Important AICPA-Regulation CPA Exam Questions

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AICPA Regulation CPA-Regulation Exam

Attempt the Certified Public Accountant practice test and solve real exam-like CPA-Regulation questions to prepare efficiently and increase your chances of success. Our AICPA-Regulation practice questions match the actual CPA Regulation exam format, helping you enhance confidence and improve performance. With our CPA-Regulation practice exam software, you can analyze your performance, identify weak areas, and work on them effectively to boost your final Certified Public Accountant exam score.

Vendor:	AICPA
Exam Name:	CPA Regulation
Registration Code:	CPA-Regulation
Related Certification:	AICPA Certified Public Accountant Certification
Exam Track:	AICPA Managment
Exam Audience:	Account manager, Certified Public Accountant,

Total Questions

Last Updated

14-08-2026

Exam Duration

90 MINUTES

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Question: 1

On December 1, 1997, Krest, a self-employed cash basis taxpayer, borrowed $200,000 to use in her business. The loan was to be repaid on November 30, 1998. Krest paid the entire interest amount of $24,000 on December 1, 1997. What amount of interest was deductible on Krest's 1997 income tax return?

A$0

B$2,000

C$22,000

D$24,000

Answer: B

Explanation:

Choice 'b' is correct. Cash basis taxpayers deduct interest in the year paid or the year to which the interest relates, whichever is later. Even though all of the interest on this loan was paid on December 1, 1997, only the interest relating to December 1997 can be deducted in 1997. The question does not give an interest rate, but because the loan is to be repaid in a lump sum at maturity, 1/12 of the interest, or $2,000 applies to each month.

Choice 'a' is incorrect. Because $2,000 of the interest relates to 1997, this amount is deductible in 1997.

Choice 'c' is incorrect. This is the amount that cannot be deducted until 1998, the year to which the interest relates. Be sure to read questions like this very carefully, because if you had simply misread the question as seeking the amount deductible in 1998, you would get the question wrong despite understanding the rule.

Choice 'd' is incorrect. Cash basis taxpayers can deduct interest in the year paid or the year to which the interest relates, whichever is later, thus 11 months of the interest will not be deductible until 1998.

Question: 2

Adams owns a second residence that is used for both personal and rental purposes. During 2001, Adams used the second residence for 50 days and rented the residence for 200 days. Which of the following statements is correct?

ADepreciation may not be deducted on the property under any circumstances.

BA rental loss may be deducted if rental-related expenses exceed rental income.

CUtilities and maintenance on the property must be divided between personal and rental use.

DAll mortgage interest and taxes on the property will be deducted to determine the property's net income or loss.

Answer: C

Explanation:

Choice 'c' is correct. Because the second property was personally used more than 14 days, any net loss from the rental of the property will be disallowed.

All related expenses must be prorated between the personal use portion and the rental activity portion.

Prorated depreciation is permitted for the rental activity.

Question: 3

Which of the following statements is the best definition of real property?

AReal property is only land.

BReal property is all tangible property including land.

CReal property is land and intangible property in realized form.

DReal property is land and everything permanently attached to it.

Answer: D

Explanation:

Choice 'd' is correct. Real property includes land and all items permanently affixed to the land (e.g., buildings, paving, etc.)

Choice 'a' is incorrect. Real property includes more than just the land (as per the Explanation: above); it includes all items permanently affixed to land.

Choice 'b' is incorrect. 'All' tangible property could include moveable personal property and is therefore, incorrect.

Choice 'c' is incorrect. 'Intangible property in realized form' is a distracter and a contradiction in terms.

Question: 4

Tom and Joan Moore, both CPAs, filed a joint 1994 federal income tax return showing $70,000 in taxable income. During 1994, Tom's daughter Laura, age 16, resided with Tom. Laura had no income of her own and was Tom's dependent.

Determine the amount of income or loss, if any that should be included on page one of the Moores' 1994 Form 1040.

The Moores received a stock dividend in 1994 from Ace Corp. They had the option to receive either cash or Ace stock with a fair market value of $900 as of the date of distribution. The par value of the stock was $500.

A$0

B$500

C$900

D$1,000

E$1,250

F$1,300

G$1,500

H$2,000

I$2,500

J$3,000

K$10,000

L$25,000

M$50,000

N$55,000

O$75,000

Answer: C

Explanation:

'C' is correct. $900. If a taxpayer has the option of taking a dividend either in stock or in other property (e.g., cash), the dividend is taxable regardless of the option the taxpayer selects.

Question: 5

Dale received $1,000 in 1990 for jury duty. In exchange for regular compensation from her employer during the period of jury service, Dale was required to remit the entire $1,000 to her employer in 1990. In Dale's 1990 income tax return, the $1,000 jury duty fee should be:

AClaimed in full as an itemized deduction.

BClaimed as an itemized deduction to the extent exceeding 2% of adjusted gross income.

CDeducted from gross income in arriving at adjusted gross income.

DIncluded in taxable income without a corresponding offset against other income.

Answer: C

Explanation:

Choice 'c' is correct. The $1,000 jury duty fee that was required to be remitted to the employer may be deducted from gross income in arriving at adjusted gross income. This, in effect, washes out the $1,000 income she will have to report as part of gross income for the jury duty fees paid to her.

Choices 'a' and 'b' are incorrect. The amount remitted is allowed as an adjustment in arriving at AGI, not as an itemized deduction.

Choice 'd' is incorrect. A corresponding offset is allowed against other income as an adjustment in arriving at AGI.

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