits.
Jack, Jill, and Betty are U.S. citizens and unmarried. Gail and Mark provided more than
half of the support for Jack, Jill, and Betty. How many people qualify as dependents on
Gail and Mark's tax return?
A. Zero
B. Two
C. One
D. Three
Explanation
Choice “C” is correct. Jack meets the CARES test for a qualifying child. Jill does not meet
the CARES test for a qualifying child because she is 24 and not a full-time student. She
fails the age limit test of CARES. Jill also does not meet the SUPORT test because she
earns more taxable income than the gross income threshold amount (“U” for under that
amount). Betty does not meet the CARES test because she fails the close relative and age
limit tests. (The CARES test is for a qualifying child, not a qualifying relative.) Betty also
fails the SUPORT test because her taxable income ($6,000) is not under the gross income
threshold amount. Therefore, Gail and Mark James can claim one person as a dependent
—Jack.
Choices “B”, “D”, and “A” are incorrect, based on the above explanation.
QUESTION 21
Susie, John, Luke, and Will provide support for their 80-year-old mother, Joyce. Joyce lives
by herself in an apartment in Miami, Florida. Joyce earned $4,000 this year working at her
church. Joyce provides 10% of her own support. Susie provides 30% of Joyce’s support,
John provides 5% of Joyce’s support, Luke provides 15% of Joyce’s support, and Will
provides 40% of Joyce’s support. Under a multiple support agreement, who may claim
Joyce as a dependent?
A. Susie, Luke, and Will
B. Susie and Will
C. Will
D. Susie, Luke, John, and Will
Explanation
Choice “A” is correct. Under a multiple support agreement, Susie, Luke, and Will are
eligible to claim Joyce as a dependent because they contributed more than 10% of
Joyce's support.
Choice “B” is incorrect. Under a multiple support agreement, Luke is also eligible to claim
Joyce as a dependent because he contributed more than 10% of Joyce's support.
Choice “C” is incorrect. Under a multiple support agreement, Susie and Luke are also
eligible to claim Joyce as a dependent because they contributed more than 10% of
Joyce's support.
Choice “D” is incorrect. John did not provide more than 10% of Joyce’s support. Therefore,
he is not eligible to claim Joyce as a dependent under a multiple support agreement.
QUESTION 22
Anderson, a computer engineer, and spouse, who is unemployed, provide more than half
of the support for their child, age 23, who is a full-time student and who earns $7,000. They
also provide more than half of the support for their older child, age 33, who earns $2,000
during the year. How many dependents meet qualifying relative or qualifying child rules
for the Andersons?
A. Two
B. One
C. Zero
D. Three
Explanation
Choice "A" is correct. Both children meet the dependency criteria. The 23-year-old child
meets qualifying child rules (CARES). The age limit is met because the 23-year-old is a full-
time student. The 33-year-old meets qualifying relative rules (SUPORT). The Andersons
have two dependents for tax purposes.
Choices "B", "D", and "C" are incorrect based on the above explanation.
QUESTION 23
Molly Morris is 15 years old. Molly’s parents (James and Beth) divorced in May of the
current tax year. Molly lived with both parents until the divorce. Molly does not provide
more than half of her own support. After the divorce, Molly’s mother has custody of Molly,
but Molly lives equal time with both parents. James’ AGI is $40,000 and Beth’s AGI is
$35,000. Molly’s parents cannot decide who can claim Molly as a dependent for tax
purposes. Assuming neither parent waives their right to claim Molly as a dependent, which
statement is true?
A. Both parents may claim Molly as a dependent because she lives equal time with
each parent.
B. Beth may claim Molly as a dependent because her AGI is lower.
C. James may claim Molly as a dependent because his AGI is higher.
D. Beth and James must alternate claiming Molly as a dependent.
Explanation
Choice “C” is correct. The parent with custody of the child for the greater part of the year
may claim the child as a dependent (determined by time, not the divorce decree).
Because Molly’s parents have equal custody during the year, the parent with the higher
AGI would be eligible to claim Molly as a dependent, which in this case would be James.
However, James could waive the right to claim Molly as a dependent.
Choices “A”, “B”, and “D” are incorrect, based on the above explanation.
QUESTION 24
Thompson's spouse died in Year 1. Thompson did not remarry in Year 2 and lived alone the
entire year. What is Thompson's Year 2 filing status?
C. Single.
Explanation
Choice “C” is correct. Filing status is determined as of the last day of the year. At the end
of Year 2, Thompson is not married and does not qualify for any other filing status.
Therefore, his status is single.
Choice “A” is incorrect. Head of household status could apply in certain circumstances
where there is a dependent and surviving spouse status does not apply. That is not the
case here. Thompson is single for Year 2.
Choice “B” is incorrect. When a spouse dies during the year, the surviving spouse can file
married filing jointly for that year under an exception to the end-of-year test. But this
question is about Year 2, the year after death. Thompson is single for Year 2.
Choice “D” is incorrect. Surviving spouse status, also known as qualifying widow(er), can
be claimed for the two years after year of death. However, it requires the presence of a
dependent child, which is not part of the facts here. Thompson is single for Year 2.
QUESTION 25
The spouse of a married taxpayer died on January 15, Year 1. The taxpayer's qualifying
child moved to live with grandparents in their home on August 30, Year 2. If the taxpayer
did not remarry before the end of Year 2, then which filing status should the taxpayer
choose for Year 2?
A. Married filing separately
B. Head of household
C. Surviving spouse
Explanation
Choice "B" is correct. The taxpayer should choose the head of household filing status for
Year 2. The taxpayer qualifies for this filing status because the taxpayer is unmarried and
maintained his or her home as the principal residence for the qualifying child for more
than half of the taxable year. The taxpayer does not meet the requirements for a
qualifying widow(er) as a result of the qualifying child moving to live with grandparents in
their home on August 30, Year 2. To file as a qualifying widow(er), the surviving spouse
must pay over half the cost of maintaining a household where a dependent child lives for
the whole taxable year.
Choice "A" is incorrect. In order to use the married filing separately status, a taxpayer
must be married. In this example, the taxpayer is a widow(er) and did not remarry before
the end of Year 2.
Choice "C" is incorrect. To file a return with the surviving spouse status, the surviving
spouse must pay over half of the cost of maintaining a household where a dependent
child lives for the whole taxable year. Since the taxpayer's qualifying child moved to live
with grandparents in their home on August 30, Year 2 in this example, the taxpayer cannot
use the surviving spouse filing status for Year 2.
Choice "D" is incorrect. If a taxpayer's spouse dies during the year, a joint return may be
filed for that corresponding year. In this example, the taxpayer's spouse died during Year 1,
so the married filing jointly status could not be used in Year 2.
QUESTION 26
Jim and Kay Ross contributed to the support of their two children, Dale and Kim, and Jim's
widowed parent, Grant. For Year 27, Dale, a 19-year-old full-time college student, earned
$4,500 as a babysitter. Kim, a 23-year-old bank teller, earned $12,000. Grant received
$5,000 in dividend income and $4,000 in nontaxable Social Security benefits. Grant and
Kim are U.S. citizens and were over one-half supported by Jim and Kay, but neither of the
two currently reside with Jim and Kay. Dale's main place of residence is with Jim and Kay,
and he is currently on a temporary absence to attend school. How many people meet the
definition of either qualifying child or qualifying relative on the Year 27 joint income tax
return for Jim and Kay Ross?
A. Three
B. Two
C. Zero
D. One
Explanation
Choice "D" is correct. Only one person meets the criteria for either qualifying child or
relative for the Rosses. Dale meets the definition of qualifying child. He meets all criteria
of CARES. He is under the age limit because he is a full-time student under the age of 24.
All other CARES tests are met. Kim does not meet the age test for qualifying child. She
also does not meet the qualifying relative criteria because her taxable gross income of
$12,000 exceeds the gross income limit under SUPORT. Because Grant is Jim's parent,
Grant does not have to live with the Rosses to be a qualifying relative. However, Grant's
taxable gross income of $5,000 exceeds the gross income limit, so he is not a qualifying
relative. Note that Grant's nontaxable Social Security benefits are not included in gross
income for purposes of the qualifying relative gross income test.
Choice "A" is incorrect. Only Dale meets the definition of either qualifying child or
qualifying relative for Jim and Kay Ross. Kim does not meet the the age test for qualifying
child or the gross income test for qualifying relative. Grant also does not meet the gross
income test for qualifying relative.
Choice "B" is incorrect. Kim fails the age test for qualifying child (CARES) and the gross
income test
for qualifying relative (SUPORT). Grant also fails the gross income test for qualifying
relative (SUPORT).
Choice "C" is incorrect. Dale meets the CARES criteria for qualifying child for Jim and Kay
Ross.
QUESTION 27
Bill and Anne Chambers are married and file a joint return. They have no children. Their
college friend, Ryan, lived with them for the entire current tax year. Ryan is 40 years old
and earned $2,000 at a part-time job and received $25,000 in municipal bond interest.
Ryan is a citizen of the United States and is unmarried. Which of the following statements
is true regarding claiming Ryan as a dependent on the Chambers' tax return?
A. Ryan qualifies as a dependent for the Chambers under the qualifying child rules.
B. If Ryan earns $15,000 in self-employment income in addition to the part-time job

and municipal bond interest, he would qualify as a dependent on the Chambers’
tax return.
C. Ryan qualifies as a dependent for the Chambers under the qualifying relative
rules as long as the Chambers provide more than half of Ryan’s support.
D. Ryan qualifies as a dependent for the Chambers under the qualifying relative
rules because he lived with the Chambers for the entire year, as long as Ryan
does not provide more than half of his own support.
Explanation
Choice “C” is correct. Ryan meets the SUPORT tests for a qualifying relative if the
Chambers provide more than half of Ryan’s support.
CARES Test (Qualifying Child) SUPORT Test (Qualifying Relative)
Close Relative Support (over 50%) test
Age Limit Under a specific amount of (taxable) gross income

test
Residency and Filing Precludes dependent filing a joint tax return test
Requirements
Eliminate Gross Income Test Only citizens (residents of U.S./Canada or Mexico)

test
Support Test Relative test
Ryan's taxable income ($2,000) is under the gross income threshold amount. He doesn’t
file a joint return. He is a citizen of the United States and he lives with the Chambers for
the entire year.
Choice “A” is incorrect. Ryan does not meet the CARES test for qualifying child. He is not a
close relative and not under the age limit.
Choice “B” is incorrect. If Ryan earns $15,000 in self-employment income, he would not
meet the “U” test because his taxable income is over the gross income threshold amount.
Choice “D” is incorrect. The support test for the qualifying relative test states that the
Chambers must pay more than half of the support of Ryan. The fact that Ryan does not
provide more than half of his own support is not enough to meet the support test for
qualifying relative (SUPORT).
QUESTION 28
Dave and Pam Stevens contributed to the support of their three children, Lisa, Tanya, and
Hannah, and Pam's divorced mother, Ellen. For the current year, Lisa, a 26-year-old sales
clerk, earned $27,000. Tanya, a 23-year-old, full-time college graduate student in
accounting, earned $35,000 working for a CPA firm. Hannah, a 20-year old artist, earned
nothing during the year, but is still aspiring to sell her first piece and has signed on with an
art studio. Ellen received $10,000 in nontaxable social security benefits and $2,000 in
dividend income. All are U.S. citizens and are over half supported by Dave and Pam. How
many dependents do Dave and Pam Stevens have under the qualifying child and
qualifying relative rules?
A. One
B. Three
C. Two
D. Zero
Explanation
Choice "B" is correct. Based on the CARES (QC) and the SUPORT (QR) tests, Dave and Pam
have three dependents.
Lisa: NO. Lisa fails the age limit for QC and exceeds the gross income limitation for QR.
Tanya: YES. Tanya meets all tests of QC. She is a full-time student under the age of 24 so
she meets the age test.
Hannah: YES. Hannah meets all criteria for QR. She fails the age limit test for QC.
Ellen: YES. Ellen meets the gross income limitation for QR because the Social Security
income is nontaxable and not included for the gross income test.
Tanya, Hannah, and Ellen all meet dependency requirements.
Choices "D", "A", and "C" are incorrect based on the above explanation.
QUESTION 29
In the current tax year, Blake Smith provided more than half of the support for his cousin,
niece, and a close family friend. Blake lives alone and sends a monthly support check to
each person. None of the individuals whom Blake supports has any income or files a tax
return. All three individuals are U.S. citizens. Which of the three people that Blake supports
can he claim as a dependent on his tax return?
A. Niece
B. None
C. Family friend
D. Cousin
Explanation
Choice “A” is correct. The niece meets the SUPORT test for qualifying relative status. The
cousin and family friend do not meet the “R” (relative) or “T” (taxpayer lives with individual)
tests. All three people whom Blake supports fail the residency test for a qualifying child.
Choice “B” is incorrect. Blake’s niece meets the SUPORT tests and therefore counts as a
qualifying relative.
Choice “C” is incorrect. Blake’s family friend does not meet the “R” (relative) or “T”
(taxpayer lives with individual) test, because Blake’s family friend does not qualify as a
qualifying relative and did not live with him for the entire year.
Choice “D” is incorrect. The cousin does not meet the “R” (relative) or “T” (taxpayer lives
with individual) tests for a qualifying relative because Blake’s cousin did not live with him
for the entire year.
QUESTION 30
Heather is single and has one son, Rhett, who is 19 years old. Rhett lived at home for four
months of the current tax year before moving away to take a full-time job in another city.
Heather provided more than half of Rhett’s support for the taxable year. Rhett earned
$20,000 in gross income and is unmarried. Which of the following statements regarding
the dependency rules for Rhett is true?
A. Heather may claim Rhett as a dependent because he is a qualifying child.
B. Heather may claim Rhett as a dependent because he is a qualifying relative.
C. Rhett fails the age limit test for a qualifying child.
D. Rhett must live with Heather for the entire year to meet the qualifying relative
test.
Explanation
Choice “C” is correct. Rhett fails both the age limit and residency test for qualifying child
status.
Choice “A” is incorrect. Rhett is not a qualifying child. He fails both the age limit test and
the residency test (CARES).
Choice “B” is incorrect. Rhett is not considered a qualifying relative because his gross
income exceeds the gross income threshold amount.
Choice “D” is incorrect. Rhett does not have to live with Heather for the entire year to
meet the qualifying relative test because he is her son.
QUESTION 31
Jackie is 21 years old and is a full-time student at the local community college. She is
married to Bill and they have no children. Jackie and Bill live in Jackie’s parents’ basement
while they both finish college. Bill is 25 years old and is also a full-time student. Jackie’s
parents pay more than half of Jackie and Bill’s support. Jackie has no gross income and
Bill has $2,000 from a part-time job. Bill and Jackie file a joint return and received a refund
because their tax liability is zero. Can Jackie’s parents claim Jackie and Bill as
dependents on their tax return?
A. Jackie’s parents cannot claim Jackie or Bill as dependents.
B. Jackie’s parents can claim both Jackie and Bill as dependents.
C. Jackie’s parents can only claim Bill, but not Jackie as a dependent.
D. Jackie’s parents can only claim Jackie, but not Bill as a dependent.
Explanation
Choice “B” is correct. Jackie qualifies as her parent’s qualifying child (CARES). Bill
qualifies as Jackie’s parents’ qualifying relative (SUPORT). Even though Jackie and Bill file
a joint return, they can still be considered dependents because they receive a refund and
their tax liability is zero.
Choices “D”, “C”, and “A” are incorrect, based on the above explanation.
QUESTION 32
Which of the following taxpayers would not qualify for the filing status of head of
household?
A. A married taxpayer with a dependent child in the household who has lived apart
from the taxpayer's spouse for the entire year due to abandonment.
B. A single taxpayer whose spouse died in the preceding tax year and who has a
dependent child living in the household.
C. A single taxpayer who provides over one-half of the support for a dependent
parent in a nursing home but does not have a qualifying child in the household.
D. A single taxpayer who provides one-half of the support for a dependent child
who has lived almost the entire year at a U.S. university while pursuing an
undergraduate degree.
Explanation
Choice "B" is correct. A taxpayer qualifies for surviving spouse, or qualifying widow(er),
filing status for the two years following the year the taxpayer's spouse dies if the taxpayer
maintains a household where a dependent child lives for the entire year.
Choice "A" is incorrect. A married taxpayer who has lived apart from his or her spouse for
the last six months of the year and maintains a household where a dependent child lives
for more than half the year qualifies for head-of-household filing status.
Choice "C" is incorrect. A single taxpayer who provides more than one-half of the support
for a qualifying relative and maintains a home that is the principal residence of the
qualifying relative qualifies for head-of-household filing status. A dependent parent is not
required to live with the taxpayer, provided the taxpayer contributes more than half the
cost of maintaining a home that is the principal residence of the parent for the entire year.
Choice "D" is incorrect. A single taxpayer who maintains a home that is the principal
residence for a dependent child qualifies for head-of-household filing status. A full-time
student under age 24 who does not provide more than half of his or her own support is a
qualifying dependent child. A college student living at a university is considered
temporarily away from home. The parent's home is considered the child's principal
residence.
QUESTION 33
Jane is 20 years old and is a sophomore at Lake University. She is a full-time student and
does not have any gross income. Jane spends the holidays and summers at home with her
parents. Her total support for the current tax year is $30,000, including a scholarship for
$5,000 to cover her tuition. Jane used $12,000 of her savings and her grandparents
provided $13,000. Which of the following statements regarding the dependency rules for
Jane is true?
A. Jane does not qualify as a dependent for either her parents or grandparents.
B. If Jane’s parents (rather than her grandparents) provided the $13,000, then they
would not be able to claim Jane as a dependent because Jane provided more
than half of her own support.
C. Jane’s grandparents can claim her as a dependent because Jane did not
provide more than half of her own support.
D. Jane’s grandparents cannot claim her as a dependent because Jane provided

more than half of her own support.
Explanation
Choice “D” is correct. Jane does not qualify as a dependent for her grandparents as a
qualifying child or relative. With respect to her grandparents, Jane's scholarship is treated
as support and thus Jane provides more than half of her own support ($12,000 savings +
$5,000 scholarship = $17,000; $17,000/$30,000 = 0.57 = 57%).
Jane does qualify as a dependent of her parents because she is under 24, a full-time
student, and the scholarship does not count as support with respect to her parents. She
also meets all other tests of qualifying child for her parents.
Choice “A” is incorrect. Jane is a dependent of her parents because she meets all tests for
a qualifying child.
Choice “B” is incorrect. The scholarship does not count as support for Jane with respect to
her parents. Therefore, Jane meets all tests for qualifying child of her parents.
Choice “C” is incorrect. Jane’s scholarship does count as support for Jane with respect to
her grandparents. Because Jane provided more than half of her own support (see the
calculation above), Jane’s grandparents cannot claim her as a qualifying child or relative.
QUESTION 1
How are a C corporation's net capital losses used?
A. Carried back three years and forward five years.
B. Carried forward indefinitely.
C. Deductible in full from the corporation's ordinary income.
D. Deducted from the corporation's ordinary income only to the extent of $3,000.
QUESTION 2
The question below includes actual dates that must be used to determine the appropriate
tax treatment of the transaction.
The following information applies to a calendar year-end C corporation whose net
operating loss was generated in the year ending December 31, 2019:
Net operating loss (NOL) incurred in 2019 $(80,000)
Taxable income in 2018 60,000
The corporation's taxable income in 2018 and 2020 is before consideration of any NOL
carrybacks or carryforwards. In this situation, the corporation may utilize its 2019 NOL by
offsetting:
A. All of 2020 taxable income, with no carryforward allowed in succeeding periods.
B. $56,000 of the 2020 taxable income and carrying forward $24,000 of the NOL to
2021 and succeeding periods.
C. All of 2018 taxable income and $20,000 of 2020 taxable income.
D. $48,000 of the 2018 taxable income and $12,000 of the 2020 taxable income.
QUESTION 3
Which of the following statements is correct with respect to the reorganization provisions
of the Bankruptcy Code?
A. The commencement of a proceeding may be voluntary or involuntary.
B. A partnership is not eligible to be a debtor.
C. A trustee is required to be appointed.
D. The reorganization may not be confirmed unless all creditors accept the plan.
QUESTION 4
Emerald Corporation, a calendar year corporation, began business in Year 1. Emerald made
a valid S corporation election on December 8, Year 3, with the unanimous consent of its
shareholders. The eligibility requirements for S status continued to be met throughout Year
4. On what date did Emerald's S status become effective?
A. January 1, Year 3.
B. December 8, Year 3.
C. December 31, Year 3.
D. January 1, Year 4.
QUESTION 5
Nia Johnson invested in a certificate of deposit (CD) at the local bank. The total interest to
be earned on the CD amounted to $1,000. However, Nia withdrew the money early and only
earned $800. The bank reported $1,000 of interest and a $200 early withdrawal penalty to
Nia for tax reporting. How will Nia report the interest earned and the early withdrawal
penalty?
A. $1,000 as interest income and no deduction for the early withdrawal penalty
B. $800 as interest income
C. $1,000 as interest income and a $200 itemized deduction for the early withdrawal
penalty
D. $1,000 as interest income and a $200 adjustment to AGI for the early withdrawal
penalty
QUESTION 6
The U.S. Tax Court is:
A. A specialized trial court that hears only Federal tax cases. Tax Court decisions
may not be appealed.
B. A specialized trial court that hears only Federal tax cases. The trials are by judge
and not by a jury.
C. A specialized trial court that hears only Federal tax cases, and that requires the
taxpayer to pay any disputed tax before the case is heard.
D. An appeals court where taxpayers may appeal decisions of tax cases decided at
the District Court level.
QUESTION 7
Riley purchased Series EE U.S. Savings Bonds in 1998. Redemption proceeds will be used for
payment of the college tuition for Riley's dependent child. One of the conditions that must
be met for the tax exemption of accumulated interest on these bonds is that the:
A. Purchaser of the bonds must be the sole owner of the bonds (or the joint owner
with his or her spouse).
B. Bonds must be purchased by the parent (or both parents) and put in the name of
the dependent child.
C. Bonds must be purchased by the owner of the bonds before the owner reaches
the age of 24.
D. Bonds must be transferred to the college for redemption by the college rather
than the owner of the bonds.
QUESTION 8
Which of the following promises is supported by legally sufficient consideration and will be
enforceable?
A. A promise to pay a minor $500 to paint a garage.
B. A promise to pay the police $250 to catch a thief.
C. A parent's promise to pay one child $500 because that child is not as wealthy as
the child's sibling.
D. A person's promise to pay a real estate agent $1,000 in return for the real estate
agent's earlier act of not charging commission for selling the person's house.
QUESTION 9
Under Circular 230, for tax returns:
A. A practitioner may rely on client-furnished information under any circumstances.

The client is always right.
B. A practitioner can advise a client to take a tax return position that is frivolous
only if the taxpayer is a member of an officially recognized tax protest
organization.
C. A practitioner must exercise due diligence in preparing tax returns and other
documents, unless such due diligence is waived in writing by the client.
D. A practitioner must return all client records at the request of the client.
QUESTION 10
Dylan died on March 2, Year 1. Ann, his wife, and Lena, their daughter, survive. Ann filed a
joint return in Year 1. Lena, age 19 in Year 4, is a college student and continues to live at
home with her mother. She works part-time, earning wages of $2,000 for the year. What is
Ann's filing status for Year 4?
A. Surviving spouse.
B. Married, filing joint.
C. Single.
QUESTION 11
Which of the following conditions will prevent a corporation from qualifying as an S
Corporation?
A. The corporation has both common and preferred stock.
B. One shareholder is a grantor trust.
C. One shareholder is an estate.
D. The corporation has one class of stock with different voting rights.
QUESTION 12
A corporation may reduce its regular income tax by taking a tax credit for:
A. State income taxes.
B. Dividends-received exclusion.
C. Accelerated depreciation.
D. Foreign income taxes.

QUESTION 13
A shareholder's basis in the stock of an S corporation is increased by the shareholder's pro
rata share of income from:
Tax-exempt Taxable
interest interest
A. No Yes
B. No No
C. Yes No
D. Yes Yes
QUESTION 14
Robin, a C corporation, had revenues of $200,000 and operating expenses of $75,000.
Robin also received a $20,000 dividend from a domestic corporation and is entitled to a
$10,000 dividend-received deduction. Robin donated $15,000 to a qualified charitable
organization in the current year. What is Robin's charitable contributions deduction?
A. $15,000
B. $14,500
C. $13,900
D. $13,500
QUESTION 15
If a corporation's charitable contributions exceed the limitation for deductibility in a
particular year, the excess:
A. May be carried back or forward for one year at the corporation's election.
B. May be carried back to the third preceding year.
C. Is not deductible in any future or prior year.
D. May be carried forward to a maximum of five succeeding years.

QUESTION 16
With respect to the penalties for failure to file information returns of tax preparers, which of
the following provisions is correct for any person who employed a tax return preparer
during the return period?
A. The penalty for failure to file information returns does not apply to the extent that
the failure is due to reasonable cause and not due to willful neglect.
B. The fine for failure to file such information returns is a penalty of $100 for each
failure, with a maximum of $50,000 for each return period.
C. Each such person must send to the IRS an information return containing the
name, address, and social security number of each tax return preparer employed
for at least 3 months during the year.
D. The fine for failure to file such information returns is a penalty of $50 for each
failure, with no maximum for each return period.
QUESTION 17
In which of the following cases will federal law prohibit a state from imposing an income
tax on net income?
A. Orders are taken within the state and accepted at corporate headquarters
outside of the state and shipped from a location outside of the state.
B. The business has its corporate headquarters in the state and generates sales
from there.
C. Orders are taken within the state and accepted at corporate headquarters
outside of the state and shipped from a location inside the state.
D. The business has a retail outlet store in the state.

QUESTION 18
Albert and Carol Dutton finalized their divorce in January 2017. In accordance with the
divorce decree, Albert transferred title in their home to Carol during the year. The home,
which had a fair market value of $450,000, was subject to a mortgage of $300,000 that
had more than 25 years remaining on the amortization schedule. Monthly mortgage
payments amount to $2,200. Under the terms of the settlement, Albert is obligated to make
the mortgage payments on the home for the full remaining 25-year term of the
indebtedness, regardless of how long Carol lives. Albert made 12 mortgage payments
during the current year. What amount is taxable as alimony on Carols' current year tax
return?
A. $150,000
B. $13,200
C. $0
D. $26,400
QUESTION 19
Grant had adjusted gross income of $55,000. During the year his personal use summer
home was completely destroyed by a fire. The home was located in a presidentially
declared disaster area. Pertinent data with respect to the home follows:
Cost basis $ 135,000
Value before casualty $ 140,000
Value after casualty $ 123,000
Grant was insured for his actual loss and he received the insurance settlement. What is
Grant's allowable casualty loss deduction?
A. $12,000
B. $0
C. $12,900
D. $16,900
QUESTION 20
Circular 230:
A. Prohibits referral or compensation agreements.
B. Prohibits a practitioner from endorsing or negotiating refund checks issued to the

client.
C. Prohibits a practitioner from charging a contingent fee.
D. Addresses the practice before the IRS of "practitioners," which includes only
Attorneys, Certified Public Accountants, and Enrolled Agents.
Hi,


8. ICAEW
C. IT Exams
3. PMP
D. Language Tests

them!
Have a good day!

QUESTION 21
Starr, a self-employed individual, purchased a piece of equipment for use in Starr's
business. The costs associated with the acquisition of the equipment were:
Purchase price $ 55,000
Delivery charges 725
Installation fees 300
Sales tax 3,400
What is the depreciable basis of the equipment?
A. $59,425
B. $55,000
C. $59,125
D. $58,400
QUESTION 22
Which of the following professional bodies has the authority to revoke a CPA's license to
practice public accounting?
A. National Association of State Boards of Accountancy.
B. State board of accountancy.
C. State CPA Society Ethics Committee.
D. Professional Ethics Division of AICPA.

QUESTION 23
Which of the following increases the accumulated adjustments account of an S
corporation?
A. Capital contributions by the shareholders.
B. Distribution to shareholders.
C. Interest and dividends.
D. Charitable contributions.
QUESTION 24
In general, which of the following debts will be discharged under the voluntary liquidation
provisions of the Bankruptcy Code?
I. A debt arising before the filing of the bankruptcy petition due to the debtor's
negligence.
II. Income taxes due from filing a fraudulent return 7 years prior to filing the bankruptcy
petition.
A. Both I and II.
B. II only.
C. I only.
D. Neither I nor II.

QUESTION 25
Which of the following items should be included on Schedule M-1, Reconciliation of Income
(Loss) per Books With Income per Return, of Form 1120, U.S. Corporation Income Tax Return,
to reconcile book income to taxable income?
A. Premiums paid on key-person life insurance policy.
B. Cash distributions to shareholders.
C. Corporate bond interest.
D. Ending balance of retained earnings.

QUESTION 26
Which of the following requirements is not necessary in order to have a security interest
attach?
A. Either the creditor must take possession of the collateral or the debtor must sign a
security agreement that describes the collateral.
B. The debtor must have rights in the collateral.
C. Value must be given by the creditor.
D. There must be a proper filing.

QUESTION 27
Which of the following statements is correct concerning the similarities between a limited
partnership and a corporation?
A. All corporate stockholders and all partners in a limited partnership have limited
liability.
B. Both are recognized for federal income tax purposes as taxable entities.
C. Each is created under a statute and must file a copy of its certificate with the
proper state authorities.
D. Both are allowed statutorily to have perpetual existence.

QUESTION 28
Shontelle and Teodoro are equal partners in the S&T Partnership. On January 1 of the
current year, each partner's adjusted basis in S&T was $50,000 (including each partner's
$15,000 share of partnership liabilities). During the current year, S&T sustained an operating
loss of $25,000 and earned $5,000 of interest and dividend income from investments. The
partnership's liabilities were reduced to $20,000 as of December 31. Assuming the liabilities
are shared equally by the partners, the basis of each partner's interest in S&T on January 1
of the next year is:
A. $35,000
B. $47,500
C. $45,000
D. $40,000
QUESTION 29
Which of the following statements is correct regarding modification of a sales contract
under the Uniform Commercial Code?
A. The modification must satisfy the Statute of Frauds if the contract as modified is
within its provisions.
B. There must be a writing if the original contract is in writing.
C. There must be consideration present if the contract is between merchants.
D. The parol evidence rule applies and thus a writing is required.

QUESTION 30
Which of the following is a typical characteristic of a 501(c)(3) private foundation, rather
than a 501(c)(3) public charity?
A. The organization is publicly supported.
B. The organization’s primary activity is making grants to other charitable

organizations.
C. The organization directly operates charitable programs.
D. Funding is typically received from many sources, rather than a single major
source.
QUESTION 31
Ben Willis paid self-employment taxes of $3,000 as a result of earnings from his consulting
business. The "employer" portion of these taxes are:
A. A deduction to arrive at adjusted gross income.
B. A tax credit.
C. A deduction from adjusted gross income.
D. Not deductible.
QUESTION 32
Tim and Rick cannot come to an agreement as to the exact amount Rick owes Tim. They
decide to and do form a new agreement that, on fulfillment, will discharge the prior
obligation. Rick fulfills the new terms. This is called:
A. Anticipatory repudiation.
B. A novation.
C. An accord and satisfaction.
D. Substantial performance.
QUESTION 33
Which of the following statements is false?
A. If an individual files a tax return with a zero tax liability in the prior year, the
individual must pay in at least 90 percent of the current year's tax to avoid
underpayment penalties, as the ability to use the 100 percent of prior year tax is
lost.
B. If an individual fails to pay estimated taxes for a year, there is no underpayment

penalty due under any circumstances if the balance of tax due at filing is less
than $1,000.
C. The Internal Revenue Service may waive the penalty for underpayment of taxes if
the failure to pay was due to casualty, disaster, illness, or death of the taxpayer.
D. If tax payments are withheld from payroll checks, regardless of the dollar
amounts withheld at any particular time throughout the year, the payments are
deemed to have been paid evenly throughout the year.
QUESTION 34
Bob files an extension of his Year 1 income tax return on March 23, Year 2. His withholding
for Year 1 is $3,200. He estimates that he will owe an additional $1,000 and includes a check
for $1,000 with the extension. Bob files his Year 1 income tax return on May 18, Year 2. The
total tax indicated on the return is $5,100. What amount of the tax is subject to the Failure-
to-Pay Penalty?
A. $900
B. $1,000
C. $1,900
D. $3,200
QUESTION 35
For income to be taxable on a tax return, it must be:
A. Either realized or recognized.
B. Both realized and recognized.
C. Recognized only.
D. Realized only.
QUESTION 36
Martin Corporation, a calendar year corporation, purchased and placed into service
evenly in the current year $3,630,000 of computer equipment. Martin elected to take the
maximum allowable Section 179 expense. What is Martin Corporation's Section 179 expense
deduction?
A. $1,160,000
B. $3,630,000
C. $420,000
D. $740,000
QUESTION 1
How are a C corporation's net capital losses used?
A. Carried back three years and forward five years.
B. Carried forward indefinitely.
C. Deductible in full from the corporation's ordinary income.
D. Deducted from the corporation's ordinary income only to the extent of $3,000.
Explanation
Choice "A" is correct. A C corporation's net capital losses are carried back three years and
forward five years.
Choice "B" is incorrect. A C corporation's net operating losses may be carried forward
indefinitely.
Choice "C" is incorrect. A corporation's capital losses can be used only to offset capital
gains, and any excess is carried back three years and forward five years.
Choice "D" is incorrect. This is incorrect because it states the rule for an individual
taxpayer.
QUESTION 2
The question below includes actual dates that must be used to determine the appropriate
tax treatment of the transaction.
The following information applies to a calendar year-end C corporation whose net
operating loss was generated in the year ending December 31, 2019:
Net operating loss (NOL) incurred in 2019 $(80,000)
The corporation's taxable income in 2018 and 2020 is before consideration of any NOL
carrybacks or carryforwards. In this situation, the corporation may utilize its 2019 NOL by
offsetting:
A. All of 2020 taxable income, with no carryforward allowed in succeeding periods.
B. $56,000 of the 2020 taxable income and carrying forward $24,000 of the NOL to
2021 and succeeding periods.
C. All of 2018 taxable income and $20,000 of 2020 taxable income.
D. $48,000 of the 2018 taxable income and $12,000 of the 2020 taxable income.
Explanation
Choice "C" is correct. The NOL incurred in 2019 can be carried back five years and carried
forward indefinitely. There is no taxable income limitation for tax years prior to 2021.
Choice "A" is incorrect. If the company elects not to carry back, the company can offset all
of 2020 taxable income, with the remaining NOL carried forward to 2021 and succeeding
periods.
Choice "B" is incorrect. The NOL incurred in 2019 can be carried back five years and the 80
percent of taxable income limitation applies only to post-2017 NOLs carried forward to
taxable years beginning in 2021 or later.
Choice "D" is incorrect. The 80 percent of taxable income limitation applies only to post-
2017 NOLs carried forward to taxable years beginning in 2021 or later.
QUESTION 3
Which of the following statements is correct with respect to the reorganization provisions
of the Bankruptcy Code?
A. The commencement of a proceeding may be voluntary or involuntary.
B. A partnership is not eligible to be a debtor.
C. A trustee is required to be appointed.
D. The reorganization may not be confirmed unless all creditors accept the plan.
Explanation
Choice "A" is correct. A voluntary or involuntary petition may be filed under Chapter 7 or 11.
Choice "B" is incorrect. A partnership may be a debtor under either Chapter 7 or Chapter 11.
Choice "C" is incorrect. A trustee is not usually appointed in a reorganization. Generally,

the debtor remains in possession of his or her business.
Choice "D" is incorrect. A plan can be confirmed by as few as one impaired class of
creditors if a court finds the plan is not unfairly discriminatory and is fair and equitable.
Thus, confirmation of the plan does not even require that the majority of creditors approve
the plan.
QUESTION 4
Emerald Corporation, a calendar year corporation, began business in Year 1. Emerald made
a valid S corporation election on December 8, Year 3, with the unanimous consent of its
shareholders. The eligibility requirements for S status continued to be met throughout Year
4. On what date did Emerald's S status become effective?
A. January 1, Year 3.
B. December 8, Year 3.
C. December 31, Year 3.
D. January 1, Year 4.
Explanation
Choice "D" is correct. In order to be effective for the current taxable year, the S corporation
election must be made by the 15th day of the third month of the taxable year. If the election
is made after that date, the election becomes effective on the first day of the next taxable
year, January 1, Year 4, in this case.
Choice "A" is incorrect. If the election had been made in December Year 2, this choice
would have been the effective date.
Choice "B" is incorrect. The election must be made by the 15th day of the third month of the
taxable year to be effective in that tax year and is effective back to the first day of that
taxable year. The election is not effective on the date the election is made unless the
election is made on the first day of the taxable year and the election is for that taxable
year.
Choice "C" is incorrect. The election is retroactively effective to the first day of the taxable
year if the election is timely made, but the election is not effective on the last day of the
year in which the election is made.
QUESTION 5
Nia Johnson invested in a certificate of deposit (CD) at the local bank. The total interest to
be earned on the CD amounted to $1,000. However, Nia withdrew the money early and only
earned $800. The bank reported $1,000 of interest and a $200 early withdrawal penalty to
Nia for tax reporting. How will Nia report the interest earned and the early withdrawal
penalty?
A. $1,000 as interest income and no deduction for the early withdrawal penalty
B. $800 as interest income
C. $1,000 as interest income and a $200 itemized deduction for the early withdrawal
penalty
D. $1,000 as interest income and a $200 adjustment to AGI for the early withdrawal
penalty
Explanation
Choice “D” is correct. The $1,000 interest income is reported in gross income and a $200
adjustment is taken for the forfeited interest due to withdrawing the money early from the
investment.
Choice “A” is incorrect. The $1,000 interest income is reported in gross income. The $200
penalty for withdrawing the money early is an adjustment to AGI rather than an itemized
deduction.
Choice “B” is incorrect. The interest income and penalty should not be netted. Instead, the
interest income of $1,000 is reported as interest, with a separate $200 adjustment for the
early withdrawal penalty.
Choice “C” is incorrect. The $1,000 interest income is reported in gross income and the
$200 early withdrawal penalty is deducted as an adjustment, not an itemized deduction.
QUESTION 6
The U.S. Tax Court is:
A. A specialized trial court that hears only Federal tax cases. Tax Court decisions
may not be appealed.
B. A specialized trial court that hears only Federal tax cases. The trials are by judge
and not by a jury.
C. A specialized trial court that hears only Federal tax cases, and that requires the
taxpayer to pay any disputed tax before the case is heard.
D. An appeals court where taxpayers may appeal decisions of tax cases decided at
the District Court level.
Explanation
Choice "B" is correct. The U.S. Tax Court is a specialized trial court that hears only Federal
tax cases, and the trials are by judge and not by a jury.
Choice "A" is incorrect. The U.S. Tax Court is a specialized trial court that hears only Federal
tax cases. The decisions may be appealed.
Choice "C" is incorrect. The U.S. Tax Court is a specialized trial court that hears only
Federal tax cases, but does not require the taxpayer to pay the disputed tax before the
case is heard. It is the U.S. District Courts that have this requirement.
Choice "D" is incorrect. The U.S. Tax Court is not an appeals court. It is a court where cases
are heard initially.
QUESTION 7
Riley purchased Series EE U.S. Savings Bonds in 1998. Redemption proceeds will be used for
payment of the college tuition for Riley's dependent child. One of the conditions that must
be met for the tax exemption of accumulated interest on these bonds is that the:
A. Purchaser of the bonds must be the sole owner of the bonds (or the joint owner
with his or her spouse).
B. Bonds must be purchased by the parent (or both parents) and put in the name of
the dependent child.
C. Bonds must be purchased by the owner of the bonds before the owner reaches
the age of 24.
D. Bonds must be transferred to the college for redemption by the college rather
than the owner of the bonds.
Explanation
Choice "A" is correct. One of the conditions that must be met for tax exemption of the
accumulated interest on the bonds is that the purchaser of the bonds must be the sole
owner of the bonds (or joint owner with his or her spouse).
Choice "B" is incorrect. The bonds must be purchased and put in the name of the owner (or
joint ownership with spouse), not in the name of the dependent child.
Choice "C" is incorrect. The owner must be at least 24 years of age before the bonds
issuance date.
Choice "D" is incorrect. There is no such requirement.

QUESTION 8
Which of the following promises is supported by legally sufficient consideration and will be
enforceable?
A. A promise to pay a minor $500 to paint a garage.
B. A promise to pay the police $250 to catch a thief.
C. A parent's promise to pay one child $500 because that child is not as wealthy as
the child's sibling.
D. A person's promise to pay a real estate agent $1,000 in return for the real estate
agent's earlier act of not charging commission for selling the person's house.
Explanation
Choice "A" is correct. To constitute consideration, there must be a bargained for exchange
of something of value. A detriment to the promisee or a benefit to the promisor constitutes
value. A promise to pay a minor $500 to paint a garage constitutes a detriment to the
promisee; the promisee is not otherwise bound to pay the minor $500 to paint the garage,
and the minor's painting the garage constitutes valid consideration to support the promise
to pay $500.
Choice "B" is incorrect. To constitute consideration, there must be a bargained for

exchange of value. A detriment to the promisee or a benefit to the promisor constitutes
value. A promise to perform a pre-existing duty does not constitute valid consideration.
Because a police officer already owes a crime victim a duty to catch the perpetrator, the
police officer's promise to perform his duty does not constitute valid consideration.
Choice "C" is incorrect. To constitute consideration, there must be a bargained for

value. Here, there is no bargained for exchange. The promise is gratuitous and not
supported by consideration.
Choice "D" is incorrect. To constitute consideration, there must be a bargained for

value. Past acts generally do not constitute valid consideration because the acts were not
bargained for. Thus, a promise to pay $1,000 in return for a prior performed act (not
charging for services) is not supported by consideration.
QUESTION 9
Under Circular 230, for tax returns:
A. A practitioner may rely on client-furnished information under any circumstances.

The client is always right.
B. A practitioner can advise a client to take a tax return position that is frivolous
only if the taxpayer is a member of an officially recognized tax protest
organization.
C. A practitioner must exercise due diligence in preparing tax returns and other
documents, unless such due diligence is waived in writing by the client.
D. A practitioner must return all client records at the request of the client.
Explanation
Choice "D" is correct. A practitioner must return all client records at the request of the
client.
Choice "A" is incorrect. A practitioner may normally rely "in good faith without verification"
upon client-furnished information. However, that does not mean "under any
circumstances." The practitioner cannot ignore contradictory information known to the
practitioner and must make reasonable inquiries if client-furnished information appears to
be questionable or incomplete. The client is not always right.
Choice "B" is incorrect. A practitioner cannot advise a client to take a tax return position
that is frivolous under any circumstances. There is no such thing as an "officially
recognized" tax protest organization.
Choice "C" is incorrect. A practitioner must exercise due diligence in preparing tax returns
and other documents (and in determining the correctness of any representations to the
IRS). There is no waiver of such due diligence, either orally or in writing.
QUESTION 10
Dylan died on March 2, Year 1. Ann, his wife, and Lena, their daughter, survive. Ann filed a
joint return in Year 1. Lena, age 19 in Year 4, is a college student and continues to live at
home with her mother. She works part-time, earning wages of $2,000 for the year. What is
Ann's filing status for Year 4?
A. Surviving spouse.
B. Married, filing joint.
C. Single.
Explanation
Choice "D" is correct. Her dependent child, Lena, is living with her.
Choice "A" is incorrect. The surviving spouse is only available for the two years after death,
provided a dependent child is living with you. The Year 4 is three years after death.
Choice "B" is incorrect. At December 31, Year 4, Ann is not married, and hadn't been
married at all in Year 4; therefore, she cannot file as married.
Choice "C" is incorrect. While it is true that Ann is single at December 31, Year 4, the head
of household status is available to her and is more advantageous.
QUESTION 11
Which of the following conditions will prevent a corporation from qualifying as an S
Corporation?
A. The corporation has both common and preferred stock.
B. One shareholder is a grantor trust.
C. One shareholder is an estate.
D. The corporation has one class of stock with different voting rights.
Explanation
Choice "A" is correct. An S corporation can only have one class of stock outstanding.
Common and preferred stock would constitute two classes of stock.
Choice "B" is incorrect. Grantor trusts and certain other types of trusts are allowed to be
shareholders in an S corporation.
Choice "C" is incorrect. Individuals, estates, and certain trusts may be shareholders in an S
corporation.
Choice "D" is incorrect. One class of stock with different voting rights is allowed for S
corporations.
QUESTION 12
A corporation may reduce its regular income tax by taking a tax credit for:
A. State income taxes.
B. Dividends-received exclusion.
C. Accelerated depreciation.
D. Foreign income taxes.
Explanation
Choice "D" is correct. Under certain conditions a taxpayer may take a credit against its
U.S. income tax for foreign income taxes paid.
Choice "A" is incorrect. State income taxes reduce taxable income; they are not tax credits.
Choice "B" is incorrect. The dividends-received deduction (not exclusion) reduces taxable
income; it is not a tax credit.
Choice "C" is incorrect. Accelerated depreciation reduces taxable income; it is not a tax
credit.
QUESTION 13
A shareholder's basis in the stock of an S corporation is increased by the shareholder's pro
rata share of income from:
Tax-exempt Taxable
interest interest
A. No Yes
B. No No
C. Yes No
D. Yes Yes
Explanation
Choice "D" is correct.
Both tax-exempt and taxable interest income increase a shareholder's basis in S
corporation stock.
Choices "B", "A", and "C" are incorrect, per the above explanation.
QUESTION 14
Robin, a C corporation, had revenues of $200,000 and operating expenses of $75,000.
Robin also received a $20,000 dividend from a domestic corporation and is entitled to a
$10,000 dividend-received deduction. Robin donated $15,000 to a qualified charitable
organization in the current year. What is Robin's charitable contributions deduction?
A. $15,000
B. $14,500
C. $13,900
D. $13,500
Explanation
Choice "B" is correct. Corporations making contributions to recognized charitable
organizations are allowed a maximum deduction of 10% of their taxable income. Taxable
income is calculated before the deduction of: (1) any charitable contribution; (2) the
dividends-received deduction; (3) any capital loss carryback.
Revenues $ 200,000
Dividends Received 20,000
Less: Operating expenses (75,000)
Income before the dividends received deduction 145,000
× 10%
Maximum allowable charitable deduction $ 14,500
Note: Excess charitable contributions not allowed as a deduction due to the 10% limitation
may be carried forward up to five years.
Choice "A" is incorrect. The full $15,000 would not be allowed due to the 10% limitation
illustrated above.
Choice "C" is incorrect. The dividends received are considered in taxable income for
purposes of the 10% limitation.
Choice "D" is incorrect. The 10% limitation is applied before the dividends received
deduction.
QUESTION 15
If a corporation's charitable contributions exceed the limitation for deductibility in a
particular year, the excess:
A. May be carried back or forward for one year at the corporation's election.
B. May be carried back to the third preceding year.
C. Is not deductible in any future or prior year.
D. May be carried forward to a maximum of five succeeding years.
Explanation
Choice "D" is correct.
A corporate charitable deduction that exceeds the limit for deduction in one year can be
carried over to the succeeding five tax years. It cannot be carried back.
Choices "C", "A", and "B" are incorrect, per the above explanation.
QUESTION 16
With respect to the penalties for failure to file information returns of tax preparers, which of
the following provisions is correct for any person who employed a tax return preparer
during the return period?
A. The penalty for failure to file information returns does not apply to the extent that
the failure is due to reasonable cause and not due to willful neglect.
B. The fine for failure to file such information returns is a penalty of $100 for each
failure, with a maximum of $50,000 for each return period.
C. Each such person must send to the IRS an information return containing the
name, address, and social security number of each tax return preparer employed
for at least 3 months during the year.
D. The fine for failure to file such information returns is a penalty of $50 for each
failure, with no maximum for each return period.
Explanation
Choice "A" is correct. The penalty for failure to file information returns of tax preparers
does not apply to the extent that the failure to file is due to reasonable cause and not due
to willful neglect.
Choice "B" is incorrect. The fine for failure to file such information returns is a penalty of
$60 for each failure, with a maximum of $30,000 (2023) for each return period, not $100 with
a maximum of $50,000.
Choice "C" is incorrect. Each person (individual, trust, estate, partnership, association,
company, or corporation) who employed a tax return preparer during the return period
must send to the IRS an information return containing the name, taxpayer identification
number, and place of work for each tax return preparer employed during the return period.
There is no 3-month provision.
Choice "D" is incorrect. The fine for failure to file such information returns is a penalty of
$60 for each failure, with a maximum of $30,000 (2023) for each return period, not $50 with
no maximum.
QUESTION 17
In which of the following cases will federal law prohibit a state from imposing an income
tax on net income?
A. Orders are taken within the state and accepted at corporate headquarters
outside of the state and shipped from a location outside of the state.
B. The business has its corporate headquarters in the state and generates sales
from there.
C. Orders are taken within the state and accepted at corporate headquarters
outside of the state and shipped from a location inside the state.
D. The business has a retail outlet store in the state.
Explanation
Choice “A” is correct. If orders are taken within the state and accepted at corporate
headquarters outside of the state and shipped from a location outside of the state, federal
law will prohibit the state from imposing an income tax on net income. The company has no
physical presence in the state.
Choice “B” is incorrect. A state may impose an income tax on net income derived from a
physical presence, including a corporate headquarters that generates sales.
Choice “C” is incorrect. A state may impose an income tax on net income derived from
orders that are taken within the state and accepted at corporate headquarters outside of
the state and shipped from a location inside the state.
Choice “D” is incorrect. A state may impose an income tax on net income derived from a
physical presence, including a retail outlet store.
QUESTION 18
Albert and Carol Dutton finalized their divorce in January 2017. In accordance with the
divorce decree, Albert transferred title in their home to Carol during the year. The home,
which had a fair market value of $450,000, was subject to a mortgage of $300,000 that
had more than 25 years remaining on the amortization schedule. Monthly mortgage
payments amount to $2,200. Under the terms of the settlement, Albert is obligated to make
the mortgage payments on the home for the full remaining 25-year term of the
indebtedness, regardless of how long Carol lives. Albert made 12 mortgage payments
during the current year. What amount is taxable as alimony on Carols' current year tax
return?
A. $150,000
B. $13,200
C. $0
D. $26,400
Explanation
Choice "C" is correct. Carol will include $0 as alimony from the mortgage payments made
by Albert during the year on her current year income tax return. Payments that are required
to be paid, even if the recipient dies, are not considered to be payments for support
(alimony), and are considered to be amounts owed to the payee as part of the divorce
settlement (i.e., property settlements). Note that for divorce or separation agreements
executed through December 31, 2018, the alimony is taxable as income to the recipient and
deductible as an adjustment by the payor. For divorce or separation agreements executed
after December 31, 2018, the alimony received is not taxable and the alimony paid is not
deductible.
Choices "B", "D", and "A" are incorrect, per the above explanation.
QUESTION 19
Grant had adjusted gross income of $55,000. During the year his personal use summer
home was completely destroyed by a fire. The home was located in a presidentially
declared disaster area. Pertinent data with respect to the home follows:
Cost basis $ 135,000
Value before casualty $ 140,000
Value after casualty $ 123,000
Grant was insured for his actual loss and he received the insurance settlement. What is
Grant's allowable casualty loss deduction?
A. $12,000
B. $0
C. $12,900
D. $16,900
Explanation
Choice "B" is correct. The entire loss was covered by insurance.
Choices "A", "C", or "D" are incorrect. Grant was insured for his actual loss and in receiving
reimbursement would have no allowable casualty loss deduction.
QUESTION 20
Circular 230:
A. Prohibits referral or compensation agreements.
B. Prohibits a practitioner from endorsing or negotiating refund checks issued to the

client.
C. Prohibits a practitioner from charging a contingent fee.
D. Addresses the practice before the IRS of "practitioners," which includes only
Attorneys, Certified Public Accountants, and Enrolled Agents.
Explanation
Choice "B" is correct. Circular 230 does prohibit a practitioner from endorsing or
negotiating refund checks which the IRS has issued to the practitioner's client.
Choice "A" is incorrect. Circular 230 does not prohibit referral or compensation
agreements. It merely requires that any compensation agreement or referral agreement
between the practitioner and a promoter be disclosed.
Choice "C" is incorrect. Circular 230 prohibits a practitioner from charging an

"unconscionable" fee but does allow contingent fees in the following situations: (1) an IRS
examination or audit, (2) a claim solely for a refund of interest and/or penalties, or (3) a
judicial proceeding arising under the Internal Revenue Code. An IRS examination or audit is
in connection with the IRS's examination of, or challenge to, an original tax return or an
amended return or claim for refund (with certain additional conditions, of course).
Choice "D" is incorrect. Circular 230 addresses the practice before the IRS of
"practitioners." However, practitioners do not include just Attorneys, Certified Public
Accountants, and Enrolled Agents. Practitioners can also be Enrolled Actuaries, Enrolled
Retirement Plan Agents, and Appraisers.
QUESTION 21
Starr, a self-employed individual, purchased a piece of equipment for use in Starr's
business. The costs associated with the acquisition of the equipment were:
Sales tax 3,400
What is the depreciable basis of the equipment?
A. $59,425
B. $55,000
C. $59,125
D. $58,400
Explanation
Choice "A" is correct. The rules for depreciable basis in tax are generally the same as the
GAAP rules for capitalizing an asset. The depreciable basis is the cost associated with the
purchase of the asset and with getting the asset ready for its intended use. Further
improvements are also capitalized, and the basis is reduced for any accumulated
depreciation. In this case, the cost of obtaining the equipment and getting the equipment
ready for its intended use includes all the items shown above, as follows:
Sales tax 3,400
Total depreciable basis $ 59,425

Choice "B" is incorrect. The costs of delivery charges, installation, and sales tax are all part
of the cost of obtaining the asset and getting the asset ready for its intended use. All of
these charges are included in the depreciable basis of the equipment.
Choice "C" is incorrect. The cost of installation is part of the cost getting the asset ready
for its intended use. This charge is included in the depreciable basis of the equipment.
Choice "D" is incorrect. The costs of delivery charges and installation are both part of the
cost of obtaining the asset and getting the asset ready for its intended use. These charges
are included in the depreciable basis of the equipment.
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QUESTION 22
Which of the following professional bodies has the authority to revoke a CPA's license to
practice public accounting?
A. National Association of State Boards of Accountancy.
B. State board of accountancy.
C. State CPA Society Ethics Committee.
D. Professional Ethics Division of AICPA.
Explanation
Choice "B" is correct. The state board of accountancy is the only body listed that can grant
a CPA license and the only body that may revoke such a license.
Choices "A", "C", and "D" are incorrect, per the above.
QUESTION 23
Which of the following increases the accumulated adjustments account of an S
corporation?
A. Capital contributions by the shareholders.
B. Distribution to shareholders.
C. Interest and dividends.
D. Charitable contributions.
Explanation
Choice "C" is correct. The accumulated adjustments account (AAA) is increased by
separately stated and non-separately stated income and gains (except tax-exempt income
and certain life insurance proceeds).
Choice "A" is incorrect. Capital contributions by shareholders do not increase AAA.
Choice "B" is incorrect. Distributions to shareholders decrease AAA, not increase AAA.
Choice "D" is incorrect. Charitable contributions decrease AAA, not increase AAA.
QUESTION 24
In general, which of the following debts will be discharged under the voluntary liquidation
provisions of the Bankruptcy Code?
I. A debt arising before the filing of the bankruptcy petition due to the debtor's
negligence.
II. Income taxes due from filing a fraudulent return 7 years prior to filing the bankruptcy
petition.
A. Both I and II.
B. II only.
C. I only.
D. Neither I nor II.
Explanation
Choice "C" is correct. Bankruptcy discharges most of pre-petition debts.
Nondischargeable debts include certain taxes, debts incurred by fraud, unscheduled
debts, debts arising from crimes, fines and penalties, alimony/child support debts, and
student loans.
QUESTION 25
Which of the following items should be included on Schedule M-1, Reconciliation of Income
(Loss) per Books With Income per Return, of Form 1120, U.S. Corporation Income Tax Return,
to reconcile book income to taxable income?
A. Premiums paid on key-person life insurance policy.
B. Cash distributions to shareholders.
C. Corporate bond interest.
D. Ending balance of retained earnings.
Explanation
Choice "A" is correct. Schedule M-1 reports the reconciliation of income (loss) per books to
income (loss) per the tax return. (Note: It reports both permanent and temporary
differences that are discussed in the Financial textbook for deferred taxes.) Items that are
included on this schedule are those that are (1) reported as income for book purposes but
not for tax purposes; (2) reported as an expense for book purposes but not for tax purposes;
(3) reported as taxable income for tax purposes but not as income for book purposes; and
(4) reported as deductible for tax purposes but not as an expense for book purposes. The
only option above that falls into one of these four categories is option b. Premiums paid on
a key-person life insurance policy are proper GAAP expenses for book purposes, but they
are not allowable deductions for tax purposes.
Choice "B" is incorrect. Cash distributions to shareholders are not reported on the income
statement for book purposes and are not deductible for tax purposes. They do not enter
into the calculation of income in either case and are not reported on Schedule M-1. Cash
distributions actually are reported on Schedule M-2, which is a reconciliation of
unappropriated retained earnings.
Choice "C" is incorrect. Corporate bond interest is not reported differently for GAAP and
tax purposes. It is included as income for GAAP purposes and for tax purposes. Therefore,
no reconciliation of book income to taxable income is required for this item.
Choice "D" is incorrect. The ending balance of retained earnings is not reported on a GAAP
income statement, nor is it included as part of taxable income. Therefore, it is not part of
Schedule M-1. Unappropriated retained earnings are reconciled on Schedule M-2 of Form
1120.
QUESTION 26
Which of the following requirements is not necessary in order to have a security interest
attach?
A. Either the creditor must take possession of the collateral or the debtor must sign a
security agreement that describes the collateral.
B. The debtor must have rights in the collateral.
C. Value must be given by the creditor.
D. There must be a proper filing.
Explanation
Choice "D" is correct. A security interest attaches on the last to occur of the following; all
three elements are required: (i) the parties must agree to create the security interest
evidenced by either the creditor’s taking possession of the collateral or a written security
agreement that describes the collateral and is signed by the debtor; (ii) the creditor must
give value in exchange for the security interest; and the debtor must have rights in the
collateral. Filing is not necessary; it is a possible method of perfecting but is not required
for attachment.
QUESTION 27
Which of the following statements is correct concerning the similarities between a limited
partnership and a corporation?
A. All corporate stockholders and all partners in a limited partnership have limited
liability.
B. Both are recognized for federal income tax purposes as taxable entities.
C. Each is created under a statute and must file a copy of its certificate with the
proper state authorities.
D. Both are allowed statutorily to have perpetual existence.
Explanation
Choice "C" is correct. Both a corporation and a limited partnership can be formed only by
filing with state authorities.
Choice "A" is incorrect. A general partner in a limited partnership does not have limited
liability but rather is personally liable for all partnership obligations.
Choice "B" is incorrect. Limited partnerships are not recognized as taxable entities. They
need only file informational returns.
Choice "D" is incorrect. The certificate of limited partnership must state the latest date on
which it is to dissolve.
QUESTION 28
Shontelle and Teodoro are equal partners in the S&T Partnership. On January 1 of the
current year, each partner's adjusted basis in S&T was $50,000 (including each partner's
$15,000 share of partnership liabilities). During the current year, S&T sustained an operating
loss of $25,000 and earned $5,000 of interest and dividend income from investments. The
partnership's liabilities were reduced to $20,000 as of December 31. Assuming the liabilities
are shared equally by the partners, the basis of each partner's interest in S&T on January 1
of the next year is:
A. $35,000
B. $47,500
C. $45,000
D. $40,000
Explanation
Choice "A" is correct.
Capital + Liabilities = Basis
Beginning: $ 35,000 $ 15,000 $ 50,000
Additions: (5,000 × 50%) 2,500 2,500
Sub: (25,000 × 50%) (12,500) (12,500)
(10,000 × 50%) (5,000) (5,000)
End: $ 25,000 $ 10,000 $ 35,000
The $10,000 amount is the reduction in liabilities.
Choice "B" is incorrect. This answer does not take into account the partner's share of the
operating loss.
Choice "C" is incorrect. This would be correct if the liabilities had increased by $5,000
instead of decreased.
Choice "D" is incorrect. This would be correct if the liabilities had not decreased.
QUESTION 29
Which of the following statements is correct regarding modification of a sales contract
under the Uniform Commercial Code?
A. The modification must satisfy the Statute of Frauds if the contract as modified is
within its provisions.
B. There must be a writing if the original contract is in writing.
C. There must be consideration present if the contract is between merchants.
D. The parol evidence rule applies and thus a writing is required.
Explanation
Choice "A" is correct. If a sales contract has been modified, it is the contract as it has been
modified that determines whether a writing is required under the Statute of Frauds.
Choice "B" is incorrect. The modification need only be evidenced by a writing if the
contract as it has been modified requires a writing. It does not matter whether the original
contract required a writing. It is the contract as modified that determines whether a writing
is required.
Choice "C" is incorrect. Under the UCC, a modification of a contract for the sale of goods
is enforceable, even without consideration. All that is required is good faith and an
agreement for the modification between the parties. The rule is the same whether or not
the contract is between merchants.
Choice "D" is incorrect. The parol evidence rule is a rule that provides that if parties have
entered into a fully integrated written contract (i.e., one that appears to embody the entire
deal between the parties), neither party may seek to vary the terms of the written contract
by introducing evidence of prior or contemporaneous oral terms or prior written terms. The
rule does not apply to all sales contracts (only fully integrated written ones). Moreover,
under the parol evidence rule, oral or written modifications made after the contract has
been entered into are admissible.
QUESTION 30
Which of the following is a typical characteristic of a 501(c)(3) private foundation, rather
than a 501(c)(3) public charity?
A. The organization is publicly supported.
B. The organization’s primary activity is making grants to other charitable

organizations.
C. The organization directly operates charitable programs.
D. Funding is typically received from many sources, rather than a single major
source.
Explanation
Choice “B” is correct. The primary activity of most 501(c)(3) private foundations is making
grants to other charitable organizations and individuals.
Choice “A” is incorrect. Private foundations typically receive private support, such as from
a family or corporation, rather than public support from governmental units and the
general public.
Choice “C” is incorrect. Private foundations typically make grants to other charitable
organizations and individuals, rather than directly operating charitable programs.
Choice “D” is incorrect. Private foundations typically receive funding from a single major
source, such as a family or corporation, rather than funding from many sources.
QUESTION 31
Ben Willis paid self-employment taxes of $3,000 as a result of earnings from his consulting
business. The "employer" portion of these taxes are:
A. A deduction to arrive at adjusted gross income.
B. A tax credit.
C. A deduction from adjusted gross income.
D. Not deductible.
Explanation
Choice "A" is correct. One-half of the self-employed taxpayer's self-employment tax (social
security and Medicare) is for the employer portion of taxes and is an adjustment (for AGI).
The other half is personal and is not deductible.
Choices "C", "B", or "D" are incorrect, per the above discussion.
QUESTION 32
Tim and Rick cannot come to an agreement as to the exact amount Rick owes Tim. They
decide to and do form a new agreement that, on fulfillment, will discharge the prior
obligation. Rick fulfills the new terms. This is called:
A. Anticipatory repudiation.
B. A novation.
C. An accord and satisfaction.
D. Substantial performance.
Explanation
Choice "C" is correct. Where both parties agree to new terms that vary from the original
contract such that fulfilling the terms of the new agreement will discharge the old
agreement completely, it is an accord. When the agreement is fulfilled, the fulfillment is
called a satisfaction.
Choice "A" is incorrect. Anticipatory repudiation occurs when the promisor unequivocally
indicates to the promisee that he will not perform when the time comes and there are
exceutory duties on both sides of the contract. Here, neither party has indicated that he
will not perform.
Choice "B" is incorrect. A novation occurs when a new contract substitutes a new party for
an old party in an existing contract on the agreement of all parties. In this instance, there
was no new party and no substitution.
Choice "D" is incorrect. Under the common law, substantial performance has occurred if a
contractor's performance is in some way deficient, yet is so nearly equivalent that it would
be unreasonable to deny the agreed upon payment. Here there is no indication that
substantial has or has not occurred.

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QUESTION 1

C. Married filing jointly

C. Married filing jointly.

A. Jonathan’s grandparents can claim him as a dependent.

B. Jonathan’s parents can claim him as a dependent.

B. Married filing separately

D. Qualifying widow(er) with dependent child

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D. Married filing jointly.

C. Taxpayers who were divorced during the year.

B. Married filing jointly.

B. Married filing separately

D. Married filing jointly

A. Luke and John

B. Travis, Luke, and John

C. Travis and Luke

B. As an alternative to the standard deduction

C. As an adjustment to arrive at adjusted gross income

D. As a deduction from adjusted gross income separate from the standard

C. Married filing separately.

B. Married filing jointly/separately.

C. Surviving spouse (qualifying widow).

A. Married filing jointly.

A. A taxpayer with no dependents is the surviving spouse of an individual who died

D. An unmarried taxpayer maintains a household with a 28-year-old son, who

I. A dependent has lived with the taxpayer for six months.

A. Neither I nor II.

B. Both I and II.

C. Qualifying widow(er) with dependent child.

D. Married filing jointly.

B. Married filing jointly.

A. Susie, Luke, and Will

B. Susie and Will

D. Susie, Luke, John, and Will

B. Beth may claim Molly as a dependent because her AGI is lower.

C. James may claim Molly as a dependent because his AGI is higher.

D. Beth and James must alternate claiming Molly as a dependent.

B. Married filing jointly.

A. Married filing separately

D. Married filing jointly

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B. If Ryan earns $15,000 in self-employment income in addition to the part-time job

A. Heather may claim Rhett as a dependent because he is a qualifying child.

B. Heather may claim Rhett as a dependent because he is a qualifying relative.

C. Rhett fails the age limit test for a qualifying child.

A. Jackie’s parents cannot claim Jackie or Bill as dependents.

B. Jackie’s parents can claim both Jackie and Bill as dependents.

D. Jane’s grandparents cannot claim her as a dependent because Jane provided

C. Married filing jointly

C. Married filing jointly.

Choice "C" is incorrect. John's children meet QC rules.

A. Jonathan’s grandparents can claim him as a dependent.

B. Jonathan’s parents can claim him as a dependent.