Corrections

All chapters and practice questions

Every figure is now for the 2025 tax year, the basis of the July 2026 – February 2027 SEE window (for example, the standard deduction for a single filer is $15,750 and the IRA limit is $7,000 plus $1,000 catch-up). Section 2.5 lists the key 2025 and 2026 figures side by side.

Chapter 2 and the answer key overview

The SEE is administered by PSI (no longer Prometric) and reported on a 200–800 scale, with 500 needed to pass. Passed parts carry over for three years.

Digital bonuses

The 12 practice exams, the 1,000 practice questions and the 850 flashcards were rebuilt in October 2026: every answer was checked, every figure was brought to the 2025 tax year, and questions that repeated across exams were replaced with new ones. If you downloaded the bonus files before then, use the new versions from the bonus page.

Answer letters

The options were reordered so that the correct answers are spread evenly across A, B, C and D. If you have an earlier printing, match answers by their wording, not by letter.

Practice Questions 5.11, question 3

The correct answer changed in this revision. Correct answer: “Taxed at preferential capital gains rates”. Qualified dividends are taxed at lower capital gains rates.

Practice Questions 5.11, question 9

The answer key in earlier printings pointed to the wrong option. Correct answer: “Receiving additional taxable income such as wages or rental income”. Social Security may become taxable as combined income increases.

Practice Questions 6.9, question 3

The answer key in earlier printings pointed to the wrong option. Correct answer: “$2,000 net loss”. $2,000 net capital loss after netting gains and losses.

Practice Questions 6.9, question 5

The answer key in earlier printings pointed to the wrong option. Correct answer: “$10,000”. $10,000 gain; adjusted basis includes improvements.

Practice Questions 7.8, question 11

The answer key in earlier printings pointed to the wrong option. Correct answer: “Not deductible”. No documentation → deduction disallowed.

Mini Drill 9.5, question 1

The correct answer changed in this revision. Correct answer: “$4,300”. HSA self-only contribution limit for 2025 is $4,300.

Mini Drill 9.5, question 2

The correct answer changed in this revision. Correct answer: “$3,300”. Health FSA salary reduction limit for 2025 is $3,300.

Mini Drill 9.5, question 3

The correct answer changed in this revision. Correct answer: “$3,300”. Minimum deductible for HDHP family coverage in 2025 is $3,300.

Mini Drill 9.5, question 4

The correct answer changed in this revision. Correct answer: “$660”. Carryover limit = 20% of $3,300 = $660.

Practice Questions 10.5, question 12

The correct answer changed in this revision. Correct answer: “$50,000 only”. Only the $50,000 paid out is taxed twice (corporate tax, then dividend tax); the retained $150,000 is taxed once.

Practice Test, Chapters 10–12, question 30

The correct answer changed in this revision. Correct answer: “When received”. Advance rent is taxable when received, under any accounting method.

Practice Test, Chapters 13–16, question 3

The correct answer changed in this revision. Correct answer: “$50,000”. 100% bonus (permanent under OBBBA for property acquired after Jan. 19, 2025) deducts the full $50,000 in Year 1

Practice Questions 17.4, question 8

The answer key in earlier printings pointed to the wrong option. Correct answer: “They obtain written consent from all affected clients”. Written consent required for conflicts.

Full-Length Practice Exam 1, question 4

The correct answer changed in this revision. Correct answer: “$5,200”. Qualifying relative must have gross income below $5,200 (2025 threshold).

Full-Length Practice Exam 1, question 24

The correct answer changed in this revision. Correct answer: “Only if filed just to claim a refund”. Allowed ONLY if joint return filed for refund only.

Full-Length Practice Exam 1, question 26

This answer was missing from the answer key in earlier printings. Correct answer: “$88,000”. 80k + 5k + 3k = 88k gross income.

Full-Length Practice Exam 1, question 27

This answer was missing from the answer key in earlier printings. Correct answer: “$5,000”. 15k proceeds − 10k basis = 5k gain.

Full-Length Practice Exam 1, question 28

This answer was missing from the answer key in earlier printings. Correct answer: “$3,000 income”. 12k income − 9k expenses = 3k net income.

Full-Length Practice Exam 1, question 29

This answer was missing from the answer key in earlier printings. Correct answer: “$25,000”. Both unemployment and wages are taxable = 25k.

Full-Length Practice Exam 1, question 30

This answer was missing from the answer key in earlier printings. Correct answer: “Total income”. Taxable portion depends on total (combined) income.

Full-Length Practice Exam 1, question 42

The correct answer changed in this revision. Correct answer: “$6,000”. Deducted contributions have no basis, so the entire $6,000 is taxable.

Full-Length Practice Exam 1, question 51

This answer was missing from the answer key in earlier printings. Correct answer: “$85,000”. 90k income − 5k above-the-line deductions = 85k AGI.

Full-Length Practice Exam 1, question 52

This answer was missing from the answer key in earlier printings. Correct answer: “$2,500”. 10k − 7.5k (7.5% AGI floor) = 2.5k deductible.

Full-Length Practice Exam 1, question 53

This answer was missing from the answer key in earlier printings. Correct answer: “$15,000”. Under the 2025 SALT cap ($40,000; $20,000 if married filing separately), the full $15,000 is deductible.

Full-Length Practice Exam 1, question 54

This answer was missing from the answer key in earlier printings. Correct answer: “$60,000”. Cash contributions limited to 60% of AGI = $60,000.

Full-Length Practice Exam 1, question 55

This answer was missing from the answer key in earlier printings. Correct answer: “Standard”. Standard deduction ($15,750) exceeds itemized ($13,000).

Full-Length Practice Exam 1, question 56

The correct answer changed in this revision. Correct answer: “$10,000”. The full $10,000 is deductible: far below the Section 179 dollar limit and covered by the $60,000 of business income.

Full-Length Practice Exam 1, question 60

The correct answer changed in this revision. Correct answer: “$8,000”. $7,000 base + $1,000 catch-up (age 50+) = $8,000.

Full-Length Practice Exam 1, question 73

The correct answer changed in this revision. Correct answer: “No deduction”. Income above the phase-out range → no deduction (a nondeductible contribution is still allowed).

Full-Length Practice Exam 1, question 76

This answer was missing from the answer key in earlier printings. Correct answer: “$1,000”. Refundable credit $6,000 − $5,000 liability = $1,000 refund.

Full-Length Practice Exam 1, question 77

This answer was missing from the answer key in earlier printings. Correct answer: “$2,200”. $2,200 per qualifying child (2025, OBBBA).

Full-Length Practice Exam 1, question 78

This answer was missing from the answer key in earlier printings. Correct answer: “Earned income & dependents”. EIC depends on earned income and dependents.

Full-Length Practice Exam 1, question 79

This answer was missing from the answer key in earlier printings. Correct answer: “$2,500”. AOTC maximum = $2,500 per eligible student.

Full-Length Practice Exam 1, question 80

This answer was missing from the answer key in earlier printings. Correct answer: “$1,200”. With two or more qualifying children the expense limit is $6,000: $6,000 × 20% = $1,200 credit.

Full-Length Practice Exam 1, question 95

The correct answer changed in this revision. Correct answer: “$5,000 tax”. 10k − 3k = 7k; then −2k refundable = 5k tax still due (no refund).

Full-Length Practice Exam 2, question 21

The correct answer changed in this revision. Correct answer: “No gain/loss; property basis becomes $50,000”. No gain/loss; property takes the $50,000 outside basis (§732(b)).

Full-Length Practice Exam 2, question 28

The correct answer changed in this revision. Correct answer: “Included now (under any method)”. Prepaid rent is taxable when received (cash or accrual).

Full-Length Practice Exam 2, question 59

This question was replaced with a new one in this revision. Correct answer: “Form 941”. Form 941 is the quarterly employment tax return for withheld income tax and FICA; Form 940 is the annual FUTA return.

Full-Length Practice Exam 2, question 86

The correct answer changed in this revision. Correct answer: “$0”. 100k − 40k = 60k; 100% bonus on 60k → 0 left for MACRS.

Full-Length Practice Exam 2, question 97

This question was replaced with a new one in this revision. Correct answer: “Excluded from the employee’s income”. Substantiated reimbursements under an accountable plan are excluded from wages; amounts paid under a nonaccountable plan are taxable wages.

Full-Length Practice Exam 2, question 98

This question was replaced with a new one in this revision. Correct answer: “$70,000”. For 2025, the SEP limit is the lesser of 25% of compensation or $70,000.

Full-Length Practice Exam 3, question 15

The correct answer changed in this revision. Correct answer: “3 years”. Copies of advertising (broadcast recordings, direct mail and e-commerce communications) must be kept at least 36 months (3 years) from the last use.

Full-Length Practice Exam 3, question 21

The correct answer changed in this revision. Correct answer: “Indefinite loss of practice rights”. Disbarment = loss of practice rights for an indefinite period; reinstatement may be requested only after 5 years (§10.81).