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C P E T e s t M a r c h / A p r i l

Two Hour Home CPE Test

The following test will provide 2 hours of CPE credits. The test questions are drawn from the articles in this issue. Please remove the form before completing the test.

INSTRUCTIONS

There are three ways to submit the test for grading: Take the test online – the fastest, most convenient way to earn CPE. You will need your login and password to take the test online. All questions must be answered before the test is complete. Once you have marked all your answers, entered your credit card information, and clicked “Submit Test and Payment,” your test will be graded immediately. Please complete the test before leaving your computer, otherwise the system will time-out and your responses will be lost. You cannot leave and return to a test. • Use the test form provided in the EA Journal (as a tear out), providing the information requested, and filling in the appropriate bubbles on the answer sheet on the back. This form should be mailed along with payment to NAEA Home CPE, 1120 Connecticut Ave NW, Ste 460, Washington, DC 20036-3953. • Use the tests and forms included with the digital version of the magazine. Complete the application, and simply circle the appropriate answer directly on the CPE test. Fax the application and test to 202-822-6270 or mail it to the address above. You must earn at least 75% on the test to pass, and you will receive an immediate email notification of your CPE hours earned. If you do not pass on the first attempt, you will have the opportunity to immediately retake the test. If you wish to retake the test at another time, you must then do so on paper and either fax or mail the form, along with a note stating that you are retaking the online test.

Members $35, Nonmembers $45 for 20 questions. Payment must be submitted with completed test form for test to be processed. Those who do not pass the first time will have a second chance to take and pass the test without additional payment. See the test form for payment choice options.

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TAx COURT CORNER: DETERmININg BUSINESS USE PORTION Of A RESIDENCE1. Any personal use of a room or segregated area will disallow its use in computing an office-in-home deduction except: A. De minimis personal useB. Inventory storageC. Use to meet clients or customersD. Records storage

2. Non-business passage from one room to another is considered personal use and therefore disqualifies the area from the office-in-home calculation.A. TrueB. False

3. Use of the business area by family members if for only a few days will:A. Be considered de minimis and the deduction will be allowedB. Disqualify the area from the office-in-home calculation

4. In the Rayden case the Tax Court allowed what percentage of the home for business purposes?A. 60.4%B. 25.8%C. 44.3%D. 48.5%

mAKINg SElf-RENTAlS WORK RIgHT5. “Self-Rental” refers to the rental of:A. Real estateB. Tangible personal propertyC. Intangible personal propertyD. None of the above

6. Which of the following is true?A. Net self-rental income/loss is netted with other Schedule E activities to determine deductible passive loss or incomeB. Net self-rental income is deemed to be non-passive in natureC. Net self-rental loss is considered passive in natureD. All of the aboveE. B and C

7. In the Cox case the Tax Court ruled that:A. Material participation in a business of one spouse is treated as partici-pation of the other spouseB. It is permissible for one spouse to report rental of jointly-owned space to the other spouse’s partnership without limitationsC. It is permissible for one spouse to report rental of half of jointly-owned space to the other spouse’s partnership but the partner spouse cannot deduct the rent paid for his or her halfD. None of the above

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8. A business may benefit from the vacation rental rules if the residence or other property is used only rarely for business purposes.A. TrueB. False

9. To avoid disallowance of self-rental status the owner/landlord should:A. Have a written lease agreementB. Actually write rent checks from the business to the landlordC. Establish a rental rate comparable to similar properties in the areaD. All of the above

10. The IRS considers self-rental a “related-party” transaction.A. TrueB. False

11. A sole proprietor or single member llC may want to deduct self-rental over an 8829 deduc-tion because:A. It could generate a loss on Schedule CB. The business use is not regular and exclusiveC. Get a higher deductionD. None of the aboveE. All of the above

AmENDINg THE PARTNERSHIP RETURN12. To qualify as a “small partnership” and therefore not under TEfRA, the partnership must have:A. Fewer than ten partners at any one time during the taxable yearB. No partners that are passthrough entitiesC. Only individuals as partnersD. A and CE. A and B

13. A partnership with a single member llC or a living trust as a partner may qualify as a small partnership.A. TrueB. False

14. Under TEfRA a partnership is required to file which form when wishing to amend the partnership return?A. Form 8802B. Form 8082C. Form 8282D. Form 1065X

15. A completed corrected form 1065 must be filed with the administrative adjustment request (AAR).A. TrueB. False

16. An AAR filed as a claim for refund must be filed by:A. The tax matters partner (TMP)B. Any partner having a more than 25% interest in the partnershipC. Any partner

17. When an AAR is filed as a substituted return, the IRS will automatically conduct a partnership-level audit.A. TrueB. False

18. What is the recourse for a partnership when the IRS either takes no action or disallows an AAR claim for refund?A. None. The decision is final.B. Simply have the partners amend their individual returns to reflect the changesC. The TMP may file a petition for adjustment with the U.S. Tax Court

TAx RESEARCH SERvICE19. There has been increased concern about penalties for tax preparers and the need to demonstrate substantial authority. IRC Sec. 6694(a)(2)(A) requires that positions be sup-ported by “substantial authority.”A. TrueB. False

20. Reg. Sec. 1.6662-4(d)(3)(iii) identifies such substantial authority to include the Internal Revenue Code, Treasury regulations (including proposed and temporary), revenue rulings and revenue procedures, tax treaties, committee reports, and primary research sources.A. TrueB. False

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