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AICPA CPA Regulation Sample Questions:

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

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

2. Starr, a self-employed individual, purchased a piece of equipment for use in Starr's business. The costs
associated with the acquisition of the equipment were:

What is the depreciable basis of the equipment?

A) $58,400
B) $59,425
C) $55,000
D) $59,125

3. Under the uniform capitalization rules applicable to taxpayers with property acquired for resale, which of
the following costs should be capitalized with respect to inventory if no exceptions have been met?

A) Option D
B) Option A
C) Option B
D) Option C

4. Darr, an employee of Sorce C corporation, is not a shareholder. Which of the following would be included
in a taxpayer's gross income?

A) The fair market value of land that the taxpayer inherited from an uncle.
B) Employer-provided medical insurance coverage under a health plan.
C) The dividend income on shares of stock that the taxpayer received for services rendered.
D) A $10,000 gift from the taxpayer's grandparents.

5. Gibson purchased stock with a fair market value of $14,000 from Gibson's adult child for $12,000. The
child's cost basis in the stock at the date of sale was $16,000. Gibson sold the same stock to an unrelated
party for $18,000. What is Gibson's recognized gain from the sale?

A) $4,000
B) $6,000
C) $0
D) $2,000

Solutions: