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AICPA CPA Regulation Sample Questions:

1. 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) Single.
B) Married filing separately.
C) Head of household.
D) Qualifying widow(er) with dependent child.

2. Under a $150,000 insurance policy on her deceased father's life, May Green is to receive $12,000 per
year for 15 years. Of the $12,000 received in 1987, the amount subject to income tax is:

A) $2,000
B) $1,000
C) $0
D) $12,000

3. Tom and Joan Moore, both CPAs, filed a joint 1994 federal income tax return showing $70,000 in taxable
income. During 1994, Tom's daughter Laura, age 16, resided with Tom. Laura had no income of her own
and was Tom's dependent.
Determine the amount of income or loss, if any that should be included on page one of the Moores' 1994
Form 1040.
The Moores had no capital loss carryovers from prior years. During 1994, the Moores had the following
stock transactions, which resulted in a net capital loss:

A) $900
B) $1,500
C) $2,000
D) $2,500
E) $1,000
F) $3,000
G) $1,250
H) $55,000
I) $0
J) $25,000
K) $10,000
L) $50,000
M) $75,000
N) $500
O) $1,300

4. Among which of the following related parties are losses from sales and exchanges not recognized for tax
purposes?

A) Ancestors, lineal descendants, and all in-laws.
B) Grandfather and granddaughter.
C) Father-in-law and son-in-law.
D) Brother-in-law and sister-in-law.

5. Greller owns 100 shares of Arden Corp., a publicly-traded company, which Greller purchased on January
1 , 2001, for $10,000. On January 1, 2003, Arden declared a 2-for-1 stock split when the fair market value
(FMV) of the stock was $120 per share. Immediately following the split, the FMV of Arden stock was $62
per share. On February 1, 2003, Greller had his broker specifically sell the 100 shares of Arden stock
received in the split when the FMV of the stock was $65 per share. What is the basis of the 100 shares of
Arden sold?

A) $5,000
B) $6,500
C) $6,200
D) $6,000

Solutions: