AICPA CPA Regulation - REG Exam Questions

QUESTION NO: 1
An individual had the following capital gains and losses for the year:

What will be the net gain (loss) reported by the individual and at what applicable tax rate(s)?

QUESTION NO: 2
Smith, an individual calendar-year taxpayer, purchased 100 shares of Core Co. common stock for
$ 15,000 on December 15, 1992, and an additional 100 shares for $13,000 on December 30, 1992. On
January 3, 1993, Smith sold the shares purchased on December 15, 1992, for $13,000. What amount of
loss from the sale of Core's stock is deductible on Smith's 1992 and 1993 income tax returns?

QUESTION NO: 3
Elm Corp. is an accrual-basis calendar-year C corporation with 100,000 shares of voting common stock
issued and outstanding as of December 28, 1996. On Friday, December 29, 1996, Hall surrendered 2,000
shares of Elm stock to Elm in exchange for $33,000 cash. Hall had no direct or indirect interest in Elm
after the stock surrender. Additional information follows:

What amount of income did Hall recognize from the stock surrender?

QUESTION NO: 4
Gibson purchased stock with a fair market value of $14,000 from Gibson's adult child for $12,000. The
child's cost basis in the stock at the date of sale was $16,000. Gibson sold the same stock to an unrelated
party for $18,000. What is Gibson's recognized gain from the sale?

QUESTION NO: 5
In the current year Jensen had the following items:

What is Jensen's AGI for the current year?

QUESTION NO: 6
Baum, an unmarried optometrist and sole proprietor of Optics, buys and maintains a supply of eyeglasses
and frames to sell in the ordinary course of business. In 1999, Optics had $350,000 in gross business
receipts and its year-end inventory was not subject to the uniform capitalization rules. Baum's 1999
adjusted gross income was $90,000 and Baum qualified to itemize deductions. During 1999, Baum
recorded the following information:
Business expenses:

What amount should Baum report as 1999 net earnings from self-employment?

QUESTION NO: 7
Which payment(s) is(are) included in a recipient's gross income?
I. Payment to a graduate assistant for a part-time teaching assignment at a university. Teaching is not a
requirement toward obtaining the degree.
II. A grant to a Ph.D. candidate for his participation in a university-sponsored research project for the
benefit of the university.