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CPA TCP Practice Exam 4
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Comprehensive practice exam for the CPA Tax Compliance and Planning (TCP) discipline. This exam covers advanced individual and entity tax compliance, planning strategies, and property transactions, aligned with the 2026 AICPA Blueprints. It focuses on complex scenarios requiring application and analysis skills.
68
Questions
Hard
Difficulty
75%
Pass mark
Difficulty breakdown
Easy(2)
Medium(45)
Hard(21)
Topics covered
Browse all topics →Area I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea I: Individual Compliance and PlanningArea II: Entity Tax ComplianceArea II: Entity Tax ComplianceArea II: Entity Tax ComplianceArea II: Entity Tax ComplianceArea II: Entity Tax ComplianceArea II: Entity Tax ComplianceArea II: Entity Tax ComplianceArea II: Entity Tax ComplianceArea II: Entity Tax ComplianceArea II: Entity Tax ComplianceArea II: Entity Tax ComplianceArea II: Entity Tax ComplianceArea II: Entity Tax ComplianceArea II: Entity Tax ComplianceArea II: Entity Tax ComplianceArea III: Entity Tax PlanningArea III: Entity Tax PlanningArea III: Entity Tax PlanningArea III: Entity Tax PlanningArea III: Entity Tax PlanningArea III: Entity Tax PlanningArea III: Entity Tax PlanningArea III: Entity Tax PlanningArea III: Entity Tax PlanningArea III: Entity Tax PlanningArea III: Entity Tax PlanningArea III: Entity Tax PlanningArea IV: Property TransactionsArea IV: Property TransactionsArea IV: Property TransactionsArea IV: Property TransactionsArea IV: Property TransactionsArea IV: Property TransactionsArea IV: Property TransactionsArea IV: Property TransactionsArea IV: Property TransactionsArea IV: Property TransactionsArea IV: Property Transactions
Sample questions
Q01Medium1 mark
In Year 1, an executive exercises Incentive Stock Options (ISOs) to purchase 1,000 shares of company stock at a strike price of $10 per share when the fair market value is $50 per share. The executive holds the stock through the end of Year 1. For regular tax purposes, no income is recognized in Year 1. Which of the following correctly describes the Alternative Minimum Tax (AMT) implication for Year 1?
Q02Hard1 mark
A taxpayer provides an interest-free loan of $200,000 to their adult child on January 1, Year 1, to purchase a primary residence. The loan is payable on demand. The applicable federal rate (AFR) for Year 1 is 4%. The child has net investment income of $800 for Year 1. Assuming the gift tax annual exclusion is $18,000, what are the income tax implications for the lender (parent) regarding imputed interest?
Q03Medium1 mark
A taxpayer, age 15, has $4,500 of interest income and no earned income in Year 1. The taxpayer is claimed as a dependent by their parents. The standard deduction for a dependent with no earned income is $1,300. The next $1,300 is taxed at the child's rate. Amounts above that are taxed at the parents' marginal rate. If the parents' marginal tax rate is 37% and the child's rate is 10%, what is the child's tax liability for Year 1?
Q04Medium1 mark
A taxpayer anticipates their marginal tax rate will increase from 24% in Year 1 to 35% in Year 2. They have a $20,000 consulting fee they can invoice in December Year 1 (receiving payment immediately) or January Year 2. They also have a $10,000 property tax bill due in January Year 2 that can be prepaid in December Year 1. Assuming the time value of money is negligible and they itemize deductions in both years, which strategy minimizes their total tax liability over the two years?
Q05Medium1 mark
A taxpayer is subject to the safe harbor rules for estimated tax payments. Their Year 1 Adjusted Gross Income (AGI) was $160,000, and their Year 1 tax liability was $30,000. For Year 2, they project a tax liability of $40,000. To avoid the underpayment penalty for Year 2 without regard to the annualized income installment method, what is the minimum total estimated tax payment required?
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All questions (68)
Free to browse · no sign-up requiredQ01In Year 1, an executive exercises Incentive Stock Options (ISOs) to purchase 1,000 shares of company stock at a strik...MediumQ02A taxpayer provides an interest-free loan of $200,000 to their adult child on January 1, Year 1, to purchase a primar...HardQ03A taxpayer, age 15, has $4,500 of interest income and no earned income in Year 1. The taxpayer is claimed as a depend...MediumQ04A taxpayer anticipates their marginal tax rate will increase from 24% in Year 1 to 35% in Year 2. They have a $20,000...MediumQ05A taxpayer is subject to the safe harbor rules for estimated tax payments. Their Year 1 Adjusted Gross Income (AGI) w...MediumQ06A taxpayer wants to donate stock held for 5 years to a public charity. The stock has a basis of $10,000 and a fair ma...MediumQ07An individual works in a foreign country for the entire calendar Year 1. They earn $130,000 in salary. The maximum Fo...MediumQ08A taxpayer is deciding between contributing to a Traditional IRA or a Roth IRA in Year 1. They are in the 24% margina...MediumQ09In Year 1, a taxpayer invests $50,000 in a partnership activity. The taxpayer is a limited partner and does not mater...HardQ10A taxpayer owns a rental real estate activity in which they actively participate. In Year 1, the activity generates a...MediumQ11A taxpayer has three passive activities: Activity A (Income $20,000), Activity B (Loss $10,000), and Activity C (Loss...HardQ12A taxpayer sells their entire interest in a passive activity to an unrelated party in a fully taxable transaction. Th...HardQ13A taxpayer has $20,000 suspended loss under At-Risk rules and $15,000 suspended loss under Passive Activity rules for...HardQ14A donor gifts $50,000 cash to their friend in Year 1. The donor also pays $25,000 directly to a university for the fr...MediumQ15A wealthy individual wants to reduce their taxable estate. They own two assets: Asset A (Basis $100k, FMV $1M, high a...HardQ16In Year 1, a donor makes a taxable gift of $2,000,000. The donor has made no prior taxable gifts. The applicable cred...MediumQ17A married couple agrees to 'gift split' for all gifts made in Year 1. Spouse A gifts $56,000 to their niece. Spouse B...MediumQ18A donor transfers property into a revocable trust for the benefit of their child. The donor retains the right to chan...HardQ19An investor is comparing a Corporate Bond yielding 6% and a Municipal Bond yielding 4%. The investor is in the 32% ma...MediumQ20A grandparent wants to fund their grandchild's future college education while minimizing transfer taxes. They are con...MediumQ21A client holds a $1,000,000 life insurance policy on their own life. They want to ensure the proceeds are not include...MediumQ22A self-employed taxpayer (age 52) wants to maximize retirement contributions. They have net schedule C income of $300...MediumQ23An individual designates their estate as the beneficiary of their IRA. The individual dies at age 68 (before Required...HardQ24A C Corporation has a Net Operating Loss (NOL) carryforward of $100,000 arising from Year 1 (post-TCJA). In Year 2, t...MediumQ25Shareholder A contributes property (Basis $40,000, FMV $100,000) to a C Corporation in exchange for 100% of the stock...MediumQ26A C Corporation distributes land to its sole shareholder as a nonliquidating distribution. The land has a basis of $2...EasyQ27Parent Corp owns 100% of Sub Corp. In Year 1, Sub Corp sells land to Parent Corp for $500,000 (Sub's basis was $300,0...HardQ28A U.S. C Corporation owns 100% of a Foreign Corporation. The Foreign Corporation earns $500,000 of Subpart F income (...MediumQ29A U.S. Corporation is determining the source of its income. It manufactures inventory in the U.S. and sells it to cus...MediumQ30An S Corporation shareholder has a stock basis of $10,000 and a debt basis (direct loan to S Corp) of $5,000 at the b...MediumQ31An S Corporation distributes property (Basis $20,000, FMV $50,000) to its sole shareholder. The shareholder has a sto...HardQ32An S Corporation is liquidated. It distributes its only asset (Basis $100,000, FMV $150,000) to its sole shareholder....HardQ33Shareholder A sells their 50% interest in an S Corporation on June 30, Year 1 (exactly halfway through the year). The...MediumQ34An S Corporation was formerly a C Corporation and has Accumulated Earnings and Profits (AEP) of $20,000. It has an Ac...HardQ35Partner A contributes property (Basis $30,000, FMV $100,000) to a partnership for a 50% interest. The property is sub...MediumQ36A partnership distributes cash of $20,000 and property (Basis $15,000, FMV $25,000) to a partner in a nonliquidating ...MediumQ37Partner A receives a guaranteed payment of $40,000 for services rendered to the partnership. The partnership has $100...MediumQ38A partnership has a §754 election in effect. Partner A sells their 25% interest to Buyer B for $200,000. At the time ...MediumQ39Partner A contributes land (Basis $60,000, FMV $100,000) to a partnership in Year 1. In Year 3, the partnership sells...HardQ40A partner receives a liquidating distribution consisting of Cash ($10,000) and Inventory (Basis $20,000, FMV $25,000)...HardQ41A Simple Trust has $10,000 of interest income and $20,000 of capital gains allocable to corpus in Year 1. The trust i...MediumQ42A Complex Trust has DNI of $15,000. It distributes $20,000 to the sole beneficiary. $5,000 of the DNI is tax-exempt i...HardQ43Which of the following powers, if retained by the grantor, will cause a trust to be treated as a Grantor Trust for in...MediumQ44A trust has $50,000 of DNI. The trustee is required to distribute $30,000 to Beneficiary A and has discretion to dist...HardQ45A §501(c)(3) tax-exempt hospital operates a gift shop (staffed by volunteers) and a public cafeteria (staffed by paid...MediumQ46A tax-exempt organization has $5,000 of UBI from advertising and $2,000 of directly connected deductions. It also has...MediumQ47An entrepreneur plans to form a business that will incur losses for the first 3 years. They want to deduct these loss...MediumQ48A taxpayer contributes services worth $50,000 in exchange for a 20% capital interest in a new partnership. The partne...MediumQ49Compare the liquidation of a C Corporation vs. a Partnership. Both entities distribute appreciated property to their ...MediumQ50A C Corporation expects a significant increase in state income tax rates in Year 2. It uses the accrual method. It ha...MediumQ51A C Corporation has a net capital loss of $20,000 in Year 4. It had capital gains of $5,000 in Year 1, $8,000 in Year...MediumQ52A C Corporation is subject to the accumulated earnings tax. It has Accumulated Taxable Income of $200,000. It pays a ...HardQ53An S Corporation (former C Corp) sells an asset in Year 1 for a gain of $100,000. The asset was held when the S elect...HardQ54Shareholders of an S Corporation want to revoke the S election. Shareholder A owns 40%, Shareholder B owns 20%, and S...EasyQ55An S Corporation with AEP wants to distribute cash to shareholders but avoid dividend treatment. It has no AAA. What ...MediumQ56A partner plans to sell their partnership interest. They have a suspended passive loss of $10,000 from the partnershi...MediumQ57Partnership AB distributes Property X (Basis $10,000, FMV $15,000) to Partner A. Partner A contributed Property Y (Ba...HardQ58A taxpayer exchanges an office building (Basis $200,000, FMV $500,000) for a warehouse (FMV $450,000) and $50,000 cas...MediumQ59A factory is destroyed by fire. Adjusted basis was $400,000. Insurance proceeds were $600,000. The taxpayer purchases...MediumQ60A taxpayer sells a business truck (Section 1245 property) for $30,000. Original cost was $50,000. Accumulated depreci...MediumQ61A taxpayer sells an office building (Section 1250 property) for $600,000. Original cost $500,000. Straight-line depre...HardQ62A taxpayer has a net §1231 gain of $50,000 in Year 5. In Year 1, they had a net §1231 loss of $12,000 which was deduc...MediumQ63An individual (single) sells Section 1244 small business stock for a loss of $70,000. They have no capital gains. Wha...MediumQ64A taxpayer sells land (Basis $60,000) for $100,000 in Year 1. They receive $20,000 in Year 1 and a note for $80,000 p...MediumQ65A taxpayer sells a rental house to their adult child. Basis $200,000, FMV $150,000. The child later sells the house t...HardQ66Corporation A owns 60% of Corporation B. Individual X owns 40% of Corporation A. Does Individual X constructively own...MediumQ67An accrual basis corporation owes $10,000 bonus to its cash basis shareholder (who owns 60% of the stock). The bonus ...MediumQ68A taxpayer sells a building to a partnership in which they own 60% of the capital interest. The building (Basis $100,...Medium