EA Part 2 practice questions with answers
Start with 10 free businesses questions below. Choose an answer to reveal the explanation. These original teaching questions are an untimed sample, not a full SEE simulation or a pass prediction. The separate PDF contains 20 MCQs with answers and explanations.
10 free questions
Cash-method receipts
Question 1. A cash-method sole proprietor completes work in December but first receives the client's payment in January. No amount was available without restriction in December. When is that service income generally included?
Explanation after you answerConstructive receipt
Question 2. A cash-method consultant's fee is credited to an account and available without restriction on December 30. The consultant chooses to withdraw it in January. When is the income generally included?
Explanation after you answerCost of goods sold
Question 3. A retailer has beginning inventory of $12,000, purchases of $48,000, and ending inventory of $15,000. Ignore other inventory costs and adjustments. What is cost of goods sold?
Explanation after you answerBusiness loan proceeds
Question 4. A sole proprietor borrows $30,000 under a genuine obligation to repay the lender. What is the general income treatment of the loan proceeds at receipt?
Explanation after you answerEquipment cost basis
Question 5. A business pays $24,000 for equipment, $1,200 to ship it, and $800 to install it. Assume all three costs must be capitalized. What is initial cost basis?
Explanation after you answerAdjusted basis
Question 6. Business equipment has original basis of $50,000 and $18,000 of depreciation allowed or allowable. There are no other basis adjustments. What is adjusted basis?
Explanation after you answerPartnership income
Question 7. A partner is allocated $12,000 of ordinary partnership income but receives no cash distribution. Ignoring special exceptions, what is the general reporting result?
Explanation after you answerPartnership basis
Question 8. A partner begins with $20,000 of outside basis, is allocated $6,000 of income, and receives a $4,000 cash distribution. Assume no liabilities, losses, or other adjustments. What is ending basis?
Explanation after you answerBusiness and personal costs
Question 9. A sole proprietor pays $900 for personal groceries unrelated to the business. How should the payment generally be treated when calculating business deductions?
Explanation after you answerNet business income
Question 10. A sole proprietor has $90,000 of gross business income and $34,000 of fully deductible business expenses. Ignore all other adjustments and taxes. What is net business income?
Explanation after you answer
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Questions from the MiloPrep question bank. Independently authored practice, not official exam items. This short set is for learning and does not predict an exam score.
Bar scale: 0 to 85 scored questions. All domains together total 85.
How to review this Part 2 sample
After each answer, write down why the correct choice fits the supplied facts and why your alternative fails. Write the tax classification before calculating. Check cash versus accrual and constructive receipt facts. Keep an ordered roll-forward of increases and decreases. The sample is intentionally small and does not cover every topic in the official outline.
Part 2: what to distinguish while studying
Use the content outline to check coverage, then allocate extra practice to the errors you can explain. The distinctions below are study guidance, not measured candidate failure rates or an official study-hour prescription.
| Focus | Practice action | Trap |
|---|---|---|
| Entity | Write the tax classification before calculating. | A partnership and C corporation do not share one distribution rule. |
| Timing | Check cash versus accrual and constructive receipt facts. | Completing work and receiving cash are different events. |
| Basis and distributions | Keep an ordered roll-forward of increases and decreases. | Income allocation is not the same as a cash distribution. |
Swipe the table to compare all columns.
Exam format and tested tax year
Each part contains 100 multiple-choice questions in 3.5 hours: 85 scored and 15 experimental. The IRS lists 500 as the passing scaled score on a 200-800 scale; it is not a raw percentage. For the 2026 cycle, use law through December 31, 2025 and calendar year 2025 unless the question says otherwise. Verify the active bulletin before booking.
Read the entity and assumptions before calculating
The sample checks cash-method timing, constructive receipt, inventory, loan proceeds, capitalized cost, adjusted basis, partnership income and other basic business distinctions. It is not a miniature version of every Part 2 topic. In particular, success on these examples does not establish coverage of all entities or specialized returns. Use the part guide and official outline to identify what still needs practice.
Before selecting a choice, write the entity, accounting method and requested quantity. Then underline the simplifying assumptions. If liabilities and other basis adjustments are expressly excluded, do not invent them. If an amount was available without restriction, do not assume that delaying withdrawal also delays recognition. These preliminary decisions are often more important than the final subtraction.
Use the wrong choices to find the mistaken rule
A wrong choice can reveal a specific operation: adding ending inventory, leaving depreciation out of basis, or treating a distribution as the only taxable partnership income. When reviewing, identify which operation would produce your selected answer. If you cannot reproduce your own reasoning, slow down and solve the problem again before looking at another explanation.
Keep classification errors separate from arithmetic slips. Someone who knows cost of goods sold is beginning inventory plus purchases minus ending inventory needs a different repair from someone who treats all purchases as an immediate deduction. The review table connects several sample traps to the principle that should replace them.
| Topic | Wrong shortcut | Replacement rule |
|---|---|---|
| Constructive receipt | Use the withdrawal date only. | Check when the amount was available without substantial restriction. |
| Inventory | Deduct beginning inventory plus all purchases. | Subtract ending inventory under the stated simplified computation. |
| Borrowing | Treat loan proceeds as sales. | A genuine repayment obligation generally means no income at receipt. |
| Equipment basis | Exclude required freight and installation. | Include capitalized acquisition costs under the supplied assumptions. |
| Adjusted basis | Ignore depreciation not claimed. | Account for depreciation allowed or allowable. |
| Partnership allocation | Wait for a cash distribution to report income. | Separate distributive share from cash transfers. |
Swipe the table to compare all columns.
Retest with a changed transaction
After repairing the rule, change one input or one decisive fact. For inventory, use a larger ending balance and explain why current cost of goods sold falls. For cash-method income, contrast unrestricted availability in December with first availability in January. For a partnership, change a distribution while keeping income constant and explain which ledger changes.
Then mix topics so that the page heading no longer tells you which rule to use. Track correct-but-guessed answers separately and return to them. The downloadable PDF is a separate printable resource; the service is the next step for account-based study. Neither the number of attempts on this sample nor the displayed result converts to the SEE’s official scaled score.
Original worked example
Find the inventory mistake before repeating the calculation
A retailer has beginning inventory of $9,000, purchases of $36,000 and ending inventory of $11,000. Ignore other costs and adjustments. A learner deducts $45,000.
- 1The $45,000 total is goods available under the simplified facts, not cost of goods sold.
- 2Subtract the $11,000 still in ending inventory.
- 3Cost of goods sold is $9,000 + $36,000 - $11,000 = $34,000.
- 4Change ending inventory to $14,000: cost of goods sold becomes $31,000, which checks the direction of the relationship.
The repair is recognizing what remains unsold. Repeating the addition alone would preserve the original error.
Questions about this topic
Are these official IRS exam questions?
No. They are original teaching items. No affiliation, endorsement or prediction of live exam questions is implied.
Is an account required for these online questions?
No. You can answer and review the sample on this page. Account signup is a separate action for the service.
Is this the same as the emailed PDF?
The online sample and the 20-question PDF are separate resources. Do not add their counts together as a claim about unique questions.
Sources and editorial notes
Prepared by MiloPrep editorial team. The linked provisions support the rules; examples and study methods are editorial teaching material. This page does not claim review by an enrolled agent.
- PSI SEE Candidate Information Bulletin (28 August 2026)
- Question formats and content outlines, pp. 28-41; 15 experimental questions are unscored.
- Official content outlines for Parts 1, 2 and 3; question formats and domain counts.
- IRS Publication 334 (2025): Small business tax
- Business income, costs and accounting methods.
- Business income, accounting methods, costs and deductions.
- IRS Publication 541 (December 2025): Partnerships
- Distributive share, distributions and outside basis.
- IRS Publication 551 (December 2025): Basis of assets
- Acquisition costs and adjusted basis.
- Initial and adjusted basis; gifts and inherited property.
- IRS: Enrolled agents frequently asked questions
- Preparing for the exam, scheduling, carryover and test results. The passing scaled score is 500 on a 200-800 scale.
- Exam format, tested law, score reporting, scheduling and carryover rules.
For the 2026 SEE cycle, the IRS specifies law through 31 December 2025 and generally calendar year 2025. Procedural sources can be revised; use the active bulletin and the exact notice or form instructions for the applicable period.
Notes
- * Part 2: where the 85 scored questions sit: Exact scored-question counts from the outline, not percentages or historical trends. Another 15 experimental questions are unscored and are not identified during the exam. ↩ Return to content