Preparing for the CPA TCP (Tax Compliance & Planning) section can be challenging, especially with Task-Based Simulations (TBSs) that test your ability to apply tax rules in real-world cases. In this guide, we’ve compiled exam-style TBSs with step-by-step answers and explanations to help you master corporate taxation, individual AMT, partnerships, capital gains, and estate planning. These practice cases are designed according to the AICPA CPA Exam Blueprints to give you the most accurate and valuable preparation.
CPA TCP Task-Based Simulations (TBS)
TBS 1: Corporate Tax Return Adjustment
Scenario:
A corporation filed its tax return reporting a taxable income of $500,000. During review, the IRS auditor identified the following adjustments:
- $50,000 meals (50% deductible)
- $20,000 charitable contributions (deduction limited to 10% of taxable income)
- $15,000 penalties (nondeductible)
Task: Recalculate the adjusted taxable income.
Answer & Explanation:
- Meals deductible = $25,000
- Charitable contribution allowed = $50,000 × 10% = $50,000 cap → $20,000 is within limit → fully deductible.
- Penalties not deductible.
Adjusted taxable income = $500,000 – 25,000 – 20,000 + 15,000 = $470,000.
TBS 2: Partnership Income Allocation
Scenario:
A partnership has net income of $120,000. Partner A and Partner B share profits 60:40. Partner A also receives a guaranteed payment of $10,000.
Task: Allocate income between A and B.
Answer & Explanation:
- Step 1: Deduct guaranteed payment = 120,000 – 10,000 = 110,000 distributable income.
- Step 2: A gets guaranteed $10,000 + 60% of 110,000 = 10,000 + 66,000 = $76,000.
- Step 3: B gets 40% of 110,000 = $44,000.
TBS 3: Individual AMT (Alternative Minimum Tax)
Scenario:
Taxpayer income = $200,000. Adjustments for AMT:
- State tax deduction = $15,000 (added back)
- Depreciation difference = $5,000 (added back)
Exemption for AMT = $81,300.
Task: Compute AMTI (Alternative Minimum Taxable Income).
Answer & Explanation:
AMTI = 200,000 + 15,000 + 5,000 = $220,000.
AMT base after exemption = 220,000 – 81,300 = $138,700.
TBS 4: Capital Gains & Losses
Scenario:
A taxpayer has:
- ST Capital Gain = $12,000
- LT Capital Loss = $20,000
Task: Determine taxable capital gain/loss for the year.
Answer & Explanation:
- Netting: 12,000 – 20,000 = –8,000 net capital loss.
- Allowed deduction = $3,000 against ordinary income.
- Carryforward = $5,000 LT loss.
TBS 5: Estate Tax Valuation
Scenario:
Gross estate = $4,000,000.
Deductions:
- Funeral expenses = $20,000
- Charitable bequests = $200,000
- Debt = $500,000
Task: Calculate taxable estate.
Answer & Explanation:
Taxable estate = 4,000,000 – (20,000 + 200,000 + 500,000) = $3,280,000.
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The CPA TCP TBSs provided here give you a realistic simulation of exam-style questions. By practicing scenarios like corporate tax adjustments, AMT, partnerships, capital gains, and estate planning, you’ll strengthen your problem-solving skills and boost your confidence on exam day. Keep revising, practice regularly, and focus on application-based learning to score well.