Practice Test Geeks(ABA) Accredited Business Accountant Practice Test
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Tax Preparation & Compliance Flashcards

7 cards from real ABA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Tax Preparation & Compliance flashcards as text

  1. A self-employed individual earns $90,000 in net self-employment income. What is the deductible portion of self-employment tax on Form 1040?

    Answer: One-half of the calculated SE tax

    Self-employed individuals may deduct one-half of their self-employment tax as an above-the-line deduction on Form 1040.

  2. Which form is used to report wages, tips, and other compensation paid to employees and the taxes withheld?

    Answer: Form W-2

    Form W-2 (Wage and Tax Statement) is issued by employers to report employee wages and withholdings to both employees and the IRS.

  3. An accrual-basis taxpayer receives payment in December for services to be performed in February of the next year. When must the income generally be recognized?

    Answer: December, when cash is received

    Under the claim of right doctrine, income received without restriction must be reported in the year received, even for accrual-basis taxpayers.

  4. Which of the following is an 'above-the-line' deduction for an individual taxpayer?

    Answer: Student loan interest

    Student loan interest (up to $2,500) is an above-the-line deduction, reducing AGI without requiring itemization.

  5. A married couple filing jointly has AGI of $130,000. What is the maximum annual IRA contribution limit per person for 2024?

    Answer: $7,000

    For 2024, the IRA contribution limit is $7,000 per person (or $8,000 for those age 50+), subject to income phase-outs for deductibility.

  6. A business owner uses their personal vehicle 60% for business. The vehicle cost $40,000. Using the actual expense method, what is the maximum depreciable basis for business use?

    Answer: $24,000

    The depreciable business-use basis is $40,000 × 60% = $24,000, since only the business-use percentage of the cost qualifies.

  7. Which tax form is required for a partnership to report its income, deductions, and credits to the IRS?

    Answer: Form 1065

    Form 1065 (U.S. Return of Partnership Income) is the information return filed by partnerships, with income flowing through to partners via Schedule K-1.