1
H&R BLOCK INCOME TAX SPECIALIST
Exam Questions with 100% Correct Answers
New Modified Graded A+ 2026 Latest
Michelle converted her personal residence to rental property in 2018. She
purchased the property in 2014 for $110,000 of which $10,000 was allocable to
the land. Unfortunately, property values in her neighborhood have declined over
the past few yrs. On the date of conversion, the FMV of the property was
$98,000; $10,000 was allocated to the land. Michelle's basis for depreciation in
the property is:
A. $88,000
B. $98,000
C. $100,000
D. $110,000
<<Correct Answers>>A
Greg purchased a new machine for use in his business. He incurred the
following costs with the purchase; $2,000 cash paid, $10,000 financed, a $500
delivery charge, and a $200 installation charge. Greg's basis on the machine is
.
A. $2,000
B. $2,700
C. $12,000
D. $12,700
,2
<<Correct Answers>>D
,3
All of the following decrease basis; EXCEPT:
A. Casualty restoration beyond bringing the property to pre-casualty condition
B. Insurance payments for a casualty loss
C. Depreciation
D. Cancelled debt
<<Correct
Answers>>A
Wyatt, who is employed full-time as a software engineer, sometimes uses his
time and talent to assist worthy causes. In 2018, he helped a local non-profit
organization create a new website. Although his primary object was to help the
organization, the directors insisted on compensating him. He received a Form
1099-MISC from the organization reporting non-employee compensation of
$2,800 in box 7. How should Wyatt report this on his tax return?
A. As other income on SCH 1 (Form 1040), line 21. He should deduct any
applicable expenses on SCH A
B. He should report income, less applicable expenses, as other income on SCH
1 (Form 1040), line 21
C. He should report this as self-employment income and deduct any eligible
expenses on SCH C or SCH C-EZ
D. Wyatt does not need to report this income since he performed the work for a
non-profit organization
Answer:C
, 4
Sam pays his 19 yr. old son, Joshua, $550/month to maintain the lawn & garden
at the family residence. Sam is subject to what household employment tax rules
for Joshua?
A. Since Joshua is not performing any child case services, the household tax
rules do not apply.
B. Since Joshua is the taxpayer's child under age 21, the household employment
tax rules do not apply.
C. Since no evidence is given that Joshua is a student, he is considered to be
Sam's household employee.
D. Since Joshua's wages are over $2,100 for the yr., Sam is subject to the
household employment tax rules for Joshua.
<<Correct Answers>>B
A taxpayer should include which of the following when figuring their federal
gross income?
A. Prior-year federal income tax refund.
B. Ordinary dividends.
C. Personal injury compensation.
D. Qualified disaster relief payments.
<<Correct Answers>>B
A taxpayer is required to file Schedule 1 (Form 1040) when claiming which of
the following?
H&R BLOCK INCOME TAX SPECIALIST
Exam Questions with 100% Correct Answers
New Modified Graded A+ 2026 Latest
Michelle converted her personal residence to rental property in 2018. She
purchased the property in 2014 for $110,000 of which $10,000 was allocable to
the land. Unfortunately, property values in her neighborhood have declined over
the past few yrs. On the date of conversion, the FMV of the property was
$98,000; $10,000 was allocated to the land. Michelle's basis for depreciation in
the property is:
A. $88,000
B. $98,000
C. $100,000
D. $110,000
<<Correct Answers>>A
Greg purchased a new machine for use in his business. He incurred the
following costs with the purchase; $2,000 cash paid, $10,000 financed, a $500
delivery charge, and a $200 installation charge. Greg's basis on the machine is
.
A. $2,000
B. $2,700
C. $12,000
D. $12,700
,2
<<Correct Answers>>D
,3
All of the following decrease basis; EXCEPT:
A. Casualty restoration beyond bringing the property to pre-casualty condition
B. Insurance payments for a casualty loss
C. Depreciation
D. Cancelled debt
<<Correct
Answers>>A
Wyatt, who is employed full-time as a software engineer, sometimes uses his
time and talent to assist worthy causes. In 2018, he helped a local non-profit
organization create a new website. Although his primary object was to help the
organization, the directors insisted on compensating him. He received a Form
1099-MISC from the organization reporting non-employee compensation of
$2,800 in box 7. How should Wyatt report this on his tax return?
A. As other income on SCH 1 (Form 1040), line 21. He should deduct any
applicable expenses on SCH A
B. He should report income, less applicable expenses, as other income on SCH
1 (Form 1040), line 21
C. He should report this as self-employment income and deduct any eligible
expenses on SCH C or SCH C-EZ
D. Wyatt does not need to report this income since he performed the work for a
non-profit organization
Answer:C
, 4
Sam pays his 19 yr. old son, Joshua, $550/month to maintain the lawn & garden
at the family residence. Sam is subject to what household employment tax rules
for Joshua?
A. Since Joshua is not performing any child case services, the household tax
rules do not apply.
B. Since Joshua is the taxpayer's child under age 21, the household employment
tax rules do not apply.
C. Since no evidence is given that Joshua is a student, he is considered to be
Sam's household employee.
D. Since Joshua's wages are over $2,100 for the yr., Sam is subject to the
household employment tax rules for Joshua.
<<Correct Answers>>B
A taxpayer should include which of the following when figuring their federal
gross income?
A. Prior-year federal income tax refund.
B. Ordinary dividends.
C. Personal injury compensation.
D. Qualified disaster relief payments.
<<Correct Answers>>B
A taxpayer is required to file Schedule 1 (Form 1040) when claiming which of
the following?
