Practice Test Geeks(CTP) Certified Tax Professional Practice Test
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Tax Preparation & Filing Flashcards

7 cards from real CTP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Tax Preparation & Filing flashcards as text

  1. A taxpayer has $15,000 of net capital losses in the current year. How much can they deduct against ordinary income, and what happens to the remainder?

    Answer: $3,000 is deductible against ordinary income; $12,000 carries forward indefinitely

    Capital losses can offset capital gains fully, but net capital losses deductible against ordinary income are capped at $3,000 per year; the rest carries forward indefinitely.

  2. What is the 'constructive receipt' doctrine and how does it affect cash-basis taxpayers?

    Answer: Income is taxable when it is made available to the taxpayer without restriction, even if not yet physically received

    Under constructive receipt, a cash-basis taxpayer must include income when it is credited to their account or made available without restriction, even if not physically received.

  3. A taxpayer who is blind AND age 65 or older files as Single. How many additional standard deduction amounts do they receive for 2023?

    Answer: Two additional amounts

    For 2023, each condition (age 65+ and blindness) adds a separate additional standard deduction amount, so a single taxpayer who qualifies for both receives two additional amounts.

  4. Which IRS notice typically indicates the first formal step in a tax audit by correspondence?

    Answer: CP2000 — Underreporter Notice

    A CP2000 notice is issued when income reported to the IRS by third parties does not match what was reported on the return, initiating a correspondence audit process.

  5. A taxpayer pays $12,000 in qualified mortgage interest and $6,000 in state and local taxes. The standard deduction for Single is $13,850. Should they itemize?

    Answer: Yes — itemized deductions of $18,000 exceed the standard deduction

    Combined itemized deductions of $18,000 ($12,000 mortgage interest + $6,000 SALT, within the $10,000 SALT cap) exceed the $13,850 standard deduction, so itemizing saves more tax.

  6. What is the primary purpose of Form 8949?

    Answer: To report sales and dispositions of capital assets

    Form 8949 (Sales and Other Dispositions of Capital Assets) is used to report individual capital asset transactions, with totals flowing to Schedule D.

  7. Under the Affordable Care Act, what form do taxpayers who purchased insurance through the Marketplace use to reconcile the Premium Tax Credit?

    Answer: Form 8962

    Form 8962 (Premium Tax Credit) is used to reconcile the advance payments of the Premium Tax Credit received with the actual credit amount the taxpayer is entitled to based on their income.