Free SEE Part 2 sample questions with answers
Here are five free SEE Part 2 practice questions covering all three domains, each with a worked explanation. They are original questions written to the level of the published content outline, not real exam items, and they follow the three formats the exam uses: direct question, incomplete sentence and “all of the following EXCEPT”. All figures relate to tax year 2025, as the current exam does.
Question 1. Alex contributes land to a newly formed partnership in exchange for a 25% interest. The land has an adjusted basis to Alex of $40,000 and a fair market value of $70,000, and is not subject to any liability. What is Alex's basis in the partnership interest immediately after the contribution?
- A. $70,000
- B. $40,000
- C. $30,000
- D. $0
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Answer: B
A contribution of property to a partnership in exchange for an interest is generally tax-free, and the partner’s basis in the interest equals the adjusted basis of the property contributed, here $40,000. Fair market value does not set basis, and the $30,000 of built-in gain is deferred rather than recognised or lost. The partnership also takes a carryover basis of $40,000 in the land.
Question 2. In 2025, a sole proprietor gives holiday gifts to three clients. Each gift cost $60, not counting incidental costs such as wrapping. What is the total deduction for the gifts?
- A. $180
- B. $90
- C. $0
- D. $75
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Answer: D
The deduction for business gifts is limited to $25 per recipient per year, so three recipients allow 3 × $25 = $75. The 50% limit applies to business meals, not gifts, so $90 is wrong, and the full $180 exceeds the per-recipient cap. Incidental costs such as wrapping or shipping do not count toward the $25 limit.
Question 3. A trust's governing instrument requires all of its income to be distributed currently and makes no provision for charitable contributions. During the year it made no distributions of corpus. For the year, the trust is:
- A. A simple trust
- B. A complex trust
- C. A grantor trust
- D. A qualified disability trust
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Answer: A
A trust that must distribute all income currently, has no charitable provision and distributes no corpus during the year is a simple trust for that year. A trust failing any of those conditions is complex. Grantor trust status depends on powers retained by the grantor, not on distribution terms, and a qualified disability trust is a separate category with its own requirements.
Question 4. A calendar-year C corporation that qualifies for S status wants its election to take effect for its 2025 tax year. Without relying on late-election relief, when must it file Form 2553?
- A. At any time during 2025
- B. By the due date of the corporation’s 2025 return, including extensions
- C. No more than 2 months and 15 days after the beginning of the 2025 tax year
- D. Within one year after the end of the 2025 tax year
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Answer: C
Form 2553 must be filed no more than 2 months and 15 days after the beginning of the tax year the election is to take effect, or at any time during the preceding tax year. An election filed later in 2025 generally takes effect for 2026 instead, unless the corporation qualifies for late-election relief. The corporation’s return due date and the end of the year are not the election deadline.
Question 5. All of the following are requirements for an employer's expense reimbursement arrangement to be treated as an accountable plan, EXCEPT:
- A. The expenses must have a business connection
- B. The reimbursements must be reported as wages on the employee’s Form W-2
- C. The employee must adequately account for the expenses within a reasonable period
- D. The employee must return any excess reimbursement within a reasonable period
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Answer: B
An accountable plan requires a business connection, adequate substantiation within a reasonable period and return of any excess within a reasonable period. When those are met, reimbursements are excluded from the employee’s wages. Treating reimbursements as taxable wages is the consequence of failing the rules, a nonaccountable plan, not one of the requirements.
How did you do?
Notice what these questions reward. Question 1 is a rule you either know or do not, but the wrong options are all numbers a careful candidate might calculate — this is how Part 2 tests basis. Question 2 mixes two separate limits, the $25 gift cap and the 50% meal rule, and offers the answer you would get by applying the wrong one. Question 4 tests a deadline, and every distractor is a period that sounds reasonable but is not the rule.
Question 5 is the EXCEPT format. Three options are true; you are looking for the false one. Under time pressure it is easy to pick the first true statement you recognise, which is why the exam tips suggest rereading the stem on every EXCEPT question.
What each question tests
| Question | Domain | Topic |
|---|---|---|
| 1 | Business entities | Partner’s basis on contribution of property |
| 2 | Business tax preparation | Business gift limit |
| 3 | Specialized returns | Simple versus complex trusts |
| 4 | Business entities | S corporation election timing |
| 5 | Business tax preparation | Accountable plans |
Each domain has its own guide with three more questions: business entities, business tax preparation and specialized returns. When you are ready for something longer, the 20-question practice test is weighted like the real exam.
If you got four or five right, the study plan will probably take you less than six weeks. Two or fewer suggests the full six, or eight if business returns are new to you.