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SEE Exam Sample Questions For Future IRS Enrolled Agents

by
Steward Financial
on
4/7/2023
SEE Exam Sample Questions For Future IRS Enrolled Agents

IRS Enrolled Agents are specially trained tax professionals who complete extensive coursework in order to provide their clients with the best possible services, including being able to represent them in front of the IRS should the need arise.

There is a definite need for Enrolled Agents (EAs) within the tax and accounting industry. If you’re thinking about embarking on this career path, the information in this guide will help you prepare for the IRS Special Enrollment Examination (SEE).

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Credit: Witthaya Prasongsin / Getty Images

The IRS describes SEE as consisting of “multiple-choice questions that test the knowledge and skills required for an Enrolled Agent.”

In order to become an EA, testees much pass all three SEE sections:

SEE Part 1 - Individuals

SEE Part 2 - Businesses

SEE Part 3 - Representation, Practices, and Procedures

Below, you’ll find some sample questions that are designed to help you prepare for your journey to becoming a full-fledged IRS Enrolled Agent.

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Credit: Pekic / Getty Images

Sample Question 1

Circular 230, Section 10.22 requires a practitioner to exercise due diligence. Except as provided in Sec 10.34 and 10.37 a practitioner will be presumed to have exercised due diligence if the practitioner relies on:

a. Information received from the IRS taxpayer hotline.

b. Information received from the IRS practitioner hotline.

c. The work product of another person and the practitioner used reasonable care in engaging, supervising, training, and evaluating the person.

d. Information obtained on the Internet.

Except as provided in Sec 10.34 and 10.37, a practitioner will be presumed to have exercised due diligence for purposes of this section if the practitioner relies on the work product of another person and the practitioner used reasonable care in engaging, supervising, training, and evaluating the person, taking proper account of the nature of the relationship between the practitioner and the person. Therefore the only correct answer is (c).

Sample Question 2

John, a U.S. citizen, has two bank accounts in Australia – the highest values of the accounts during the year are $5,000 for Account #1 and $8,000 for Account #2. By what date must he file FinCEN Form 114 (FBAR)?

a. John is not required to file a FBAR.

b. April 15 (or October 15 with an extension) of the subsequent year.

c. June 30 of the subsequent year

d. October 30 of the subsequent year.

Answer B is the correct choice. Because the aggregate value ($13,000) of John’s foreign accounts exceeded $10,000, he is required to electronically file FinCEN Form 114 by April 15 (or October 15 with an extension) of the subsequent year.

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Credit: Alistair Berg / Getty Images

Sample Question 3

Which of the following statements about the partial disposition election is accurate?

a. Form 3115 is used to make the election.

b. If this election is made, the replacement of a fence at a taxpayer’s rental property could result in a gain or loss claimed on the taxpayer’s return for the year the fence is replaced.

c. When this election is made, the taxpayer continues to depreciate the portion of the property that has been disposed.

d. This election applies to restorations, betterments and adaptations.

This election allows taxpayers to elect to recognize gain or loss on the replacement, retirement or other disposition of a partial asset in asset classes 00.11 through 00.4 of Rev. Proc. 87-56, such as replacing a fence that is not completely depreciated. Prior to the regulations permitting this election, the old fence would have to remain on the books as part of the whole asset and if not already depreciated to zero, continue to be depreciated. No formal election is required; the election is made by applying the partial disposition provisions for the taxable year in which the portion of an asset is disposed of by the taxpayer by reporting the gain, loss, or other deduction on the taxpayer's timely filed, including extensions, original Federal tax return for that taxable year. No accounting method change is needed or allowed to make this election, so Form 3115 isn’t required. This election does not apply to betterments or an adaptation of the asset to a new or different use.

Sample Question 4

Which of the following distributions would be exempt from the 10% early withdrawal penalty?

a. An IRA distribution taken in the year the taxpayer ceased employment after turning age 55.

b. A distribution from a qualified plan after the taxpayer reached age 55 and while still employed.

c. An IRA distribution after the taxpayer reached age 55 and while still employed.

d. A qualified plan distribution after separating from service in the year the taxpayer reached age 55 or in a later year.

The answer is D. The “separation from service” exception does not apply to distributions from IRA plans, so choices A and C would not be correct. Choice B is not right because this exception does not apply if the distribution is taken while still employed, even if age 55 has been reached. Only if the taxpayer is age 59½ or over would a distribution while still in service be exempt from penalty.

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Credit: courtneyk / Getty Images

Sample Question 5

Nicholas sends a $120 gift to his favorite charity every six months. Which of the following is true?

a. He won’t need documentation to substantiate the gift because his donation is less than $250 for the year.

b. He will need a written communication from the donee organization.

c. He will need a bank record as verification of the donation.

d. He will need either a bank record or a written communication from the donee organization.

The answer is (d): For contributions of money, regardless of the amount, applicable recordkeeping requirements are satisfied only if the donor maintains as a record of the contribution either a bank record or written communication from the donee. Therefore, answer (d) is the correct answer.

Good luck with your future endeavors as you strive to become an IRS Enrolled Agent!

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Steward Financial

Steward Financial

Jon Osborn is a tax preparer based in San Dimas, California. His company, Steward Financial Services, offers a broad range of tax preparation, accounting and business consulting for small businesses. He loves to work with clients who are looking for answers to complex tax and business planning issues. He has owned several small businesses and worked with over one hundred small business owners. He helps his individual and business tax clients find the best ways to spend their money in order to minimize IRS tax. Small businesses looking to grow, sell or just increase cash flow are one of Jon's specialties.

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