IRS SEE Practice Test 1

10 free IRS SEE practice questions in the real exam format, covering the official content areas, with an explanation for every answer.

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Question 1 of 10

Business Tax Preparation

Sunita Kapoor, a sole proprietor, operates a retail gift shop and keeps inventories. Based on the 2025 amounts in the table, what is the cost of goods sold she reports on Schedule C?

Raman Gifts — 2025 inventory and purchase data
Item	Amount
Inventory, January 1, 2025	$42,000
Purchases of merchandise	$186,000
Purchase returns and allowances	$6,000
Freight-in on merchandise purchased	$4,000
Merchandise withdrawn for personal use (at cost)	$2,000
Inventory, December 31, 2025	$51,000