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CPA TCP Practice Exam 5
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Comprehensive practice exam for the CPA Tax Compliance and Planning (TCP) discipline, aligned with the 2026 AICPA Blueprints. This exam covers advanced individual and entity tax compliance, tax planning strategies, and property transactions.
68
Questions
Hard
Difficulty
75%
Pass mark
Difficulty breakdown
Easy(10)
Medium(40)
Hard(17)
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 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 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 Transactions
Sample questions
Q01Medium1 mark
In Year 1, an executive is granted an Incentive Stock Option (ISO) to purchase 1,000 shares of company stock at an exercise price of $10 per share (the fair market value on the grant date). In Year 3, when the stock is worth $25 per share, the executive exercises the option. In Year 5, the executive sells the stock for $40 per share. Assume the executive meets all holding period requirements for ISO treatment. What are the regular tax and Alternative Minimum Tax (AMT) implications in Year 3 (the year of exercise)?
Q02Medium1 mark
A taxpayer has a $500,000 interest-free loan from their employer outstanding for the entire Year 1. The applicable federal rate (AFR) is 4%. The loan is compensation-related. The taxpayer has net investment income of $800. Which of the following correctly describes the tax consequences to the employee and employer for Year 1?
Q03Medium1 mark
A taxpayer wants to donate stock held for 5 years to a public charity. The stock has an adjusted basis of $20,000 and a fair market value (FMV) of $50,000. The taxpayer's AGI is $100,000. The taxpayer wants to maximize their current year charitable deduction. Which strategy yields the highest deductible amount for the current year, assuming the relevant percentage limitations are 30% of AGI for FMV contributions of capital gain property and 50% of AGI for basis contributions?
Q04Medium1 mark
An individual taxpayer had an AGI of $160,000 in Year 1 and a tax liability of $30,000. In Year 2, the taxpayer expects an AGI of $200,000 and a tax liability of $45,000. To avoid the underpayment penalty for Year 2 without paying more than necessary during the year, what is the minimum required annual estimated tax payment?
Q05Hard1 mark
A taxpayer invests $50,000 cash for a 20% interest in a partnership. The partnership takes out a $200,000 nonrecourse loan (secured only by real estate) and a $100,000 recourse loan. The taxpayer is not personally liable for the nonrecourse debt but bears economic risk of loss for their share of the recourse debt. The activity incurs a loss of $90,000 in Year 1. The taxpayer does not materially participate. What is the taxpayer's at-risk amount at the end of Year 1 before considering the loss?
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All questions (67)
Free to browse · no sign-up requiredQ01In Year 1, an executive is granted an Incentive Stock Option (ISO) to purchase 1,000 shares of company stock at an ex...MediumQ02A taxpayer has a $500,000 interest-free loan from their employer outstanding for the entire Year 1. The applicable fe...MediumQ03A taxpayer wants to donate stock held for 5 years to a public charity. The stock has an adjusted basis of $20,000 and...MediumQ04An individual taxpayer had an AGI of $160,000 in Year 1 and a tax liability of $30,000. In Year 2, the taxpayer expec...MediumQ05A taxpayer invests $50,000 cash for a 20% interest in a partnership. The partnership takes out a $200,000 nonrecourse...HardQ06In Year 1, a taxpayer has the following income and losses:<br/>- Salary: $120,000<br/>- Income from Partnership A (Ma...HardQ07A taxpayer owns a passive activity that has $40,000 of suspended losses from prior years. In Year 2, the taxpayer sel...MediumQ08A taxpayer gives their child a gift of $100,000 in Year 1. The annual gift tax exclusion for Year 1 is $18,000. The t...EasyQ09A married couple agrees to 'gift split' for all gifts made in Year 1. The annual exclusion is $18,000 per donee. One ...MediumQ10A taxpayer holds two assets: Asset A (Basis $10,000, FMV $100,000) and Asset B (Basis $100,000, FMV $80,000). The tax...HardQ11A child (age 14) has $5,000 of interest income and no earned income in Year 1. The standard deduction for a dependent...MediumQ12A taxpayer, age 45, is deciding between contributing $7,000 to a Traditional IRA (deductible) or a Roth IRA (non-dedu...HardQ13A C Corporation has a Net Operating Loss (NOL) of $100,000 generated in Year 2. In Year 3, the corporation has taxabl...MediumQ14A C Corporation distributes land to its sole shareholder as a nonliquidating distribution. The land has a basis of $4...MediumQ15Parent Corp owns 100% of Sub Corp. They file a consolidated return. In Year 1, Parent sells land to Sub for $150,000 ...MediumQ16An S Corporation distributes property with a fair market value of $50,000 and an adjusted basis of $70,000 to its sol...MediumQ17A shareholder of an S Corporation has a stock basis of $10,000 and a debt basis of $5,000 (from a direct loan to the ...HardQ18Partner A contributes land with a basis of $60,000 and FMV of $100,000 to a partnership for a 50% interest. The land ...MediumQ19A partnership distributes cash of $10,000 and property (Basis $15,000, FMV $20,000) to a partner in a nonliquidating ...MediumQ20Partner X sells their 1/3 interest in a partnership to Buyer Y for $100,000. The partnership has assets with a basis ...HardQ21A complex trust has Distributable Net Income (DNI) of $40,000 (all ordinary income). The trust instrument requires a ...HardQ22A tax-exempt organization (501(c)(3)) operates a gift shop. The shop sells items related to its exempt purpose (books...MediumQ23A U.S. citizen works in France for the entire Year 1. They earn $110,000 in salary. The maximum Foreign Earned Income...EasyQ24A taxpayer is forming a new business and expects losses for the first 3 years, followed by significant profits. The t...MediumQ25A C Corporation is subject to the Accumulated Earnings Tax (AET). Its taxable income is $500,000. Federal income taxe...MediumQ26An S Corporation was formerly a C Corporation. At the time of conversion, it had $100,000 of Net Unrealized Built-in ...HardQ27A taxpayer exchanges a warehouse used in business (Basis $200,000, FMV $300,000) for an apartment building (FMV $280,...MediumQ28A taxpayer sells a machine used in business for $50,000. The machine was purchased for $60,000 and has accumulated de...MediumQ29A taxpayer sells an office building (real property) for $500,000. Original cost was $400,000. Accumulated straight-li...HardQ30A taxpayer sells property to their adult child for $40,000. The property had an adjusted basis of $60,000. Two years ...MediumQ31A taxpayer holds §1244 small business stock purchased for $200,000. The taxpayer is single. The stock becomes worthle...EasyQ32A taxpayer sells property for $100,000 in Year 1. The adjusted basis was $40,000. The buyer pays $20,000 in Year 1 an...MediumQ33An S Corporation has Accumulated Earnings and Profits (AEP) of $20,000 from C Corp years. The Accumulated Adjustments...HardQ34A partnership makes a guaranteed payment of $50,000 to a partner for services. The partnership has $100,000 of ordina...MediumQ35A taxpayer has a short-term capital loss of $10,000 and a long-term capital gain of $4,000 in Year 1. The taxpayer al...EasyQ36A C Corporation owns 80% of a foreign subsidiary. The subsidiary pays a dividend of $100,000 to the US parent. The su...HardQ37A taxpayer has a $30,000 loss from a rental real estate activity in which they actively participate. Their MAGI is $1...MediumQ38An individual taxpayer sells §1202 Qualified Small Business Stock (QSBS) acquired in Year 1 (after 2010) and held for...EasyQ39A taxpayer is subject to the Alternative Minimum Tax (AMT) in Year 1. They paid $10,000 in state income taxes and $15...MediumQ40A partnership distributes a marketable security (Basis $20,000, FMV $35,000) to a partner in a nonliquidating distrib...MediumQ41A taxpayer contributes property with a basis of $100,000 and FMV of $150,000 to a C Corporation for 100% of the stock...MediumQ42A taxpayer is considering investing in a Municipal Bond yielding 3% or a Corporate Bond yielding 5%. The taxpayer's m...EasyQ43A taxpayer sells stock to their brother for $5,000. The taxpayer's basis was $8,000. The brother subsequently sells t...HardQ44An S Corporation distributes appreciated property (Basis $10,000, FMV $100,000) to its sole shareholder in a liquidat...MediumQ45A taxpayer has a Health Savings Account (HSA). In Year 1, they contribute $4,000 (the maximum allowed for self-only c...MediumQ46A taxpayer sells 100 shares of Stock X for a loss of $5,000 on December 15, Year 1. On January 5, Year 2, the taxpaye...EasyQ47A taxpayer is a general partner in a partnership that operates a trade or business. The partnership income is $100,00...MediumQ48A C Corporation distributes cash of $50,000 to a shareholder. The corporation has Current E&P of $10,000 and Accumula...HardQ49A taxpayer owns a life insurance policy with a cash surrender value of $50,000 and a basis (premiums paid) of $20,000...MediumQ50A partnership has two partners, A and B. Partner A contributes Property X (Basis $10,000, FMV $20,000). Partner B con...HardQ51A taxpayer owns a rental house. In Year 1, the house is destroyed by fire. Adjusted basis was $100,000. Insurance pro...MediumQ52A taxpayer receives a non-qualified stock option (NSO) with a readily ascertainable fair market value of $5,000 at th...HardQ53A C Corporation has current year E&P of $50,000 and accumulated E&P of $20,000. It distributes land (Basis $10,000, F...MediumQ54A taxpayer has a net §1231 gain of $20,000 in Year 5. In Years 1-4, the taxpayer had net §1231 losses of $8,000 (Year...MediumQ55A taxpayer is the beneficiary of a simple trust. The trust has $10,000 of ordinary income and $5,000 of long-term cap...MediumQ56A taxpayer contributes $5,000 to a 529 Qualified Tuition Program in Year 1. In Year 5, the account is worth $8,000. T...MediumQ57A C Corporation has $100,000 of taxable income. It makes a charitable contribution of $20,000. What is the allowable ...EasyQ58An S Corporation elects to treat a distribution as coming from Accumulated E&P rather than the Accumulated Adjustment...HardQ59A taxpayer receives a gift of property with a basis of $10,000 and FMV of $8,000. The taxpayer sells the property lat...MediumQ60A taxpayer has $100,000 in a Traditional IRA (all pre-tax). They convert it to a Roth IRA in Year 1. The value is $10...MediumQ61A C Corporation has a net capital loss of $20,000 in Year 4. In Years 1, 2, and 3, it had capital gains of $5,000, $8...MediumQ62A taxpayer sells their principal residence for a $400,000 gain. They are single and lived in the home for 18 months d...MediumQ63A partnership distributes cash of $30,000 to a partner in liquidation of their interest. The partner's basis was $20,...EasyQ64A taxpayer has Net Investment Income of $5,000 and Investment Interest Expense of $8,000. What is the deduction allowed?EasyQ66A taxpayer sells a passive activity with $20,000 of suspended losses to their brother. What happens to the suspended ...HardQ67A taxpayer has a Net Operating Loss (NOL) from a farming business in Year 1. What is the carryback period?MediumQ68A taxpayer owns a vacation home used 30 days for personal use and rented for 100 days. Rental income is $10,000. Expe...Medium