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AICPA CPA Regulation Sample Questions:

1. Conner purchased 300 shares of Zinco stock for $30,000 in 1980. On May 23, 1994, Conner sold all the
stock to his daughter Alice for $20,000, its then fair market value. Conner realized no other gain or loss
during 1994. On July 26, 1994, Alice sold the 300 shares of Zinco for $25,000.
What was Alice's recognized gain or loss on her sale?

A) $5,000 short-term loss.
B) $0
C) $5,000 long-term gain.
D) $5,000 long-term loss.

2. Farr made a gift of stock to her child, Pat. At the date of gift, Farr's stock basis was $10,000 and the
stock's fair market value was $15,000. No gift taxes were paid. What is Pat's basis in the stock for
computing gain?

A) $15,000
B) $10,000
C) $0
D) $5,000

3. Under the uniform capitalization rules applicable to taxpayers with property acquired for resale, which of
the following costs should be capitalized with respect to inventory if no exceptions have been met?

A) Option B
B) Option C
C) Option D
D) Option A

4. Under the uniform capitalization rules applicable to property acquired for resale, which of the following
costs should be capitalized with respect to inventory if no exceptions are met?

A) Option B
B) Option C
C) Option D
D) Option A

5. Darr, an employee of Sorce C corporation, is not a shareholder. Which of the following would be included
in a taxpayer's gross income?

A) A $10,000 gift from the taxpayer's grandparents.
B) Employer-provided medical insurance coverage under a health plan.
C) The fair market value of land that the taxpayer inherited from an uncle.
D) The dividend income on shares of stock that the taxpayer received for services rendered.

Solutions: