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Gleim REG Final Exam Test Bank
Latest Edition 202555-2026. Questions
& Correct Verified Answers. Graded A
A contested involuntary petition in bankruptcy will be dismissed if the debtor A) Owes unsecured obligations exceeding $18,600 to fewer than three creditors. B) Had all its property taken to enforce a lien within 120 days of filing. C) Is failing to pay undisputed debts as they become due. D) Is an individual engaged in the business of farming. - ANSD A notice of disbarment or suspension of a certified public accountant from practice before the Internal Revenue Service is issued to which of the following? A) IRS employees B) Interested departments and agencies of the federal government. C) State Authorities D) All of the answers are correct - ANSD A penalty may be assessed on any preparer or A) Any person who prepares and signs a tax return or claim for refund.
B) Any member of a firm who gives advice (written or oral) to a taxpayer or to a preparer not associated with the same firm. C) Any person who prepares and signs a tax return or claim for refund and the individual with overall supervisory responsibility for the advice given by the firm with respect to the return or claim. D) The individual with overall supervisory responsibility for the advice given by the firm with respect to the return or claim. - ANSC A plan of reorganization under Chapter 11 A) May be filed by any party in interest for 120 days after entry of the order for relief. B) Must be filed by the trustee and approved by the creditors within 180 days after entry of the order for relief. C) Must treat all classes of claims and ownership interests equally. D) Must treat all claims or interests in the same class equally. - ANSD A principal will not be liable to a third party for a tort committed by an agent A) Unless the principal instructed the agent to commit the tort. B) Unless the tort was committed within the scope of the agency relationship. C) If the agency agreement limits the principal's liability for the agent's tort. D) If the tort is also regarded as a criminal act. - ANSB A tax preparer filed a return for a taxpayer and used the taxpayer's detailed check register containing both business and personal expenses. If the tax
A valid contract is formed when A) A court gives permission to parties to enter into a contract. B) It has all the elements of a contract, and the law provides a remedy if breached. C) Both parties make promises. D) The contract was made during the commission of a crime. - ANSB A valid limited partnership A) Cannot be treated as an "association" for federal income tax purposes. B) May have an unlimited number of partners. C) Is exempt from all Securities and Exchange Commission regulations. D) Must designate in its certificate the name, address, and capital contribution of each general partner and each limited partner. - ANSB After serving as an active director of Lee Corp. for 20 years, Ryan was appointed an honorary director with the obligation to attend directors' meetings with no voting power. In the current year, Ryan received an honorary director's fee of $5,000. This fee is A) Reportable by Lee as employee compensation subject to Social Security tax. B) Reportable by Ryan as self-employment income subject to Social Security self-employment tax. C) Taxable as "other income" by Ryan, not subject to any Social Security tax.
D) Considered to be a gift not subject to Social Security self-employment or income tax. - ANSB All of the following expenses incurred in the course of operating a business are deductible business expenses except A) Advertising sponsorship at public school sporting events. B) Public service advertising that keeps the name of the business before the public. C) Advertising in a concert program the local church is sponsoring. D) Advertising in a convention program of a political party. The proceeds from the publication of the program are for the local use of the political party. - ANSD All of the following payments made to employees would be currently deductible as business expenses except A) Wages paid to employees for constructing a new building to be used in the business. B) Vacation pay paid to an employee when the employee chooses not to take a vacation. C) Reasonable salary paid to a corporate officer owning a controlling interest for services she rendered. D) Lump-sum payment made to the beneficiary of a deceased employee that is reasonable in relation to the employee's past services, i.e., payment equivalent to compensation. - ANSA
What amount, if any, is the taxpayer's overpayment? A) $ B) $1, C) $2, D) $3,000 - ANSD An involuntary petition in a liquidation case under Chapter 7 of the Bankruptcy Code A) Will be denied if a majority of creditors in amount and in number have agreed to a common law composition agreement. B) Can be filed by creditors only once in a 7-year period. C) May be successfully opposed by the debtor by proof that the debtor is solvent in the balance sheet sense. D) If not contested will result in the entry of an order for relief by the bankruptcy judge. - ANSD Anderson and Decker are equal members in Andek, an LLC, which has not elected to be treated as a corporation. Anderson contributes $7,000 cash, and Decker contributes a machine with an adjusted basis of $5,000 and fair market value of $10,000, subject to a liability of $3,000. What is Decker's basis in Andek? A) $2, B) $3,
C) $5,
D) $10,000 - ANSB
Ann Mayer wrote Tom Jackson and offered to sell Jackson a building for $200,000. The offer stated it would expire 30 days from July 1. Mayer changed her mind and does not wish to be bound by the offer. If a legal dispute arises between the parties regarding whether there has been a valid acceptance of the offer, which of the following is true? A) The offer cannot be legally withdrawn for the stated period of time. B) The offer will not expire prior to the 30 days even if Mayer sells the property to a third person and notifies Jackson. C) If Jackson phoned Mayer on August 1 and unequivocally accepted the offer, a contract would be formed, provided Jackson had no notice of withdrawal of the offer. D) If Jackson categorically rejects the offer on July 10, Jackson cannot validly accept within the remaining stated period of time. - ANSD Bank Corp., a calendar-year corporation, reimburses employees for properly substantiated qualifying business meal expenses. The employees are present at the meals, which are neither lavish nor extravagant, and the reimbursement is not treated as wages subject to withholdings. For 2024, what percentage of the meal expense may Bank deduct? A) 0% B) 50% C) 80%
D) $3,600 - ANSD
Charles and Marcia are married cash-basis taxpayers. In 2024, they had interest income as follows: $500 interest on federal income tax refund $600 interest on state income tax refund $800 interest on federal government obligations $1,000 interest on state government obligations What amount of interest income is taxable on Charles and Marcia's 2024 joint income tax return? A) $ B) $1, C) $1, D) $2,900 - ANSC Clark and Lewis share profits and losses of 60% and 40%, respectively. The tax basis of each partner's interest in the partnership as of December 31, 2023, was as follows:Clark$24,000Lewis$18,000During 2024, the partnership had ordinary income of $50,000 and a long-term capital loss of $10,000 from the sale of securities. There were no distributions to the partners during 2024. What is the amount of Lewis's tax basis as of December 31, 2024? A) $44,
B) $34,
C) $38,
D) $42,000 - ANSB
Don Bradford sold a parcel of land to Heston, who promptly recorded the deed. Bradford then resold the land to Wallace. In a suit against Bradford by Wallace, recovery will be based on the theory of A) Bilateral mistake. B) Ignorance of the facts. C) Unilateral mistake. D) Fraud. - ANSD Dowling is a promoter and has decided to use a limited partnership for conducting a securities investment venture. Which of the following is unnecessary to form the partnership? A) All limited partners' capital contributions must be paid in cash. B) A state statute must recognize limited partnerships. C) A limited partnership certificate must be signed by all general partners and filed in the proper office in the state. D) The partnership must have one or more general partners and one or more limited partners. - ANSA Downs, Frey, and Vick formed the DFV General Partnership to act as manufacturers' representatives. The partners agreed Downs would receive 40% of any partnership profits and Frey and Vick would each receive 30%
C) $1,
D) $2,430 - ANSB
During 2024, Corporation G received $30,000 in dividends from a taxable domestic corporation in which G had 25% ownership. G received no other dividends. G's charitable contributions for 2024 totaled $15,000. G's taxable income for 2024 was $70,000 after the dividends-received deduction but before the deduction for charitable contributions. What is the amount of Corporation G's charitable contribution deduction for 2024? A) $7, B) $8, C) $10, D) $15,000 - ANSB During a major sports event, a taxpayer rented his primary residence to spectators for 10 days. The taxpayer's rental income and expenses were as follows: Rental income$10, Prorated mortgage and taxes1, Advertising Commissions1, How much net rental income must the taxpayer report on the tax return? A) $
B) $7,
C) $8,
D) $10,000 - ANSA
During an all-employee awards ceremony, Pedals Company gave Mollie a new bicycle for her outstanding safety record. This award was presented to Mollie for her services to the company and in accordance with Pedals's qualified employee achievement awards program. The bicycle cost Pedals $1,200 and has a fair market value of $1,700. What amount must Mollie include in income? A) $1, B) $ C) $1, D) $500 - ANSB During Year 3, Ruth Loy received interest income as follows: On U.S. Treasury certificates$3, On refund of Year 1 federal income tax The total amount of interest subject to tax in Ruth's Year 3 return is A) $ B) $ C) $3, D) $3,200 - ANSD
A) $1,
B) $3,
C) $3,
D) $6,500 - ANSA
Gero Corporation had operating income of $160,000 after deducting $10,000 for contributions to State University, but not including dividends of $2,000 received from nonaffiliated taxable domestic corporations (not from debt-financed portfolio stock). In computing the maximum allowable deduction for contributions, Gero should apply the percentage limitation to a base amount of A) $172, B) $171, C) $170, D) $162,000 - ANSA Hall, a divorced person and custodian of her 12-year-old child, filed her 2024 federal income tax return as head of a household. She submitted the following information to the CPA who prepared her 2024 return: The divorce agreement, executed in 2016, provides for Hall to receive $3,000 per month, of which $600 is designated as child support. After the child reaches 18, the monthly payments are to be reduced to $2,400 and are to continue until remarriage or death. However, for the year 2024, Hall received a total of only $5,000 from her former husband. Hall paid an attorney $2,000 in 2024 in a suit to collect the alimony owed. What amount should be reported in Hall's 2024 return as alimony income?
A) $36,
B) $28,
C) $5,
D) $0 - ANSD
Hancock, LLP, is an organization of professionals who have not incorporated. It is required to file which document with the secretary of state? A) Certificate of limited partnership. B) Statement of qualification. C) Foreign limited partnership registration. D) Partnership by estoppel. - ANSB If a person is induced to enter into a contract by another person because of the close relationship between the parties, the contract may be voidable under which of the following defenses? A) Fraud in the inducement. B) Unconscionability. C) Undue influence. D) Duress. - ANSC If an individual taxpayer's suspended passive losses and credits from an activity other than rental real estate cannot be used in the current year, they may be carried
D) $1,220,000 - ANSC
In 2024, Rusty paid $5,000 of interest on a qualified education loan. Rusty is not claimed as a dependent by another taxpayer. What is the maximum deduction available to him for the education loan interest? A) $ B) $2, C) $2, D) $7,000 - ANSC In the current year, a taxpayer reports the following items: Salary$95, Income from partnership M, in which the taxpayer materially participates45, Passive activity loss from partnership N(60,000) During the year, the taxpayer disposed of the interest in partnership N, which had a suspended loss carryover of $25,000 from prior years. What is the taxpayer's adjusted gross income for the current year? A) $55, B) $80, C) $115, D) $140,000 - ANSA
In the current year, an unmarried individual with modified adjusted gross income of $25,000 paid $1,000 interest on a qualified education loan entered into on July 1. How may the individual treat the interest for income tax purposes? A) As a $500 deduction to arrive at AGI for the year. B) As a $1,000 deduction to arrive at AGI for the year. C) As a $1,000 itemized deduction. D) As a nondeductible item of personal interest. - ANSB In which of the following situations may the tax return preparer disclose the tax return information requested without first obtaining the consent of the taxpayer/client? A) The preparer receives a state grand jury subpoena requesting copies of federal and state income tax returns. B) An IRS agent, in his or her official capacity, visits the preparer and requests copies of state and federal income tax returns, related returns, schedules, and records of the taxpayer used in the preparation of the tax returns. C) A partner in a partnership, who was not involved with the return preparation or partnership records, requests a copy of the partnership return, including the Schedule K-1s for all partners. D) All of the answers are correct. - ANSD
