IRS Enrolled Agent - SEE Part 1: Individuals (SEE-1) practice questions

Margaret Holloway inherited a parcel of investment land from her late aunt, who had owned it for nine years. Margaret sold the land four months after the date of her aunt's death and realised a gain. How is this gain classified for capital gains purposes?

• ALong-term, because property acquired from a decedent is automatically treated as held for more than one year.check_circle Correct
• BShort-term, because Margaret personally held the land for only four months before selling it.
• CLong-term only if Margaret's combined holding period plus her aunt's nine years exceeds one year.
• DShort-term, because the aunt's holding period cannot be tacked on after death.

Why A is correct: Under the inheritance rules, property acquired from a decedent receives automatic long-term treatment on sale, so the heir's actual holding period is irrelevant to classification.

Why B is wrong: This applies the ordinary holding-period count to inherited property, but property acquired from a decedent is treated as held long-term regardless of how long the heir actually owns it.

Why C is wrong: This describes a carryover or tacking concept that applies to gifts, not inheritances; inherited property does not require tacking because long-term treatment is automatic.

Why D is wrong: It is true that the aunt's period is not tacked, but the conclusion is wrong because inherited property is deemed long-term by statute rather than by tacking.

Soraya Nasrallah, who itemises, paid unreimbursed medical and dental bills during 2024 and wants to know how much she can deduct on Schedule A. Which threshold must her qualifying medical expenses exceed before any amount becomes deductible?

• A7.5 percent of her adjusted gross income, with only the portion above that floor deductible.check_circle Correct
• B2 percent of her adjusted gross income, the same floor that applied to miscellaneous itemised deductions.
• C10 percent of her adjusted gross income, the floor in effect before recent changes.
• D7.5 percent of her taxable income after the standard deduction is subtracted.

Why A is correct: Unreimbursed qualifying medical and dental expenses are deductible only to the extent they exceed 7.5 percent of adjusted gross income, and only the excess over that floor is allowed.

Why B is wrong: The 2 percent floor applied to certain miscellaneous itemised deductions that are currently suspended, not to medical expenses, so it is the wrong threshold here.

Why C is wrong: A 10 percent floor applied in some earlier years, but the medical floor is 7.5 percent of adjusted gross income for 2024, so this overstates the threshold.

Why D is wrong: The percentage is correct but the base is wrong; the floor is measured against adjusted gross income, not taxable income, so this option misstates the calculation base.

Marcus Delacroix's wife died in March 2024. He did not remarry during the year, and he has no dependants. He paid all the costs of keeping up his home for the full year. Which filing status may Marcus use for the 2024 tax return?

• AQualifying surviving spouse, because his wife died during the tax year.
• BHead of household, because he maintained the home on his own for the full year.
• CMarried filing jointly, because he is treated as married for the entire year his spouse died.check_circle Correct
• DSingle, because he was widowed before the end of the tax year.

Why A is wrong: Qualifying surviving spouse applies only to the two years AFTER the year of death and requires a dependent child, so it is unavailable both for the year of death and because Marcus has no dependants.

Why B is wrong: Head of household requires being unmarried or considered unmarried and a qualifying person in the home; Marcus is treated as married for the year and has no qualifying person, so this status does not apply.

Why C is correct: A taxpayer whose spouse dies during the year and who has not remarried by year end is considered married for that whole year and may file a joint return for the year of death.

Why D is wrong: Marital status for a decedent's final year keeps the surviving spouse as married for that year, so single is not the correct status for the year of death.