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AICPA CPA Regulation Sample Questions:
1. Conner purchased 300 shares of Zinco stock for $30,000 in 1980. On May 23, 1994, Conner sold all the
stock to his daughter Alice for $20,000, its then fair market value. Conner realized no other gain or loss
during 1994. On July 26, 1994, Alice sold the 300 shares of Zinco for $25,000.
What was Alice's recognized gain or loss on her sale?
A) $5,000 long-term gain.
B) $5,000 short-term loss.
C) $5,000 long-term loss.
D) $0
2. Under the uniform capitalization rules applicable to taxpayers with property acquired for resale, which of
the following costs should be capitalized with respect to inventory if no exceptions have been met?
A) Option D
B) Option A
C) Option C
D) Option B
3. Baum, an unmarried optometrist and sole proprietor of Optics, buys and maintains a supply of eyeglasses
and frames to sell in the ordinary course of business. In 1999, Optics had $350,000 in gross business
receipts and its year-end inventory was not subject to the uniform capitalization rules. Baum's 1999
adjusted gross income was $90,000 and Baum qualified to itemize deductions. During 1999, Baum
recorded the following information:
Business expenses:
What amount should Baum report as 1999 net earnings from self-employment?
A) $273,000
B) $281,750
C) $243,250
D) $252,000
4. Farr made a gift of stock to her child, Pat. At the date of gift, Farr's stock basis was $10,000 and the
stock's fair market value was $15,000. No gift taxes were paid. What is Pat's basis in the stock for
computing gain?
A) $10,000
B) $0
C) $15,000
D) $5,000
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) Qualifying widow(er) with dependent child.
B) Single.
C) Married filing separately.
D) Head of household.
Solutions:
Question # 1 Answer: D | Question # 2 Answer: B | Question # 3 Answer: B | Question # 4 Answer: A | Question # 5 Answer: A |
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