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Enrolled Agent Review Course - Triggers and Assumptions
Memorizing an entire enrolled agent review course does not always indicate readiness to sit for the exam. There are several things they don't teach at enrolled agent school (if there were such a thing) that a student should understand before attempting the SEE exam. Even the best enrolled agent software available today is unlikely to educate prospective SEE test takers on how to take the exam.
While memory is a valuable asset for this EA exam, test-taking skills can add critical points to your results. The following fundamentals will help you hone your skills. These characteristics are common to the enrolled agent exam, and any other test for that matter.
Triggers - A trigger is an important detail or fact within a question that a test taker must understand to determine the correct answer. Common triggers include age, income, citizenship, marital status, residency, support, and use. When you recognize a trigger, consider why it is in the question. Is it important? Would changing it change the answer all together? Often there are reasons why this information is in the question. If you do not understand why something is there, take pause, and try to recall if there is a rule. If you cannot remember, choose the best answer, mark the question and return to later for review.
Assumptions - Occasionally you will encounter a question without enough details (i.e. missing a trigger). There are clearly facts that are important that are not stated, but in a perfect world should be. When this occurs, it is best to assume the most likely scenario.
Example Question: Margaret, a widow, sold 100 acres of land she and her husband paid $20,000 for in 1993. He died in 2009. As of the date of his death, the land was valued at $100,000 for estate tax purposes. Margaret sold the land for $200,000 on an installment basis. What is her gross profit percentage?
A. 90%
B. 70%
C. 50%
D. 60%
The question implies joint ownership because they paid for the property together. An important trigger you must assume to answer this question correctly is joint ownership, specifically JTWROS. In a community property state, the answer is entirely different. The trigger (state of residence) is not present. To answer correctly, you must assume they reside in a common law state, as it is more likely.
Example Question: George, a single taxpayer, has W-2 income of $31,000. During the 2009 tax year he contributed $5,500 to his traditional IRA. George has excess contributions of how much?
A. $2,500
B. $2,000
C. $500
D. None of the above.
The answer here is different if George is over age 50. The age trigger is not present, and the catch-up contributions are an extension of the normal rules. To answer correctly you must assume the more common scenario, in this case George is under age 50. If a trigger is not present, you will do better on the exam if you assume it does not apply.
Author Resource:-
Rain Hughes is the co-founder of Fast Forward Academy, a leading publisher of IRS Enrolled Agent software, Enrolled Agent review courses and continuing education for all tax professionals.
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