Vendor: Test Prep
Exam Code: CPA-REGULATION
Exam Name: CPA Regulation
Certification: Test Prep Certifications
Total Questions: 69 Q&A
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Updated on: Jun 12, 2026
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Under a $150,000 insurance policy on her deceased father's life, May Green is to receive $12,000 per year for 15 years. Of the $12,000 received in 1987, the amount subject to income tax is:
A. $0
B. $1,000
C. $2,000
D. $12,000
On December 31, 1989, a building owned by Pine Corp. was totally destroyed by fire. The building had fire insurance coverage up to $500,000. Other pertinent information as of December 31, 1989 follows:

During January 1990, before the 1989 financial statements were issued, Pine received insurance proceeds of $500,000. On what amount should Pine base the determination of its loss on involuntary conversion?
A. $520,000
B. $530,000
C. $550,000
D. $560,000
Hall, a divorced person and custodian of her 12-year old child, filed her 1990 federal income tax return as head of a household. She submitted the following information to the CPA who prepared her 1990 return:
• In 1990, Hall sold an antique that she bought in 1980 to display in her home. Hall paid $800 for the antique and sold it for $1,400, using the proceeds to pay a court ordered judgment.
The $600 gain that Hall realized on the sale of the antique should be treated as:
A. Ordinary income.
B. Long-term capital gain.
C. An involuntary conversion.
D. A nontaxable antiquities transaction.
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