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IRS Special Enrollment Examination (SEE) for Enrolled Agents

2. Business tax preparation: practice questions

Our Enrolled Agent (SEE) bank has 91 questions on this topic. Here are 5 of them with answers; the full mock exam draws from every topic, like the real one.

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Question 1

For 2025, the FUTA tax rate after the maximum state credit is generally:

  1. 0.6% on all wages
  2. 5.4% on the first $10,000 of wages per employee
  3. 6.0% on the first $7,000
  4. 0.6% on the first $7,000 of wages per employee
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D. 0.6% on the first $7,000 of wages per employee — FUTA is 6.0% on the first $7,000; employers who pay state unemployment tax on time get up to a 5.4% credit, for a net 0.6% (credit reduction states excepted).

Question 2

Under the uniform capitalization rules, a business that is not exempt must:

  1. Capitalize only direct materials
  2. Deduct all production costs when paid
  3. Capitalize direct costs and a share of indirect costs into inventory or produced property
  4. Expense interest on all loans
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C. Capitalize direct costs and a share of indirect costs into inventory or produced property — UNICAP requires capitalizing direct and allocable indirect costs of producing property or acquiring property for resale, unless the small business exception applies.

Question 3

Credits such as the research credit and disabled access credit are combined and claimed as:

  1. Adjustments to income
  2. The general business credit on Form 3800
  3. Refundable credits on Schedule 3, line 13
  4. Itemized deductions
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B. The general business credit on Form 3800 — Most business credits are part of the general business credit, limited by tax liability, with unused amounts carried back 1 year and forward 20 years.

Question 4

On a partnership's Schedule K-1, which item is separately stated?

  1. Rent expense
  2. Section 179 deduction
  3. Salaries paid to employees
  4. Utilities
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B. Section 179 deduction — Items that may be treated differently by each partner, such as section 179, capital gains, charitable contributions and investment interest, are separately stated.

Question 5

The 5-year lookback rule for section 1231 means:

  1. Net 1231 gain is ordinary to the extent of unrecaptured net 1231 losses of the prior 5 years
  2. Recapture applies only to property held over 5 years
  3. Losses can be carried back 5 years
  4. Section 1231 property must be held 5 years
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A. Net 1231 gain is ordinary to the extent of unrecaptured net 1231 losses of the prior 5 years — To prevent bunching losses as ordinary and gains as capital, current net 1231 gain is recharacterized as ordinary to the extent of nonrecaptured 1231 losses in the 5 prior years.

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