Ea Exam Part 2

[GTS1101]

Hi All,

I am taking Part 2 of the EA Exam in September. I passed part 1 & 3 in 2008 on the first try. This section Part 2 is very challenging. I have never dealt with partnerships, corporations, or s-corps. It is also more chapters than any of the other parts. I have got through the first 10 chapters averaging about 70-75% correct in my studying. I am using the Gleim study materials. Any of you who have taken part 2 do you have any advice in the study material. There is a lot here. How can the IRS cover all of these chapters in a 100 questions. Do they only pick a few questions from each chapter. Is there one area I should focus on more than another. Or is it completely different every time. There is a lot of material to memorize or remember for this test. Just looking for some encouragement and advise. I want to pass this on the first try. I am itching to get my EA because my new mission in my tax business is to be the taxpayers advocate. My clients don't know the IRS code and they don't know how to speak the language. I want to stand up in their defense. I am passionate about my clients only paying what they are legally obligated to pay and getting them the most tax deductions allowed under the law.

Thanks!

GTS1101

[Lion]

New Exam

I took the EA exam under the old format with two parts for entities out of four. However, there was and probably still is a very strong emphasis on basis, basis, basis. Basis when repossessing after an installment sales falls through, basis upon termination of an entity, basis when leaving an entity for the one who left and the entity and the parties that remain, basis, basis, basis. Also, I felt there was much on dissolutions of entities in general as well as basis; morphing from a partnership to an s-corporation, for instance, what are the steps. You might shoot for higher than 70% on your practice tests if you get nervous at the actual event. Read the entity tax return instructions and the IRS pubs re entities. The very best of luck to you.

[OtisMozzetti]

Hi All,

averaging about 70-75% correct in my studying. I am using the Gleim study materials.
GTS1101

There is no way to be certain, but my research convinced me that the passing score cutoff ranges around 72% correct on the new exams at Prometric. Let me explain that if one scores "70-75%", that does not adequately insure against having to retake the exam since there are random variations and particularly since Gleim does not successfully anticipate all of the potential questions. In my experience, there were always some new questions that are nowhere to be found in even the better (Gleim) preparation materials. In order to become more likely assured that you won't have to retake the exam, you need to consistently score up above 80%!

One last tip is that the official outline of topics from Prometric is key, along with reading The Tax Book (DeLuxe Edition) along with selected IRS publications, instead of only Gleim.

EA in California (passed via Prometric 2006 and 2007)

[nalawson]

I agree

I agree with previous post. Print out the topics from the Prometric site and go through and make sure you have a good grasp on those areas. I found the test (all three parts) to have questions with terminology that I had not seen anywhere else.Just read through carefully. I also used Gleim.
Good luck! It felt good to have this behind me in due to possible changes in preparer requirements in the future.

[WhiteOleander]

I took the EA exam under the old format with two parts for entities out of four. However, there was and probably still is a very strong emphasis on basis, basis, basis. Basis when repossessing after an installment sales falls through, basis upon termination of an entity, basis when leaving an entity for the one who left and the entity and the parties that remain, basis, basis, basis. Also, I felt there was much on dissolutions of entities in general as well as basis; morphing from a partnership to an s-corporation, for instance, what are the steps. You might shoot for higher than 70% on your practice tests if you get nervous at the actual event. Read the entity tax return instructions and the IRS pubs re entities. The very best of luck to you.

I agree with this post. I took the test in '97 and received my card in '98. Also, believe it or not, you might do better since you have never actually prepared any of these types of returns. The EA exam is based on law and theory. If you have prepared returns, the real life "what ifs" can cloud your thinking when you read a question and make it harder to answer.

[JG EA]

When I took the EA exam (IRS) it was said that they only passed 30% of the ones taking the exam - that there was not a passing grade, just the top 30%. Does anyone know if that is true and if so did they change this to be more fair.

[WhiteOleander]

When I took the EA exam (IRS) it was said that they only passed 30% of the ones taking the exam - that there was not a passing grade, just the top 30%. Does anyone know if that is true and if so did they change this to be more fair.

I don't know for sure. I was told that it took along time to get your scores because they had to let people challenge questions they thought were confusing or unfair or couldn't not be answered for whatever reason. And I heard that they did apply a "curve" to the results.

So, you might be right.

[geekgirldany]

I agree with the 80% on practice exams. I really took my time on studying for Part 2 because there was so much more to it. I took mine in two separate years also. Exam 3 last year.

There is alot of emphasis on basis. Partnership and Corps shareholders. I did a little different than how gleim said to study. I did as they suggested until the end. I took two weeks to go back through all the practice tests. And I mean all of them. If there was a question I kept getting wrong or a section I could not understand I would print out the questions. I also made sure I study those questions the night before the exam. Even though Gleim says not to. I did not pass Part 1. I used this method and I passed it and the following parts.

It is good in a way you haven't prepared those types of returns. I had to keep telling myself not to remember how I do it in the real world but what the IRS says to do.

I passed the test in about 1 1/2 hours. Alot quicker than I thought. I really had more to remember on part one because of credits and limiations.

You should do fine I am sure

[AJsTax]

Part 2

I took (and passed on the first try) part two this past December.
Was not as hard as part one.
Know basis, penalties for missing deadlines, late filing etc. I had a lot about retirement plans. Be real solid on the differences between the various business entities. and how to get into and out of S-corp. And partnership rules!
When you are done with the 100 questions you have to do a survey and then you sit and wait and sweat it out for a couple minutes until the screen pops up and tells you if you passed or failed. A long minute or two, let me tell you!!
Not that hard if you are solid in the Gleim study and read The tax book and other materials.

Good luck!

[erchess]

Minimum Score

I passed the IRS exam in 96 on my first try and that year at least there were predetermined passing scores, but they were secret and known in advance only by a few people at the IRS or so I was told. I prepared by studying the last five old tests and by reading up in RIA on unfamiliar concepts which included everything that did not pertain to individual returns. One large storefront firm began in that year to really push becoming an EA. They had always offered employees with five or more years of experience the chance to study for the exam but that year they began their process of reimbursing employees for the cost of registering after you took the last test and really pushing the idea. Therefore my year so many more people than anticipated registered for the test that alternate testing sites had to be set up. Because more people took it, more passed. The next year the IRS (from what I have been able to piece together) completely redid the tests. One person told me that he felt like he had studied for a test in Physics and taken one about Russian Literature. The points of emphasis had changed radically. I don't know how much later the administration of the test was passed on to Prometric but I do understand that they change a lot of the questions from year to year but keep more or less the same points of emphasis.

[S T]

Too Long Ago

I passed the EA test way too long ago to offer much light on studying.

Just want to wish you the best, and it seems you have received some really good advice on what and how to study for the current testing.

Good Luck!

Sandy

[GTS1101]

I passed!

Hi Everybody,

Thanks for your input and your guidance on Part 2 of the EA Exam. I passed on Sat. It was difficult but I found it to be not as hard as Part 3 but not as easy as Part 1. I would assume the IRS changes the test up all the time because one of you said back in Dec 08 there were lots of questions on retirement plans. My test had very few of those questions. I saw lots of questions on partnerships, basis, & corporations. I know many of you recommend not using only the Gleim products but I didn't take your advice there. I exclusively used the Gleim products. I used the CD and the book. I kept reviewing going over 20 questions and then did some 100 questions tests. I studied for about three months. I passed all three parts on the first try. With the help of Gleim and lots of prayer I was successful. I am looking forward to becoming an EA in about 60 days. I am so excited about being able to help my clients out and be there advocate representing them before the IRS in all tax matters. It feels real good to accomplish this goal as there are not that many people out there who can pass this exam.

For those of you that are EA's in California did you keep renewing your CTEC registration or did you only keep your EA active?

Also any suggestions on pricing for services like typing letters for clients, or going to an audit in there place. Also what about business returns like S corps. Should I just call around other EA's and see what their fees are. I have my first S corp return which is a final short return and I have no idea on the pricing. Not looking for the fee to charge, just on suggestions on how to come to a reasonable price for these services.

Thanks!

GTS1101

[erchess]

Charge!!!

Let me know if you find any tax professional who does not consider you a close friend and is not on this board but is willing to discuss his or her fees with you. If many are then your experience is different from mine. Even if you pose as a potential customer most will want to discuss fees only in their offices and only after they have seen something in writing to indicate that you are seriously a potential client and not a competitor looking to place your fees just lower than theirs.

I would advise you to decide what your time is worth. For example you could pose as a potential customer and ask a couple of electrical and plumbing and home repair contractors for their hourly rate. You could also include a lawyer or two in your survey but I doubt you can charge as much as one of them.

I think you will find that most practitioners on this board and elsewhere charge more for an hour of their time January to April than outside that time frame. I can also say that while many of us including me present some charges to the client as if they were not time charges (a charge for each form, for example) all of us know what we are expecting to make per hour and we set piecework charges accordingly. Many of us also charge certain clients extra for being hard to work with. Also for audits get paid a retainer up front and only spend the money for personal purposes as you earn it. I personally put retainers in a non interest bearing account because lawyers in my state have to do that and I am concerned that if I earned interest on what was not my money I might end up paying it back to the clients while also reporting it as taxable interest to myself.

If you find that you have time on your hands, volunteer at the nearest Low Income Tax Controversy Clinic. You won't get paid but you will get experience.

[luke]

Congrats

Congrats on passing EA exam!

[Lion]

Congratulations!

Congratulations. The NAEA has a study on rates. I agree with deciding on an hourly rate as your starting point. Then use that as you develop per-form charges, representation charges, consulting charges, bookkeeping charges, continuing work, one-time projects, work during tax season, etc. You'll continue to alter your rates. Ask what the prior preparer charged. Sometimes you don't have to ask; it's in their QB file or on last year's Schedule A or otherwise listed as tax preparation in their documents. Who have you worked for so far and how much did they charge for your time? Join your local chapter of NAEA or another professional group and attend their meetings for education and for networking. Volunteer with VITA or another tax clinic. Keep your ears open. Someone will say, "Gee, I would've charged $750 for that," or "I would've charged only $100." Listen and learn.