ENROLLED AGENT (EA) EXAM — 200 MCQs| All Three Parts | Exam Preparation & Revision

ENROLLED AGENT (EA) EXAM — 200 MCQs|
All Three Parts | Exam Preparation & Revision

📋 EXAM COVERAGE DESCRIPTION
This exam covers the full scope of the IRS Special Enrollment Examination (SEE) as
administered by Prometric on behalf of the IRS, including all three parts:

 Part 1 — Individuals: Filing requirements and status; gross income inclusions and
exclusions; adjustments to income (above-the-line deductions); itemized deductions;
credits (child tax credit, EITC, education credits, etc.); alternative minimum tax (AMT);
self-employment tax; retirement plans and IRAs; basis and capital gains/losses; passive
activity rules; at-risk rules; like-kind exchanges; installment sales; estate and gift tax
basics; tax on children's income (Kiddie Tax); home sale exclusion
 Part 2 — Businesses: Business entities (sole proprietorships, partnerships, S
corporations, C corporations, LLCs); business income and deductions; depreciation
(MACRS, Section 179, bonus depreciation); employment taxes (FICA, FUTA, SUTA);
payroll; corporate formations and distributions; partnership allocations and distributions;
S corporation eligibility and operations; farm income; business credits; at-risk and
passive activity rules for businesses; like-kind exchanges for businesses; accounting
methods; inventory methods; business use of home
 Part 3 — Representation, Practice & Procedures: Circular 230 (duties and
restrictions); practice before the IRS; IRS examination and audit procedures; collection
procedures (liens, levies, installment agreements, OIC); appeals; penalties and interest;
preparer penalties; taxpayer rights; innocent spouse relief; statute of limitations; power of
attorney (Form 2848); disclosure rules (Form 8821); Tax Court; whistleblower
provisions; PTIN requirements




PART 1 — INDIVIDUALS (Questions 1–70)


SECTION 1: FILING REQUIREMENTS & STATUS

1. A single taxpayer under age 65 must file a federal income tax return for 2024 if their gross
income is at least:

A. $10,000 B. $13,850 C. $14,600 D. $12,950 E. $15,000

,(Correct Answer: C) Rationale: For 2024, the filing threshold for a single taxpayer under age
65 equals the standard deduction for that filing status — $14,600. If gross income equals or
exceeds this amount, a return must be filed. The threshold is higher for those age 65 or older
($16,550 for 2024). Self-employment income of $400 or more triggers a filing requirement
regardless of the general gross income threshold.



2. A married couple filing jointly in 2024 where BOTH spouses are under age 65 must file if
their combined gross income is at least:

A. $25,900 B. $27,700 C. $29,200 D. $30,000 E. $26,600

(Correct Answer: C) Rationale: For 2024, the MFJ standard deduction is $29,200. A married
couple filing jointly must file a return if their gross income is at least $29,200 (both under age
65). If one spouse is 65 or older, the threshold increases by $1,550; if both are 65+, it increases
by $3,100. The filing threshold equals the applicable standard deduction for each filing status.



3. A taxpayer may use "Head of Household" filing status if they:

A. Are single with any dependent living in the home B. Are unmarried (or considered
unmarried), paid more than half the cost of keeping up a home, and a qualifying person lived in
the home for more than half the year C. Are legally separated as of December 31 of the tax year
D. Are a widow with no dependents E. Are single and support their own household with no
dependents

(Correct Answer: B) Rationale: Head of Household (HOH) status requires: (1) the taxpayer is
unmarried or considered unmarried on the last day of the tax year; (2) the taxpayer paid more
than half the cost of maintaining a home; and (3) a qualifying person (qualifying child or
qualifying relative) lived in the home for more than half the year (with an exception for
dependent parents who don't need to live in the home). HOH provides a higher standard
deduction and lower tax rates than single filing status.



4. For purposes of "qualifying relative" as a dependent, the gross income test requires the
potential dependent's gross income to be less than:

A. $4,000 B. $4,700 C. $5,050 D. $4,300 E. $3,950

(Correct Answer: C) Rationale: For 2024, a qualifying relative's gross income must be less
than $5,050 (this is the personal exemption amount used for dependency purposes, adjusted
annually for inflation). Note: the gross income test does NOT apply to qualifying children. The

,qualifying relative must also pass the relationship test, support test (taxpayer provides more than
half the support), and not be a qualifying child of anyone.



5. A taxpayer whose spouse died in 2022 and who has a dependent child may use which filing
status for 2024?

A. Married Filing Jointly B. Head of Household C. Qualifying Surviving Spouse (QSS) D.
Single E. Married Filing Separately

(Correct Answer: B) Rationale: Qualifying Surviving Spouse (QSS) status allows use of MFJ
tax rates for 2 years after the year of the spouse's death — 2022 and 2023 in this case. For 2024
(the third year after death), QSS is no longer available. If the taxpayer has a qualifying dependent
child, they may use Head of Household status in 2024. If no qualifying dependent exists, they
file as Single. QSS cannot be used in 2024 because 2 years have elapsed since the spouse's death
(2022 death → QSS available for 2022 and 2023 only).



SECTION 2: GROSS INCOME — INCLUSIONS & EXCLUSIONS

6. A taxpayer receives $5,000 from their employer as a gift during the holiday season. How is
this treated for tax purposes?

A. Excluded from income as a gift under IRC §102 B. Included in gross income as compensation
C. Excluded as a de minimis fringe benefit D. Excluded up to $1,600 as an employee
achievement award E. Included only if the employer deducts the payment

(Correct Answer: B) Rationale: Transfers from employers to employees are presumed to be
compensation, not gifts, regardless of the employer's intent or the term used. IRC §102 excludes
bona fide gifts from income, but the gift exclusion does NOT apply to transfers from employers
to employees. The $5,000 is includible in the employee's gross income as wages. The de minimis
fringe benefit exclusion applies to items of minimal value (traditional holiday gifts of nominal
value), not $5,000 cash.



7. Life insurance proceeds received by a beneficiary upon the death of the insured are generally:

A. Fully taxable as ordinary income B. Excluded from gross income under IRC §101(a) C.
Taxable only to the extent they exceed the policy's cash surrender value D. Subject to estate tax
but not income tax E. Taxable if the policy was a group term life policy

(Correct Answer: B) Rationale: IRC §101(a) provides that gross income does NOT include
amounts received under a life insurance contract paid by reason of the insured's death. This

, exclusion applies regardless of the policy amount and applies to named beneficiaries.
Exceptions: if a life insurance policy was transferred for valuable consideration (transfer for
value rule), the exclusion is limited. Interest earned on retained proceeds (not paid in a lump
sum) IS taxable.



8. An employee receives $300 per month in employer-provided parking as a qualified
transportation fringe benefit in 2024. How much is excludable?

A. $0 — all transportation benefits are taxable B. $150 per month C. $300 per month — the
entire amount, as it is within the 2024 exclusion limit D. $200 per month — the excess is taxable
E. $315 per month maximum exclusion

(Correct Answer: C) Rationale: For 2024, the monthly exclusion limit for qualified parking
(IRC §132(f)) is $315 per month. Since the employee receives only $300 per month, the entire
amount is within the exclusion limit and excludable from gross income. Qualified transportation
fringe benefits also include transit passes and van pools (same $315/month limit for 2024) and
qualified bicycle commuting reimbursements.



9. A taxpayer receives Social Security benefits of $20,000 during the year. Their other income is
$35,000 (wages). What amount of Social Security benefits is includible in gross income?

A. $0 B. $10,000 (50%) C. $17,000 (85%) D. $20,000 (100%) E. $15,000 (75%)

(Correct Answer: C) Rationale: To determine taxability of Social Security benefits, calculate
"provisional income" (modified AGI + 50% of Social Security benefits): $35,000 + $10,000 =
$45,000. For a single taxpayer: if provisional income exceeds $34,000 (upper threshold), up to
85% of benefits are includible. $45,000 > $34,000, so 85% × $20,000 = $17,000 is includible.
The maximum includible amount is always 85% of total Social Security benefits (never 100%).



10. Which of the following is EXCLUDED from an employee's gross income?

A. Cash bonuses paid by the employer B. Vacation pay C. Employer contributions to a qualified
pension plan on behalf of the employee D. Non-cash prizes won at a company raffle E. Sick pay
received after the first 6 months of disability

(Correct Answer: C) Rationale: Employer contributions to a qualified pension plan (IRC
§401(a)) on behalf of the employee are excluded from the employee's current gross income —
they are taxed when distributed (not when contributed). This is a fundamental principle of
qualified plan taxation — tax deferral on employer contributions. All other options are included
in gross income: cash bonuses (compensation), vacation pay (compensation), prizes (gross