200+ Free TX Tax Law Specialist Practice Questions

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2026 Statistics

Key Facts: TX Tax Law Specialist Exam

~6 hours

Exam length (3-hr essays + ~100 MCQ)

Texas Board of Legal Specialization

350

Scaled passing score

Texas Board of Legal Specialization

$2.65M

2026 Texas franchise tax no-tax-due threshold

Texas Comptroller of Public Accounts

8.25%

Maximum combined Texas sales and use tax rate

Texas Comptroller of Public Accounts

$15M

2026 federal estate/gift basic exclusion (IRC 2010)

Internal Revenue Service

100+

Free practice questions here

OpenExamPrep question bank

Texas Board Certified - Tax Law certification, administered by the Texas Board of Legal Specialization (TBLS), requires active Texas Bar membership, substantial involvement in tax law, qualifying experience, tax CLE, and peer references, plus passing a roughly six-hour exam (three morning essays + about 100 afternoon multiple-choice questions; 350 scaled passing score). The exam tests federal individual income tax (IRC 61, 121, 199A, 1221-1222), business entity taxation across Subchapter C, S, and K (IRC 11, 301, 311, 351, 368, 1361, 1366, 704, 731, 752), estate and gift tax (IRC 2010 $15M 2026 exclusion, 2503 $19,000 annual exclusion, 2036, 2042, 2056, 2601), IRS practice and procedure (IRC 6213 90-day petition, 6501/6511 limitations, 6330 CDP, 6662/6672 penalties, 7122 OIC), Texas franchise/margin tax (Tax Code 171; 2026 $2.65M no-tax-due threshold) and sales/use tax (8.25% maximum), plus planning and exempt-organization rules. Texas imposes no state personal income, estate, or inheritance tax.

Sample TX Tax Law Specialist Practice Questions

Try these sample questions to test your TX 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.

1An unmarried individual has $90,000 of wages, $4,000 of qualified dividends, and $2,000 of municipal bond interest in 2026. Which item is excluded from gross income under the Internal Revenue Code?

A.The municipal bond interest

B.The wages

C.The qualified dividends

D.All three items are fully taxable

Explanation: Under IRC 103, interest on most state and municipal bonds is excluded from gross income. Wages (IRC 61) and dividends (IRC 61, taxed at preferential capital-gains rates under IRC 1(h) if qualified) are includible.

2A cash-method taxpayer performs services in December 2025 and receives a check from the client on December 28, 2025, but does not deposit it until January 3, 2026. When is the income recognized?

A.2026, when the check is deposited

B.2025, under the doctrine of constructive receipt

C.Either year, at the taxpayer's election

D.Never, because a check is not cash

Explanation: Under the constructive-receipt doctrine (Treas. Reg. 1.451-2), income is taxed when it is credited, set apart, or otherwise made available so the taxpayer may draw upon it. Receipt of an unrestricted check in 2025 means the income is constructively received in 2025 even if cashed later.

3An individual sells stock held for 18 months at a $10,000 gain and stock held for 4 months at a $3,000 gain. How is the gain characterized for federal income tax?

A.$13,000 long-term capital gain

B.$13,000 short-term capital gain

C.$10,000 long-term capital gain and $3,000 short-term capital gain

D.$13,000 ordinary income

Explanation: Under IRC 1222, gain on a capital asset held more than one year is long-term; gain on an asset held one year or less is short-term. The 18-month holding produces long-term gain ($10,000) and the 4-month holding produces short-term gain ($3,000).

4A taxpayer realizes a $20,000 loss on the sale of stock and, 10 days later, repurchases substantially identical stock. What is the federal tax consequence of the loss?

A.The loss is fully deductible as a capital loss

B.The loss is deductible but only against ordinary income

C.Half the loss is deductible and half is disallowed

D.The loss is disallowed under the wash-sale rule and added to the basis of the new stock

Explanation: Under IRC 1091, a loss on the sale of stock is disallowed if substantially identical stock is acquired within 30 days before or after the sale. The disallowed loss is added to the basis of the replacement stock, preserving it for a later disposition.

5A single taxpayer has $5,000 of net capital loss for the year after netting all capital gains and losses. How much may be deducted against ordinary income, and what happens to the excess?

A.$3,000 deductible currently; $2,000 carried forward indefinitely

B.$5,000 deductible currently with no carryover

C.$1,500 deductible currently; $3,500 carried forward 5 years

D.None deductible; the full $5,000 carries forward

Explanation: Under IRC 1211(b), individuals may deduct net capital losses against ordinary income up to $3,000 per year ($1,500 if married filing separately). The unused $2,000 is carried forward indefinitely under IRC 1212(b) and retains its character.

6A taxpayer sells a primary residence owned and used for 4 of the last 5 years, realizing a $400,000 gain. The taxpayer is married filing jointly and has not used the exclusion in the prior two years. How much gain is excluded?

A.$0; the gain is fully taxable

B.$400,000

C.$250,000

D.$500,000

Explanation: Under IRC 121, a married couple filing jointly may exclude up to $500,000 of gain on the sale of a principal residence if the ownership and use tests (2 of the last 5 years) are met and the exclusion was not used in the prior two years. Because the $400,000 gain is below the $500,000 cap, the entire gain is excluded.

7Which of the following is an above-the-line deduction taken in arriving at adjusted gross income (AGI) rather than an itemized deduction?

A.State and local income taxes

B.Home mortgage interest

C.Deductible contributions to a traditional IRA

D.Charitable contributions to a public charity

Explanation: Deductible traditional IRA contributions are above-the-line deductions under IRC 62(a), reducing gross income to reach AGI. State/local taxes, mortgage interest, and charitable gifts are itemized (below-the-line) deductions under IRC 63(d).

8A taxpayer receives property worth $50,000 as a bona fide gift from a relative. The relative's adjusted basis in the property was $30,000. Disregarding gift tax adjustments, what is the federal income tax treatment to the recipient?

A.$50,000 is included in gross income

B.$20,000 of appreciation is included in gross income

C.The gift is excluded and the recipient takes a $50,000 fair-market-value basis

D.The gift is excluded from gross income; recipient takes a $30,000 carryover basis

Explanation: Under IRC 102, the value of property received by gift is excluded from the recipient's gross income. Under IRC 1015, the donee generally takes the donor's adjusted basis (carryover basis) of $30,000 for purposes of determining gain.

9An individual inherits stock from a decedent. The decedent's basis was $20,000 and the fair market value on the date of death was $75,000. What basis does the heir take in the stock?

A.$75,000 stepped-up basis equal to date-of-death value

B.$20,000 carryover basis

C.$47,500 average of the two figures

D.Zero basis until the stock is sold

Explanation: Under IRC 1014, property acquired from a decedent takes a basis equal to its fair market value on the date of death (a step-up here to $75,000). This eliminates the unrealized appreciation that accrued during the decedent's life from income tax.

10A taxpayer engaged in a trade or business pays $8,000 for a business meal with a client at a restaurant in 2026. How much is deductible under current law?

A.$8,000 (100% deductible)

B.$4,000 (50% deductible)

C.$0 (entertainment, fully disallowed)

D.$2,000 (25% deductible)

Explanation: Under IRC 274(n), the deduction for business meals is generally limited to 50% of the cost. The temporary 100% restaurant-meal allowance under the 2021 CAA expired after 2022, so the standard 50% limit applies in 2026.

About the TX Tax Law Specialist Exam

The Texas Board Certified - Tax Law examination is administered by the Texas Board of Legal Specialization (TBLS) to attorneys with substantial involvement in tax law who seek the Board Certified designation. TBLS defines tax law as involving the Internal Revenue Code and other federal, state, and local tax statutes and interpretive materials. The exam is a roughly six-hour test consisting of three essay questions in the morning and approximately 100 multiple-choice questions in the afternoon, testing working knowledge of the Internal Revenue Code, Treasury Regulations, federal procedure, and Texas state taxation. The passing standard is a 350 scaled score.

Questions

100 scored questions

Time Limit

Approximately 6 hours (3-hour morning essays + afternoon multiple choice)

Passing Score

350 (scaled)

Exam Fee

Confirm current application and exam fees on tbls.org (Texas Board of Legal Specialization)

TX Tax Law Specialist Exam Content Outline

18%

Federal Individual Income Tax

Gross income (IRC 61) and exclusions (102 gifts, 103 municipal interest, 121 home-sale exclusion); cash-method constructive receipt; capital gains, holding period and netting (1211-1222); wash sales (1091); above-the-line vs itemized deductions (62, 63, 164 SALT cap, 170, 274 meals); basis (1014 step-up, 1015 carryover); like-kind exchanges (1031, real property only); QBI deduction (199A); passive activity losses (469); self-employment tax (1401) and the 3.8% NIIT (1411)

18%

Business Entity Taxation

Subchapter C: 21% rate (11), double taxation, IRC 351 incorporation, distributions and E&P (301, 311), dividends-received deduction (243), NOLs (172), reorganizations (368); Subchapter S: eligibility (1361), basis and loss limits (1366), built-in gains tax (1374); Subchapter K: contributions, special allocations and substantial economic effect (704), liabilities and outside basis (752), distributions (731, 732); check-the-box entity classification for single- and multi-member LLCs

16%

Estate and Gift Tax

Unified credit / basic exclusion amount (IRC 2010; $15M for 2026) and 40% top rate (2001); annual exclusion (2503(b); $19,000 for 2026) and present-interest requirement; qualified medical/tuition transfers (2503(e)); unlimited marital deduction (2056); gross-estate inclusion for retained interests (2036) and life insurance (2042); estate deductions (2053); alternate valuation (2032); generation-skipping transfer tax (2601); portability of DSUE and gift-splitting (2513); Texas has no state estate or inheritance tax

18%

IRS Practice, Procedure and Controversy

Assessment statute of limitations (IRC 6501: 3-year general, 6-year 25% omission, unlimited for fraud/non-filing); refund claim limits (6511); 30-day letter and IRS Independent Office of Appeals; statutory notice of deficiency and 90-day Tax Court petition (6213) including math-error abatement; Collection Due Process (6330); litigation forums (Tax Court, district court jury, Court of Federal Claims); penalties (6651 FTF/FTP, 6662 accuracy, 6663 fraud, 6672 trust fund, 6702 frivolous); offers in compromise (7122) and innocent spouse relief (6015)

14%

Texas Franchise/Margin and Sales Tax

Texas franchise (margin) tax under Tax Code 171: taxable-entity definition (171.0002), lowest-of-four margin computation (171.101) capped at 70% of total revenue, the 2026 $2.65M no-tax-due threshold and $480,000 per-person compensation cap, standard 0.75% / retail-wholesale 0.375% rates and the 0.331% EZ computation; sales and use tax (6.25% state plus up to 2% local = 8.25% maximum), grocery/prescription and resale exemptions, complementary use tax, and post-Wayfair economic nexus ($500,000); Texas has no state personal income tax

16%

Tax Planning and Exempt Organizations

Charitable contributions of appreciated property (IRC 170); 501(c)(3) exemption, private inurement and the political-campaign prohibition; unrelated business income tax (511-513); private foundation excise taxes including self-dealing (4941); charitable remainder trusts (664); credit shelter and grantor retained annuity trusts; income deferral via qualified plans and Roth IRAs (408A); entity-choice and S-election planning; foreign tax credit (901); installment method (453); and the economic substance doctrine (7701(o))

How to Pass the TX Tax Law Specialist Exam

What You Need to Know

Passing score: 350 (scaled)
Exam length: 100 questions
Time limit: Approximately 6 hours (3-hour morning essays + afternoon multiple choice)
Exam fee: Confirm current application and exam fees on tbls.org

Keys to Passing

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

TX Tax Law Specialist Study Tips from Top Performers

1Treat the Internal Revenue Code as the spine of the multiple-choice section. Drill section numbers and rules cold: IRC 61 (gross income), 121 (home-sale exclusion), 199A (QBI), 1014 vs 1015 (basis step-up vs carryover), 1031 (real-property-only like-kind), 1211-1222 (capital gains/losses), 1361/1366 (S corporations), and 704/731/732/752 (partnership). The MCQs reward precise recall.

2Memorize the 2026 transfer-tax numbers: $15 million basic exclusion (IRC 2010), $19,000 annual exclusion (IRC 2503(b)), 40% top rate (IRC 2001), and the unlimited marital deduction (IRC 2056). Know which lifetime transfers are pulled back into the gross estate under IRC 2036 (retained interest) and 2042 (incidents of ownership in life insurance).

3Master the controversy timeline as a flowchart: examination -> 30-day letter -> IRS Appeals -> 90-day notice of deficiency -> 90-day Tax Court petition (IRC 6213). Layer on the limitations periods (3/6/unlimited years under IRC 6501; refund limits under 6511) and the penalty ladder (6651 FTF/FTP, 6662 accuracy, 6663 fraud, 6672 trust fund, 6702 frivolous).

4For the Texas portion, do not look for a personal income tax - there is none. Instead, learn the franchise (margin) tax cold: the lowest-of-four margin computation under Tax Code 171.101 (capped at 70% of revenue), the 2026 $2.65M no-tax-due threshold, the 0.75%/0.375% rates, and the 0.331% EZ computation. Then learn the sales/use tax (8.25% max, key exemptions, use-tax self-assessment, Wayfair economic nexus).

5Distinguish the three pass-through regimes carefully. S corporation losses are limited to stock plus direct-loan basis (IRC 1366), and entity-level debt does NOT add basis; by contrast, a partner's share of partnership liabilities increases outside basis under IRC 752. This basis distinction is a classic MCQ trap.

6For planning and exempt organizations, know the bright-line rules: 501(c)(3) absolutely prohibits political campaign intervention, UBIT (IRC 511-513) taxes unrelated business income, private foundations face the IRC 4941 self-dealing excise tax, and donating long-term appreciated property to a public charity yields a fair-market-value deduction with no recognized gain under IRC 170.

7Practice timed multiple-choice sets. The afternoon section is roughly 100 questions, so build speed at issue-spotting and eliminating distractors that state a real rule that simply does not apply to the facts (for example, citing IRC 1015 carryover basis where IRC 1014 date-of-death basis governs inherited property).

Frequently Asked Questions

What is the Texas Board Certified - Tax Law certification?

It is a credential issued by the Texas Board of Legal Specialization (TBLS) recognizing attorneys with substantial expertise in tax law. TBLS defines tax law as matters involving the Internal Revenue Code and other federal, state, and local tax statutes. Board Certified attorneys may advertise the specialization and must satisfy ongoing requirements to maintain it.

How is the TBLS tax law specialist exam structured?

The tax law certification exam is approximately a six-hour exam: three essay questions in the morning (roughly three hours) and approximately 100 multiple-choice questions in the afternoon. It tests a working knowledge of the Internal Revenue Code and Treasury Regulations, federal tax procedure, and Texas state taxation. The passing standard is a 350 scaled score.

Does Texas have a state income tax that this exam covers?

No. Texas imposes no state personal income tax, and the Texas Constitution makes enacting one very difficult. Instead, the exam's Texas component focuses on the franchise (margin) tax under Texas Tax Code Chapter 171 and the sales and use tax. Texas also has no state estate or inheritance tax, so federal transfer tax dominates the estate and gift portion.

How is the Texas franchise (margin) tax computed?

Under Texas Tax Code 171.101, an entity using the long form computes taxable margin as the lowest of four options: 70% of total revenue, total revenue minus cost of goods sold, total revenue minus compensation (capped at $480,000 per person for 2026), or total revenue minus $1,000,000. Margin is then apportioned to Texas and taxed at 0.75% (or 0.375% for retail/wholesale). For 2026, entities with annualized total revenue at or below $2.65 million owe no franchise tax, and an optional 0.331% EZ computation on total revenue is available.

What is the federal estate and gift tax exclusion for 2026?

For 2026, the basic exclusion amount (the unified credit shelter) is $15 million per person under IRC 2010(c)(3), as set by the 2025 One Big Beautiful Bill Act and indexed thereafter. The gift tax annual exclusion is $19,000 per donee under IRC 2503(b). The top marginal estate and gift tax rate is 40% under IRC 2001(c). Texas itself imposes no state estate or inheritance tax.

How long does a taxpayer have to petition the U.S. Tax Court after a notice of deficiency?

Under IRC 6213(a), a taxpayer who receives a statutory notice of deficiency (the 90-day letter) generally has 90 days from the mailing of the notice (150 days if addressed to a person outside the United States) to file a petition with the U.S. Tax Court. Filing a timely petition allows the taxpayer to litigate the deficiency without first paying the disputed tax.

What is the maximum combined Texas sales and use tax rate?

The Texas state sales and use tax rate is 6.25%, and local taxing jurisdictions (cities, counties, transit authorities, and special districts) may add up to a combined 2%, for a maximum total rate of 8.25%. Most unprepared groceries and prescription medicines are exempt, and a resale certificate exempts items purchased for resale.

200+ Free TX Tax Law Specialist Practice Questions

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