Online Access Free REG Practice Test
| Exam Code: | REG |
| Exam Name: | CPA Regulation |
| Certification Provider: | AICPA |
| Free Question Number: | 70 |
| Posted: | Jul 23, 2026 |
Don Wolf became a general partner in Gata Associates on January 1, 1989, with a 5% interest in Gata's
profits, losses, and capital. Gata is a distributor of auto parts. Wolf does not materially participate in the
partnership business. For the year ended December 31, 1989, Gata had an operating loss of $100,000.
In addition, Gata earned interest of $20,000 on a temporary investment. Gata has kept the principal
temporarily invested while awaiting delivery of equipment that is presently on order. The principal will be
used to pay for this equipment. Wolf's passive loss for 1989 is:
Hall, a divorced person and custodian of her 12-year old child, filed her 1990 federal income tax return as
head of a household. She submitted the following information to the CPA who prepared her 1990 return:
. In 1990, Hall sold an antique that she bought in 1980 to display in her home. Hall paid $800 for the
antique and sold it for $1,400, using the proceeds to pay a court ordered judgment.
The $600 gain that Hall realized on the sale of the antique should be treated as:
On December 1, 1992, Michaels, a self-employed cash basis taxpayer, borrowed $100,000 to use in her
business. The loan was to be repaid on November 30, 1993. Michaels paid the entire interest of $12,000
on December 1, 1992. What amount of interest was deductible on Michaels' 1993 income tax return?
Hall, a divorced person and custodian of her 12-year old child, filed her 1990 federal income tax return as
head of a household. She submitted the following information to the CPA who prepared her 1990 return:
. The divorce agreement, executed in 1983, provides for Hall to receive $3,000 per month, of which $600
is designated as child support. After the child reaches 18, the monthly payments are to be reduced to
$ 2,400 and are to continue until remarriage or death. However, for the year 1990, Hall received a total of
only $5,000 from her former husband. Hall paid an attorney $2,000 in 1990 in a suit to collect the alimony
owed.
. In June 1990, Hall's mother gifted her 100 shares of a listed stock. The donor's basis for this stock, which
she bought in 1970, was $4,000, and market value on the date of the gift was $3,000. Hall sold this stock
in July 1990 for $3,500. The donor paid no gift tax.
. During 1990, Hall spent a total of $1,000 for state lottery tickets. Her lottery winnings in 1990 totaled
$ 200.
. Hall earned a salary of $25,000 in 1990. Hall was not covered by any type of retirement plan, but
contributed $2,000 to an IRA in 1990.
. In 1990, Hall sold an antique that she bought in 1980 to display in her home. Hall paid $800 for the
antique and sold it for $1,400, using the proceeds to pay a court-ordered judgment.
. Hall paid the following expenses in 1990 pertaining to the home that she owns: realty taxes, $3,400;
mortgage interest, $7,000; casualty insurance, $490; assessment by city for construction of a sewer
system, $910; interest of $1,000 on a personal, unsecured bank loan, the proceeds of which were used
for home improvements. Hall does not rent out any portion of the home.
What amount should be reported in Hall's 1990 return as alimony income?