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Happy Thursday!
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Norma Wahnon
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 | Tax preparer exam candidate: Use audiobooks to prepare
for the IRS test |
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The series of articles about domain six of the IRS Return Preparer Test Specifications will introduce you to the main concepts included in the domain and help you figure out what the examiners of the RTRP competency exam expect you to know about the topic of Ethics and Circular 230. Learn more by reading about the topic in the 1040examprep blog. Don't miss it!
Visit our YouTube channel and watch our video on Circular 230 Summary. Please, click the link below
1040examprep youtube channel
Stay tuned! |
Mutiple Choice Practice QuestionSection 1231 assets
Lobster, Inc. incurs the following losses on disposition of business assets during the year:
- Loss on the abandonment of office equipment $25,000
- Loss on the sale of a building (straight-line depreciation taken in prior years of $200,000) 250,000
- Loss on the sale of delivery trucks 15,000
What is the amount and character of the losses to be reported on Lobster's tax return?
a. $40,000 Section 1231 loss only.
b. $40,000 Section 1231 loss, $50,000 long-term capital loss.
c. $40,000 Section 1231 loss, $250,000 long-term capital loss.
d. $290,000 Section 1231 loss
Solution:
Choice "d" is correct. Section 1231 assets are comprised principally of depreciable personal and real property used in the taxpayer's trade or business and held for over twelve months. Trade or business property and capital assets (held over twelve months) that have been involuntarily converted are also included. All of the assets listed in this problem are Section 1231 assets. Net 1231 losses (Sec. 1231 losses less Sec. 1231 gains) are treated as ordinary losses.
(Source: Questions and answers published by AICPA) |
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Tax term definition section |
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Tax term definition - from Circular 230
"Records of the client"
"....."Records of the client include all documents or written or electronic materials provided to the practitioner, or obtained by the practitioner in the course of the practitioner's representation of the client, that pre-existed the retention of the practitioner by the client. The term also includes materials that were prepared by the client or a third party (not including an employee or agent of the practitioner) at any time and provided to the practitioner with respect to the subject matter of the representation. The term also includes any return, claim for refund, schedule, affidavit, appraisal or any other document prepared by the practitioner, or his or her employee or agent, that was
presented to the client with respect to a prior representation if such document is necessary for the taxpayer to comply with his or her current Federal tax obligations. The term does not include any return, claim for refund, schedule, affidavit, appraisal or any other document prepared by the practitioner or the practitioner's firm, employees or agents if the practitioner is withholding such document pending the client's performance of its contractual obligation to pay fees with respect to such document."
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25% OFF ON 3 STEP SYSTEM TO PREPARE FOR THE IRS EXAM IN A FEW WEEKS
This system walks you through the steps involved in your exam preparation: 1) Diagnosing and making decisions, 2) Reviewing exam materials, and 3) Preparing for the exam day. It includes the entire collection of the 1040 Exam Prep Study Guide Series -10 e-Books, 10 Slides, 20 mind maps, and 4 planning files -plus three special bonuses. Take a look here |
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NEWS! Circular230 &AMT audio is out!!! |
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