Free IRS Enrolled Agent SEE Part 1 (Individuals) Preliminary Work and Taxpayer Data Practice Questions
Preliminary Work and Taxpayer Data on the IRS SEE Part 1 covers identification verification, prior-year return review, filing requirements and status determination, dependency tests, and the information-gathering process the preparer performs before drafting Form 1040.
Sample Questions
Question 1
Easy
Which statement most accurately describes the Identity Protection PIN (IP PIN) issued by the IRS?
Solution
IRC §6109 and the IRS Identity Protection PIN program (Pub 17 and the Get an IP PIN portal) describe the IP PIN as a six-digit number known only to the taxpayer and the IRS. When entered on the federal return, it allows the IRS to confirm the filer's identity and block returns filed by an identity thief using the taxpayer's Social Security number.
Question 2
Medium
For purposes of computing the Premium Tax Credit on Form 8962, which figure is used as the taxpayer's household income?
Solution
Under IRC §36B(d)(2) and Treas. Reg. §1.36B-1(e), household income for the PTC equals the taxpayer's modified AGI (AGI plus tax-exempt interest, the nontaxable portion of Social Security benefits, and excluded foreign earned income) increased by the modified AGI of each member of the family who is required to file a federal return. Dependents who file only to claim a refund are excluded. See Form 8962 instructions.
Question 3
Hard
Priya generated a $60,000 federal net operating loss on her 2024 Form 1040 entirely from her sole proprietorship (a non-farming, non-insurance business). She filed her 2024 return on April 15, 2025 and made no carryback. Her 2025 taxable income before any NOL deduction is $80,000. Under IRC §172 as amended by TCJA, what is the maximum NOL deduction Priya may claim on her 2025 return?
Solution
For NOLs arising in tax years beginning after December 31, 2017, IRC §172(a)(2)(B) limits the deduction to 80% of taxable income computed without regard to the NOL deduction. The cap here is $80,000 × 80% = $64,000. Priya's available NOL of $60,000 is below the cap, so she deducts the full $60,000. Any unused NOL carries forward indefinitely. See Pub 536.