Free IRS Enrolled Agent SEE Part 1 (Individuals) Specialized Returns for Individuals Practice Questions
Specialized Returns for Individuals on the IRS SEE Part 1 covers estate tax under §2010 (basic exclusion, DSUE portability via §2010(c)(4), Form 706), gift tax (annual exclusion, lifetime exemption, Form 709), and international information reporting (FBAR / Form 8938 / Form 3520 thresholds).
Sample Questions
Question 1
Easy
Form 8938 (Statement of Specified Foreign Financial Assets) is filed with the IRS in which manner?
Solution
Per the Form 8938 instructions and Treas. Reg. §1.6038D-2(a)(5), Form 8938 is attached to the taxpayer's annual income tax return — Form 1040 for an individual, Form 1120 for a corporation, etc. — and is timely filed when the income tax return (including any timely extension) is timely filed. It is NOT a separate filing with FinCEN or any specific service center.
Question 2
Medium
Which statement best describes the statutory reasonable-cause defense available against a non-willful FBAR penalty?
Solution
31 USC §5321(a)(5)(B)(ii) provides a reasonable-cause exception to the non-willful FBAR penalty only if both (i) the failure was due to reasonable cause AND (ii) the amount of the transaction or the balance in the account was properly reported on the income tax return for that year. Both prongs are required — reasonable cause alone does not suffice if the underlying income was not properly reported.
Question 3
Hard
For the IRS to be barred from later revaluing a 2025 gift after expiration of the 3-year statute of limitations on Form 709, the donor must do which of the following on the timely-filed return?
Solution
IRC §6501(c)(9) provides that the 3-year statute of limitations does not begin to run on a gift unless the gift is **adequately disclosed** on Form 709. Treas. Reg. §301.6501(c)-1(f) lists the required disclosure elements: a description of the transferred property, the identity of and relationship to the transferee, a description of any trust, the valuation method (or a qualified appraisal), and a description of any position contrary to proposed, temporary, or final Treasury regulations or revenue rulings. Once these elements are satisfied on a timely-filed Form 709, the IRS has 3 years to challenge valuation.