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200+ Free CA Tax Law Specialist Practice Questions

Pass your California Certified Legal Specialist — Taxation Law exam on the first try — instant access, no signup required.

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Key Facts: CA Tax Law Specialist Exam

Open-reference

Exam Format

California Board of Legal Specialization

5+ years

CA Bar Membership Required

CBLS standards

25%

Minimum Tax Practice Time

CBLS task requirements

45 hrs

CLE Required (Tax)

CBLS education requirements

5 years

Re-Certification Cycle

CBLS standards

100

Free Practice Questions

OpenExamPrep question bank

The CA Tax Law Specialist Exam (CBLS) is an open-reference, full-day uniform-format written exam testing IRC, Subchapter C/K/J, federal tax procedure, California tax, ethics under Circular 230, and international tax. Eligibility requires 5+ years of CA Bar membership, at least 25% of practice time in tax law over the prior 3 years, task and reference requirements, and 45 hours of approved CLE. Re-certification is required every 5 years.

Sample CA Tax Law Specialist Practice Questions

Try these sample questions to test your CA Tax Law Specialist exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 200+ question experience with AI tutoring.

1Under IRC §61, gross income includes all income from whatever source derived. Which of the following is most clearly excluded from gross income?
A.A $5,000 cash prize from a radio contest
B.A $10,000 bonus from an employer
C.A $15,000 gift from the taxpayer's parent
D.Embezzled funds the taxpayer has not yet repaid
Explanation: IRC §102(a) excludes gifts and inheritances from gross income. Prize winnings (§74), employer bonuses, and even embezzled funds (James v. United States, 366 U.S. 213 (1961)) are all gross income under §61's broad sweep. The donee-gift exclusion is the textbook §61/§102 contrast.
2Under IRC §162(a), a business expense is deductible only if it is:
A.Ordinary and necessary, paid or incurred in carrying on a trade or business
B.Reasonable, regardless of whether it relates to a trade or business
C.Capital in nature and properly depreciable
D.Reimbursed by an employer or third party
Explanation: §162(a) requires that expenses be (1) ordinary and necessary, and (2) paid or incurred during the taxable year in carrying on a trade or business. Capital expenditures are governed by §263 and must be capitalized, not currently deducted.
3Taxpayer purchased equipment for $50,000 and over five years claimed $20,000 in depreciation deductions. The taxpayer sells the equipment for $40,000. What is the taxpayer's adjusted basis at sale?
A.$50,000
B.$40,000
C.$30,000
D.$20,000
Explanation: IRC §1011 defines adjusted basis as cost basis (§1012) reduced by depreciation allowed or allowable under §1016(a)(2). $50,000 cost - $20,000 depreciation = $30,000 adjusted basis. The $10,000 gain ($40,000 amount realized - $30,000 basis) is potentially §1245 depreciation recapture.
4Under IRC §1221, which of the following is NOT a capital asset?
A.Stock held by an individual investor
B.A vacation home held by an individual
C.Inventory held for sale to customers in the ordinary course of business
D.Land held for personal use
Explanation: IRC §1221(a)(1) expressly excludes inventory and property held primarily for sale to customers in the ordinary course of business from the definition of capital asset. Such property generates ordinary income, not capital gain, when sold.
5For long-term capital gain treatment under IRC §1222, a capital asset must generally be held for more than:
A.6 months
B.1 year
C.18 months
D.2 years
Explanation: IRC §1222(3) defines long-term capital gain as gain from sale or exchange of a capital asset held for more than 1 year. The holding period begins the day after acquisition and includes the day of disposition.
6Under IRC §167, the depreciation deduction is allowed for property:
A.Held for personal use only
B.Used in a trade or business or held for the production of income
C.Held as inventory
D.Held for less than one year
Explanation: §167(a) permits depreciation for property used in a trade or business (§167(a)(1)) or held for the production of income (§167(a)(2)). Personal-use property and inventory are not depreciable.
7Under §1031, like-kind exchange treatment after the TCJA applies only to:
A.Any property used in a trade or business
B.Real property held for productive use in a trade or business or for investment
C.Personal property only
D.Inventory and dealer property
Explanation: Post-TCJA (after 2017), §1031 like-kind exchange treatment is limited to real property held for productive use in a trade or business or for investment. Personal property like-kind exchanges were eliminated for exchanges completed after 2017.
8Under IRC §165(c), an individual taxpayer's deduction for losses is generally limited to losses incurred:
A.For any personal reason
B.In a trade or business; in transactions entered into for profit; or from casualty/theft (subject to current limits)
C.Only from involuntary conversions
D.Only from gambling activities
Explanation: §165(c) limits individual loss deductions to (1) trade or business losses, (2) losses in for-profit transactions not connected to a trade or business, and (3) casualty/theft losses. The TCJA further limited personal casualty losses to federally declared disasters through 2025.
9Under §1014, the basis of property acquired from a decedent generally is:
A.The decedent's adjusted basis (carryover basis)
B.Fair market value on the date of the decedent's death (stepped-up basis)
C.Zero
D.The lower of cost or fair market value
Explanation: §1014(a)(1) provides that the basis of property acquired from a decedent is the fair market value at the date of death. This 'step-up in basis' eliminates accrued gain for income tax purposes — a major estate-planning rule.
10Donor gives stock with adjusted basis of $10,000 and FMV of $50,000 to donee. Donee later sells the stock for $60,000. Donee's basis for computing gain under §1015 is:
A.$10,000
B.$50,000
C.$60,000
D.Zero
Explanation: §1015(a) provides that the donee's basis for computing gain is the donor's adjusted basis (carryover basis) when the property has appreciated in the donor's hands. Because $10,000 (basis) is less than $50,000 (FMV at gift), donee uses $10,000 to compute gain. Gain on sale = $60,000 - $10,000 = $50,000.

About the CA Tax Law Specialist Exam

The California Certified Legal Specialist Examination in Taxation Law is administered by the California Board of Legal Specialization (CBLS) of the State Bar of California. It is an open-reference, full-day written exam testing federal income tax (IRC Subchapter A), Subchapter C corporate tax, Subchapter K partnership tax, Subchapter J trust and estate fiduciary income, estate and gift tax, federal tax procedure, California taxation (FTB conformity, sales/use tax, Prop 13), IRS practice and ethics under Circular 230, and international tax reporting (FBAR, FATCA). Candidates must also satisfy task, experience, education, and reference requirements.

Questions

100 scored questions

Time Limit

Full-day written exam (open-reference)

Passing Score

Scaled — set by CBLS per administration

Exam Fee

$725 application + exam fee (California Board of Legal Specialization (CBLS), State Bar of California)

CA Tax Law Specialist Exam Content Outline

20%

Federal Income Tax

IRC Subchapter A — gross income §61, business deductions §162, basis rules, capital gains §1221 and following, depreciation §167/§168

18%

Corporate & Partnership Tax

Subchapter C corporate distributions §301-318, Subchapter K partnership allocations §704(b)/§704(c), S corporation eligibility §1361

14%

Trust & Estate Tax

Subchapter J fiduciary income taxation, estate and gift tax §2001-2058, generation-skipping transfer tax §2601

14%

Federal Tax Procedure

IRS audits and appeals, statute of limitations §6501, statutory notice of deficiency, Tax Court vs. district court vs. Court of Federal Claims jurisdiction

12%

California Tax

California Franchise Tax Board income tax conformity (R&TC), sales and use tax (CDTFA), property tax under Proposition 13

12%

IRS Practice & Ethics

Treasury Circular 230 duties, contingent fee restrictions, conflict-of-interest rules, written advice standards

10%

International Tax

FBAR FinCEN 114, FATCA §6038D Form 8938 reporting, effectively connected income vs. FDAP withholding under §1441/§1442

How to Pass the CA Tax Law Specialist Exam

What You Need to Know

  • Passing score: Scaled — set by CBLS per administration
  • Exam length: 100 questions
  • Time limit: Full-day written exam (open-reference)
  • Exam fee: $725 application + exam fee

Keys to Passing

  • Complete 500+ practice questions
  • Score 80%+ consistently before scheduling
  • Focus on highest-weighted sections
  • Use our AI tutor for tough concepts

CA Tax Law Specialist Study Tips from Top Performers

1Master IRC Subchapter A core sections — §61 gross income, §162 ordinary and necessary business expenses, §165 losses, §167-§168 depreciation, and §1221 capital asset definition
2For Subchapter K, study §704(b) substantial economic effect and §704(c) built-in gain/loss allocation rules — high-frequency essay topics
3Subchapter J fiduciary income tax requires understanding distributable net income (DNI), the tier system, and §663(b) 65-day rule for trusts
4Federal tax procedure: memorize §6501 three-year statute of limitations, §6501(e) six-year for substantial omission, and §6501(c) no SOL for fraud or unfiled returns
5California FTB largely conforms to federal IRC as of a specific date — know the conformity year and major nonconformity items (e.g., bonus depreciation, NOLs)
6Circular 230 §10.27 prohibits contingent fees except for IRS examination of an original return and judicial proceedings — common ethics trap
7FBAR FinCEN 114 threshold is $10,000 aggregate in foreign financial accounts at any time during the year; FATCA §6038D Form 8938 thresholds are higher and tax-return-attached

Frequently Asked Questions

What is the CA Tax Law Specialist exam format?

The California Certified Legal Specialist Examination in Taxation Law is a uniform-format written exam consisting of essay and short-answer questions, administered open-reference over a full day by the California Board of Legal Specialization (CBLS) of the State Bar of California.

Is the CA Tax Law Specialist exam open-book?

Yes. All CBLS legal specialization exams — including Taxation Law — are open-reference. Candidates may bring printed reference materials, but the exam tests applied analysis rather than rote rule recall.

Who is eligible to sit for the CBLS Taxation Law exam?

Candidates must be active California Bar members for at least 5 years, dedicate at least 25% of practice time to tax law during the 3 years before application, satisfy task and experience requirements, provide references from judges and attorneys, and complete 45 hours of approved CLE in tax law.

What topics are tested on the CA Tax Law Specialist exam?

The exam covers federal income tax (IRC Subchapter A), Subchapter C corporate tax, Subchapter K partnership tax, Subchapter J trusts and estates, federal tax procedure (audits, §6501 statute of limitations, deficiency notices, Tax Court), California taxation (FTB conformity, sales/use tax, Prop 13), IRS practice ethics under Circular 230, and international tax (FBAR, FATCA, ECI vs. FDAP).

How often must CBLS Tax certification be renewed?

California Certified Legal Specialists must apply for re-certification every 5 years. Re-certification requires continued substantial involvement in the specialty area, completion of ongoing CLE, and updated references.