IRS Enrolled Agent Part 1 Practice Test

Answer choices

1. A. Both forms report exactly the same property, for the described technical objective and its associated operational control requirements, as selected.
2. B. FBAR reports real estate only, for the described technical objective and its associated operational control requirements, for this decision.
3. C. Form 8938 reports only cash, for the described technical objective and its associated operational control requirements, for the required business outcome.
4. D. Form 8938 covers specified foreign financial assets, while FBAR focuses on foreign financial accounts; their scopes are not identical, for the required outcome.

Wrong-answer review

• A. Both forms report exactly the same property, for the described technical objective and its associated operational control requirements, as selected.: Incorrect. Both forms report exactly the same property. The facts must first be tested against this rule: Form 8938 applies to specified foreign financial assets when filing conditions and filing-status/residence thresholds are met; it is separate from FBAR
• B. FBAR reports real estate only, for the described technical objective and its associated operational control requirements, for this decision.: Incorrect. FBAR reports real estate only. That conclusion is too broad because Form 8938 applies to specified foreign financial assets when filing conditions and filing-status/residence thresholds are met; it is separate from FBAR
• C. Form 8938 reports only cash, for the described technical objective and its associated operational control requirements, for the required business outcome.: Incorrect. Form 8938 reports only cash. The governing distinction is that Form 8938 applies to specified foreign financial assets when filing conditions and filing-status/residence thresholds are met; it is separate from FBAR

Answer choices

1. A. Form 8857 solely because any joint-return issue is 'innocent spouse.', under the stated decision criteria.
2. B. Form 709, within the documented operational, security, ownership, and validation requirements.
3. C. Form 8379, Injured Spouse Allocation, for the described technical objective.
4. D. Form 8606, for the described technical objective and its associated operational control requirements, under this approach.

Answer choices

1. A. Carry the prior-year amount forward automatically because it appeared on a filed return, as the recommended response to this scenario.
2. B. Ignore the prior-year return and recompute the carryover only from the client's memory, as the recommended implementation across the complete governed service lifecycle.
3. C. Amend the prior-year return solely because a carryover appears on it, for the described technical objective and its associated operational control requirements, for review.
4. D. Reconcile the carryover to the prior-year return and supporting schedules, then verify the 2025 facts that affect its use, in this situation.

Answer choices

1. A. Self-employment tax, generally computed on Schedule SE, under the stated technical, operational, and governance constraints.
2. B. Household employment tax solely because the taxpayer is self-employed, in practice.
3. C. Alternative minimum tax automatically because the taxpayer owns a business, as presented.
4. D. Net Investment Income Tax on the business's earned income, within cross-functional operational-accountability boundaries.

Answer choices

1. A. There is no deadline, for the described technical objective and its associated operational control requirements, as configured.
2. B. It must be completed by year-end only, within the documented scope, ownership, and validation boundaries.
3. C. The rollover generally must be completed within 60 days unless an exception or waiver applies, for the described technical objective.
4. D. It must be completed within 10 days, for the described technical objective and its associated operational control requirements, under this approach.

Answer choices

1. A. Ignore the inconsistency because the client signed the organizer, for the described technical objective and its associated operational control requirements, under the documented operational and governance requirements.
2. B. Claim the maximum EITC and let the IRS correct it later, for the described technical objective and its associated operational control requirements, as selected.
3. C. Refuse to ask follow-up questions because preparers may rely on any client statement, as the primary implementation for the described business requirement.
4. D. Ask reasonable follow-up questions, document the inquiries and responses, apply the eligibility rules, and complete Form 8867 if the claim is supportable, within this design.

Answer choices

1. A. Only current rent receipts, for the described technical objective and its associated operational control requirements.
2. B. Original basis, capital improvements, depreciation records, and anticipated selling costs, as the recommended response to this scenario.
3. C. Only the mortgage balance, as the primary implementation for the described business requirement.
4. D. Only property-tax bills, for the described technical objective and its associated operational control requirements.

Answer choices

1. A. Start with the standard deduction and add other items only if they change the refund, for the described technical objective and its associated operational control requirements, for this requirement.
2. B. Report only information appearing on Forms W-2 and 1099 because other items are optional, for the described technical objective and its associated operational control requirements, as selected.
3. C. Calculate tax first and investigate foreign or special filings only after the return is submitted, under the organization’s defined implementation and exception-management process.
4. D. Create a complete inventory of income, adjustments, deductions, credits, payments, and any additional filing or foreign-reporting obligations, then resolve missing documents, as the proposed design for the complete governed operational workflow.

Answer choices

1. A. The annualized income installment method, if its requirements are satisfied, within the stated policy framework.
2. B. An amended return filed before the original return, for the stated scenario.
3. C. Treating the last estimated payment as though it were made in April, when applied.
4. D. Claiming the penalty as an itemized deduction, as the primary implementation for the described business requirement.

Answer choices

1. A. The full loss is always deductible against wages, for the described technical objective and its associated operational control requirements, under the documented operational and governance requirements.
2. B. Evaluate whether the special rental real estate allowance applies and whether AGI and other limitations reduce or eliminate it.
3. C. A rental loss can never offset nonpassive income, for the described technical objective and its associated operational control requirements, as described.
4. D. The loss belongs on Schedule C because active participation makes the rental a trade or business for all purposes, for the specified implementation requirement.