If you are planning to take the IRS competency examination, certainly you need to know about the outline of topics that will be covered in the exam. From this article you will see that to review the IRS exam outline you need a study plan and a commitment if you are serious about becoming a Registered Tax Return Preparer.

 
In the document "Specifications for Registered Tax Return Preparer Test" released by the IRS in early September 2011, several details about the competency examination were revealed.

Specifically, regarding the content of the exam, the Internal Revenue Services published a more analytic detail about the major topics that will be covered in the competency test. The outline is divided into seven domains, each contributing a specific weighted percentage to the total content.

The seven domains include:
1.Collection of Taxpayer Data
2.How to treat Income and Assets
3.Different types of tax deductions and tax credits
4.Treatment of other taxes
5.How to complete the tax return filing process
6.Rules for applicable practices and procedures
7.Specific sub-parts on ethics in Circular 230.

 
Regarding the individual weight of each of the seven domains to the total content, it is given in a relative percentage basis. The treatment of income and assets as well as the different types of tax deductions and assets each cover 22% of the total material to review for the exam. These two domains are the more comprehensive ones and together, their contents account for almost half of the exam's outline content.

The other domains make up a lower percentage of the overall outline content. Topics related to the filing process only contribute 10%, treatment of other taxes contributes another 10% and practices and procedures rules contribute 5%. 

Each sub-domain outlines a list of topics each tied to a related and more specific tax concept. 

The overall exam content focuses on the preparation of the Form 1040 series. The material to review for the exam is extensive and will require adequate planning of time and resources from candidates to the exam. Candidates to the IRS competency examination are given the opportunity to learn more about what they can expect to find during their exam through the detailed outline analyzed here. Now is time for you immerse yourself into your preparation stage. Becoming informed about each detail of the IRS exam process will improve your chances for success

In the next issue of this Newsletteer read about "What is the List of Suggested Materials to Review?

For a complete version of the document "Specifications for Registered Tax Return Preparer Test", please visit the IRS website or our own website (www.1040examprep.com/blog)

With regard to the alimony deduction in connection with a 2010 divorce, which one of the following statements is correct?

a)  Alimony is deductible by the payor spouse, and includible by the payee spouse, to the extent that payment is contingent on the status of the divorced couple's children.

b) The divorced couple may be members of the same household at the time alimony is paid, provided that the persons do not live as husband and wife.

c)  Alimony payments must terminate on the death of the payee spouse.

d)  Alimony may be paid either in cash or in property.

The correct answer is c). To be considered alimony, cash payments must terminate on the death of the payee spouse.

a) Is incorrect because alimony payments can NEVER be contingent on the status of the divorced couple's children.

b) Is incorrect because that divorced couple cannot be members of the same household at the time the alimony is paid.

c) Is incorrect because ONLY CASH payments can be considered alimony.

(Question adapted from Wiley CPA Review-Regulation)

Tax Term: Alimony (pensión para el cónyuge divorciado)

Payment made by one spouse to another under a divorce or separation final decree, a temporary court order, or a written separation agreement. Alimony may include payments made to third parties (i.e. medical expenses, housing costs, taxes, tuition, etc.) by one spouse on behalf of the other. For alimony payments to be treated as deductible, the two spouses may not be living in the same household. However, if the alimony payment is made under a temporary order, and a divorce/separation decree is not yet final, it is okay to be living in the same home

From 1040 Exam Prep e-Books Series