Question 1

Contributions by a self-employed individual to a SEP plan for 2015 are limited to the lesser of a percent of net earned income or:

Accepted Answer

A) $50,000 
B) $51,000 
C) $52,000 
D) $53,000 
E) None of the above 
A) $50,000 
B) $51,000 
C) $52,000 
D) $53,000 
E) None of the above D

Question 2

Debbie is 63 years old and retired in 2013. She receives Social Security payments of $12,000 a year and interest income of $30,000. She wishes to put the maximum allowed into an IRA. How much can she contribute to her IRA?

Accepted Answer

$0. She must have earned income to contribute to an IRA.

Question 3

Bill is the owner of a house with two identical apartments. He resides in one apartment and rents the other apartment to a tenant. The tenant made timely monthly rental payments of $550 per month for the months of January through December 2015. The following expenses were incurred on the entire building: In addition, depreciation allocable to the rented apartment is $1,500. What amount should Bill report as net rental income for 2015?

Accepted Answer

A) $0 
B) $100 
C) $1,400 
D) $2,600 
E) None of the above 
A) $0 
B) $100 
C) $1,400 
D) $2,600 
E) None of the above D

Question 4

Which of the following is true about the self-employed health insurance deduction?

Accepted Answer

A) Dental insurance is not part of the allowable deduction. 
B) Medical insurance is allowed as a deduction, subject to a dollar limitation. 
C) Life insurance is allowed as a deduction. 
D) Long-term care insurance is allowed as a deduction, subject to a dollar limitation. 
E) The cost of insurance for dependent children is not allowed. 
A) Dental insurance is not part of the allowable deduction. 
B) Medical insurance is allowed as a deduction, subject to a dollar limitation. 
C) Life insurance is allowed as a deduction. 
D) Long-term care insurance is allowed as a deduction, subject to a dollar limitation. 
E) The cost of insurance for dependent children is not allowed.

Question 5

In 2015, all taxpayers may make a deductible or nondeductible contribution to an IRA.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following taxpayers qualifies for the maximum individual retirement account deduction for 2015?

Accepted Answer

A) Married taxpayers, neither of whom is covered by a qualified retirement plan, with total adjusted gross income, all earned, of $85,000 
B) A single taxpayer, who is covered by a qualified retirement plan, with adjusted gross income of $80,000 
C) A single taxpayer, who is not covered by a qualified retirement plan, with no earned income but with unearned income of $12,000 
D) Married taxpayers, only one of whom is covered by a qualified retirement plan, with total adjusted gross income of $190,000 
E) None of the above qualify for the maximum deduction 
A) Married taxpayers, neither of whom is covered by a qualified retirement plan, with total adjusted gross income, all earned, of $85,000 
B) A single taxpayer, who is covered by a qualified retirement plan, with adjusted gross income of $80,000 
C) A single taxpayer, who is not covered by a qualified retirement plan, with no earned income but with unearned income of $12,000 
D) Married taxpayers, only one of whom is covered by a qualified retirement plan, with total adjusted gross income of $190,000 
E) None of the above qualify for the maximum deduction

Question 7

The expenses associated with the rental of a residence used for both personal and rental purposes are subject to three possible tax treatments. Which of the following is not included as one of the three?

Accepted Answer

A) If a residence is rented for fewer than 15 days during the year the rental period is disregarded and the residence is regarded as a personal residence for tax purposes. 
B) If the residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10 percent of the days rented, whichever is greater, the residence is treated as rental property. 
C) If the residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10 percent of the days rented, whichever is greater, the residence is treated as a personal residence for tax purposes. 
D) If the residence is rented for 15 days or more and is used for personal purposes for more than 14 days or 10 percent of the days rented, whichever is greater, allocable rental expenses are allowed only to the extent of rental income. 
A) If a residence is rented for fewer than 15 days during the year the rental period is disregarded and the residence is regarded as a personal residence for tax purposes. 
B) If the residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10 percent of the days rented, whichever is greater, the residence is treated as rental property. 
C) If the residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10 percent of the days rented, whichever is greater, the residence is treated as a personal residence for tax purposes. 
D) If the residence is rented for 15 days or more and is used for personal purposes for more than 14 days or 10 percent of the days rented, whichever is greater, allocable rental expenses are allowed only to the extent of rental income.

Question 8

To qualify for the moving expense deduction, an employee must change job sites, move a required distance, and change employers.

Accepted Answer

A) True 
 B)False

Question 9

Clay changes jobs in 2015 and decides to roll his $50,000 retirement plan balance from his old employer's plan into an IRA. He instructs the trustee of the retirement plan to transfer the money directly to the IRA he has chosen.
​
What are the tax consequences of the transfer to Clay? Explain.

Accepted Answer

There are no tax consequences.

Question 10

When a residence is rented for less than 15 days during the year, the rental income is excluded from gross income.

Accepted Answer

A) True 
 B)False

Question 11

Jeremy, age 38, has $25,000 in a traditional IRA account and is considering taking the money out to buy himself a new car. What will be the tax consequences to Jeremy if he withdraws the $25,000 from his IRA in 2015 for this purpose? Explain.

Accepted Answer

Since Jeremy is under age 59 ½, withdraw

Question 12

Christine is a self-employed graphics artist who has net earned income of $160,000 from her business. Christine has a defined contribution SEP Plan and plans to contribute the amount that provides the maximum deduction allowable. How much can Christine contribute?

Accepted Answer

$32,000, the lesser

Question 13

Steven is 27 years old and has a total AGI of $110,000 in 2015. He contracts pneumonia in 2015 and incurs a medical bill that totals $7,500. He withdraws $7,500 from his traditional IRA to pay the bill. Which of the following is true?

Accepted Answer

A) He is not subject to penalties on the IRA withdrawal because it was for medical expenses. 
B) He is not subject to penalties on the IRA withdrawal because he was disabled by pneumonia for 2 weeks. 
C) He is subject to penalties on the IRA withdrawal because a person may not take a withdrawal from a traditional IRA until they are 59 ½ years old no matter what. 
D) He is subject to penalties on the IRA withdrawal because the withdrawal did not cover a portion of medical bills that exceeded 10 percent of his AGI. 
E) None of the above is correct. 
A) He is not subject to penalties on the IRA withdrawal because it was for medical expenses. 
B) He is not subject to penalties on the IRA withdrawal because he was disabled by pneumonia for 2 weeks. 
C) He is subject to penalties on the IRA withdrawal because a person may not take a withdrawal from a traditional IRA until they are 59 ½ years old no matter what. 
D) He is subject to penalties on the IRA withdrawal because the withdrawal did not cover a portion of medical bills that exceeded 10 percent of his AGI. 
E) None of the above is correct.

Question 14

Which of the following statements is true?

Accepted Answer

A) A distribution rollover from a retirement plan can only be done as a direct transfer from one account to another account. 
B) The trustee must withhold 10 percent of the amount distributed whenever assets are transferred from one retirement plan to another retirement plan. 
C) If a taxpayer decides to rollover an IRA to a new account, then the whole IRA must be rolled over. 
D) A taxpayer is allowed only one direct transfer each year from one retirement account to another retirement account. 
E) There are no current-year tax consequences for a direct transfer. 
A) A distribution rollover from a retirement plan can only be done as a direct transfer from one account to another account. 
B) The trustee must withhold 10 percent of the amount distributed whenever assets are transferred from one retirement plan to another retirement plan. 
C) If a taxpayer decides to rollover an IRA to a new account, then the whole IRA must be rolled over. 
D) A taxpayer is allowed only one direct transfer each year from one retirement account to another retirement account. 
E) There are no current-year tax consequences for a direct transfer.

Question 15

Monica has a Roth IRA to which she contributed $15,000. The IRA has a current value of $37,500. She is 54 years old and takes a distribution of $25,000. How much of the distribution will be taxable to Monica?

Accepted Answer

A) $0 
B) $10,000 
C) $15,000 
D) $25,000 
E) $37,500 
A) $0 
B) $10,000 
C) $15,000 
D) $25,000 
E) $37,500

Question 16

In a distribution rollover from an IRA, the recipient must contribute 80 percent of the distributed amount to the new trustee in order for the rollover to be tax free.

Accepted Answer

A) True 
 B)False

Question 17

Tony makes a maximum contribution to his employer's 401(k) plan. He earns $360,000 a year. How much income is he allowed to contribute to the plan for 2015?

Accepted Answer

$18,000, the amount

Question 18

If a taxpayer receives an early distribution from an IRA due to disability, he or she will not be subject to a penalty.

Accepted Answer

A) True 
 B)False

Question 19

Mike owns a house that he rents out for $1,000 per month. His expenses for the 2015 tax year are as follows:
Mike bought the property in September of 1997, and his basis for depreciation on the house is $137,500. He uses straight-line depreciation with a 27 ½-year life, so the depreciation on the house is $5,000. Mike does not use a property manager and handles all aspects of the rental activity himself.   
a.​
Calculate Mike's net income or loss from renting the house if his gross rental income is $12,000 ($1,000 × 12 months).
b.Is the income or loss on Mike's rental considered to be active, passive, or portfolio income?

Accepted Answer

The answer of Mike owns a house that he rents...

Question 20

Donald rents out his vacation home for 9 months and lives in his vacation home for the remainder of the year. His gross rental income for 2015 is $7,200. The expenses attributable to the vacation home for the entire year are as follows:
What amount would Donald report as net income or loss from the rental of the vacation home?

Accepted Answer

None. $7,200 (rent income) - (

Contributions by a self-employed individual to a SEP plan for 2015 are limited to the lesser of a percent of net earned income or:

Debbie is 63 years old and retired in 2013. She receives Social Security payments of $12,000 a year and interest income of $30,000. She wishes to put the maximum allowed into an IRA. How much can she contribute to her IRA?

Which of the following is true about the self-employed health insurance deduction?

In 2015, all taxpayers may make a deductible or nondeductible contribution to an IRA.

Which of the following taxpayers qualifies for the maximum individual retirement account deduction for 2015?

The expenses associated with the rental of a residence used for both personal and rental purposes are subject to three possible tax treatments. Which of the following is not included as one of the three?

To qualify for the moving expense deduction, an employee must change job sites, move a required distance, and change employers.

Clay changes jobs in 2015 and decides to roll his $50,000 retirement plan balance from his old employer's plan into an IRA. He instructs the trustee of the retirement plan to transfer the money directly to the IRA he has chosen. What are the tax consequences of the transfer to Clay? Explain.

When a residence is rented for less than 15 days during the year, the rental income is excluded from gross income.

Jeremy, age 38, has $25,000 in a traditional IRA account and is considering taking the money out to buy himself a new car. What will be the tax consequences to Jeremy if he withdraws the $25,000 from his IRA in 2015 for this purpose? Explain.

Christine is a self-employed graphics artist who has net earned income of $160,000 from her business. Christine has a defined contribution SEP Plan and plans to contribute the amount that provides the maximum deduction allowable. How much can Christine contribute?

Steven is 27 years old and has a total AGI of $110,000 in 2015. He contracts pneumonia in 2015 and incurs a medical bill that totals $7,500. He withdraws $7,500 from his traditional IRA to pay the bill. Which of the following is true?

Which of the following statements is true?

Monica has a Roth IRA to which she contributed $15,000. The IRA has a current value of $37,500. She is 54 years old and takes a distribution of $25,000. How much of the distribution will be taxable to Monica?

In a distribution rollover from an IRA, the recipient must contribute 80 percent of the distributed amount to the new trustee in order for the rollover to be tax free.

Tony makes a maximum contribution to his employer's 401(k) plan. He earns $360,000 a year. How much income is he allowed to contribute to the plan for 2015?

If a taxpayer receives an early distribution from an IRA due to disability, he or she will not be subject to a penalty.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 4: Business Income and Expenses, Part II

Contributions by a self-employed individual to a SEP plan for 2015 are limited to the lesser of a percent of net earned income or:

Debbie is 63 years old and retired in 2013. She receives Social Security payments of $12,000 a year and interest income of $30,000. She wishes to put the maximum allowed into an IRA. How much can she contribute to her IRA?

Which of the following is true about the self-employed health insurance deduction?

In 2015, all taxpayers may make a deductible or nondeductible contribution to an IRA.

Which of the following taxpayers qualifies for the maximum individual retirement account deduction for 2015?

The expenses associated with the rental of a residence used for both personal and rental purposes are subject to three possible tax treatments. Which of the following is not included as one of the three?

To qualify for the moving expense deduction, an employee must change job sites, move a required distance, and change employers.

Clay changes jobs in 2015 and decides to roll his $50,000 retirement plan balance from his old employer's plan into an IRA. He instructs the trustee of the retirement plan to transfer the money directly to the IRA he has chosen. ​ What are the tax consequences of the transfer to Clay? Explain.

When a residence is rented for less than 15 days during the year, the rental income is excluded from gross income.

Jeremy, age 38, has $25,000 in a traditional IRA account and is considering taking the money out to buy himself a new car. What will be the tax consequences to Jeremy if he withdraws the $25,000 from his IRA in 2015 for this purpose? Explain.

Christine is a self-employed graphics artist who has net earned income of $160,000 from her business. Christine has a defined contribution SEP Plan and plans to contribute the amount that provides the maximum deduction allowable. How much can Christine contribute?

Steven is 27 years old and has a total AGI of $110,000 in 2015. He contracts pneumonia in 2015 and incurs a medical bill that totals $7,500. He withdraws $7,500 from his traditional IRA to pay the bill. Which of the following is true?

Which of the following statements is true?

Monica has a Roth IRA to which she contributed $15,000. The IRA has a current value of $37,500. She is 54 years old and takes a distribution of $25,000. How much of the distribution will be taxable to Monica?

In a distribution rollover from an IRA, the recipient must contribute 80 percent of the distributed amount to the new trustee in order for the rollover to be tax free.

Tony makes a maximum contribution to his employer's 401(k) plan. He earns $360,000 a year. How much income is he allowed to contribute to the plan for 2015?

If a taxpayer receives an early distribution from an IRA due to disability, he or she will not be subject to a penalty.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Clay changes jobs in 2015 and decides to roll his $50,000 retirement plan balance from his old employer's plan into an IRA. He instructs the trustee of the retirement plan to transfer the money directly to the IRA he has chosen. What are the tax consequences of the transfer to Clay? Explain.