Question 1

A taxpayer must make contributions to a regular or Roth IRA prior to the end of the year in order to claim the deduction for that year.

Accepted Answer

A) True 
 B)False

Question 2

Passive losses of one activity may not be used to offset passive income from another activity.

Accepted Answer

A) True 
 B)False

Question 3

Rob and Julie, both in their 30s, file a joint income tax return for 2015. Rob's wages are $25,000 and Julie's wages are $33,000 for the year. Their total adjusted gross income is $58,000, and Julie is covered by a qualified pension plan at work but Rob is not.
a.What is the maximum amount that Rob and Julie may each contribute to their Roth IRAs?
b.​
​
​
If Julie's wages are $110,000 for 2015, instead of $33,000, and their adjusted gross income is $135,000, (1) what is the maximum amount that Rob and Julie may each deduct for contributions to their individual retirement accounts, and (2) what is the maximum amount they could each contribute to Roth IRAs instead?

Accepted Answer

a.
Rob
$5,500.
Julie
$5,500.
​

Question 4

A 42-year-old single taxpayer earning a salary of $132,000 a year can make which of the following IRA contributions if he is not covered by a plan at work?

Accepted Answer

A) $5,500 to either a traditional IRA, a Roth IRA, or a nondeductible IRA 
B) $4,500 to either a traditional IRA, a Roth IRA, or a nondeductible IRA 
C) $5,500 to a Roth IRA only 
D) $5,500 to either a traditional IRA or a nondeductible IRA, but no contribution is allowed to a Roth IRA 
A) $5,500 to either a traditional IRA, a Roth IRA, or a nondeductible IRA 
B) $4,500 to either a traditional IRA, a Roth IRA, or a nondeductible IRA 
C) $5,500 to a Roth IRA only 
D) $5,500 to either a traditional IRA or a nondeductible IRA, but no contribution is allowed to a Roth IRA

Question 5

Ellen supports her family as a self-employed attorney. She reports $90,000 of income on her Schedule C and pays $8,000 for health insurance for her family, $2,500 for dental insurance, $4,000 for health insurance for her 23-year-old daughter who is no longer a dependent, and $3,000 for disability insurance for herself. What is Ellen's self-employed health insurance deduction?

Accepted Answer

A) $8,000 
B) $10,500 
C) $12,000 
D) $14,500 
E) $13,500 
A) $8,000 
B) $10,500 
C) $12,000 
D) $14,500 
E) $13,500

Question 6

Chorisia Corporation has a Section 401(k) plan for its employees. The plan provides for maximum contributions equal to 15 percent of the employee's salary. Donna, a 55-year-old employee of Chorisia Corporation, elects to contribute the maximum amount possible to the Section 401(k) plan. During 2015, Donna has $115,000 in wages. For 2015, what is the maximum amount that Donna may contribute to the plan on a tax-deferred basis?

Accepted Answer

$17,250, lesser of 15 percent

Question 7

Which of the following statements is true about health savings accounts (HSAs)?

Accepted Answer

A) There is no restriction on the kind of health insurance taxpayers must carry in order to qualify for an HSA. 
B) Contributions to HSAs are not deductible for adjusted gross income (AGI), but are treated as an itemized deduction. 
C) Individuals taking distributions from HSAs which are not for medical expenses are subject to a 50 percent penalty. 
D) Distributions from HSAs are tax and penalty free when used for qualified medical expenses. 
E) Taxpayers may take tax and penalty free distributions from HSAs to purchase automobiles after age 65. 
A) There is no restriction on the kind of health insurance taxpayers must carry in order to qualify for an HSA. 
B) Contributions to HSAs are not deductible for adjusted gross income (AGI), but are treated as an itemized deduction. 
C) Individuals taking distributions from HSAs which are not for medical expenses are subject to a 50 percent penalty. 
D) Distributions from HSAs are tax and penalty free when used for qualified medical expenses. 
E) Taxpayers may take tax and penalty free distributions from HSAs to purchase automobiles after age 65.

Question 8

Penny, age 52, takes a distribution of $30,000 from her Traditional IRA account. She plans to deposit it in an IRA with a different bank. Shortly after the distribution she drives her car through the front window of her credit union in a freak accident, and uses the funds to pay for the damages. What income and/or penalties related to the failure to rollover the IRA must she show on her tax return ?

Accepted Answer

Penny must report the full $30,000 distr

Question 9

Moe has a law practice and earns $322,000 which he reports on his Schedule C. His wife, Mindy, works part-time at Wal-Mart and earns $8,300. Mindy does not receive any medical benefits through Wal-Mart. Their 29-year-old daughter, Michelle, who is not a dependent, is working towards earning her Master's degree.
Moe and Mindy pay the following amounts:
How much may Moe and Mindy claim on their tax return as a self-employed health insurance deduction?

Accepted Answer

$8,480, calculated as $6,100 +

Question 10

Carmen owns a house that she rents out for $600 per month. Her expenses for the 2015 tax year are as follows:
Carmen bought the property in March of 1992, and her basis for depreciation on the house is $110,000. She uses straight-line depreciation with a 27 ½ -year life, so the depreciation on the house is $4,000. Calculate Carmen's net income or loss from renting the house if her gross rental income is $7,200 ($600 × 12 months).

Accepted Answer

$2,320 loss, calcula

Question 11

Warren invested in a limited partnership tax shelter in 2002. During 2015, his losses from the partnership amount to $100,000. If Warren has no passive income, what is the amount of Warren's deduction for passive losses for 2015?

Accepted Answer

A) $0 
B) $10,000 
C) $20,000 
D) $40,000 
E) None of the above 
A) $0 
B) $10,000 
C) $20,000 
D) $40,000 
E) None of the above

Question 12

For purposes of the passive loss rules, income is classified into three separate categories. What are the three categories of individual income? Give an example of each.
(1)
(2)
(3)

Accepted Answer

(The three categories may be listed in a

Question 13

Which of the following is not a test which must be met to qualify for the moving expense deduction?

Accepted Answer

A) The taxpayer must stay with the same employer. 
B) The taxpayer must change job sites. 
C) The taxpayer must remain at the new job location for 39 weeks during the 12 months following the move (78 weeks out of 24 months if self-employed). 
D) The distance from the taxpayer's former residence to the new job must be at least 50 miles more than the former residence to the former job. 
E) All of the above are tests for the moving expense deduction. 
A) The taxpayer must stay with the same employer. 
B) The taxpayer must change job sites. 
C) The taxpayer must remain at the new job location for 39 weeks during the 12 months following the move (78 weeks out of 24 months if self-employed). 
D) The distance from the taxpayer's former residence to the new job must be at least 50 miles more than the former residence to the former job. 
E) All of the above are tests for the moving expense deduction.

Question 14

Nancy has active modified adjusted gross income before passive losses of $125,000. She has a loss of $15,000 on a rental property she actively manages. How much of the loss is she allowed to deduct against the $125,000 of other income?

Accepted Answer

A) None 
B) $2,500 
C) $5,000 
D) $12,500 
A) None 
B) $2,500 
C) $5,000 
D) $12,500

Question 15

XYZ Corporation has assigned Allison to inspect their zipper manufacturing plant in China for the next 4 months. Allison has incurred the following expenses:
How much may Allison deduct as moving expenses?

Accepted Answer

$0. Since Allison is assigned to be in C

Question 16

Which of the following statements is false about health savings acounts (HSAs)?

Accepted Answer

A) HSAs must be paired with qualifying high-deductible health insurance. 
B) Taxpayers qualifying for Medicare do not qualify to make HSA contributions. 
C) Distributions from HSAs which are not used for medical expenses are generally subject to a 20 percent penalty and income taxes. 
D) Distributions from HSAs which are used for qualifying medical expenses are not subject to tax or penalty. 
E) Contributions to HSAs are deductible as itemized medical deductions. 
A) HSAs must be paired with qualifying high-deductible health insurance. 
B) Taxpayers qualifying for Medicare do not qualify to make HSA contributions. 
C) Distributions from HSAs which are not used for medical expenses are generally subject to a 20 percent penalty and income taxes. 
D) Distributions from HSAs which are used for qualifying medical expenses are not subject to tax or penalty. 
E) Contributions to HSAs are deductible as itemized medical deductions.

Question 17

In most cases, an individual taxpayer reports rental income and the related expenses on Schedule E.

Accepted Answer

A) True 
 B)False

Question 18

Norm is a real estate professional with a real estate trade or business as defined in the tax law. He has $150,000 of business income and $50,000 of losses from actively managed real estate rentals. How much of the $50,000 in losses is he allowed to claim on his tax return?

Accepted Answer

A) $25,000 
B) None 
C) $50,000 
D) $20,000 
A) $25,000 
B) None 
C) $50,000 
D) $20,000

Question 19

Which of the following statements is correct?

Accepted Answer

A) Contributions to SEP plans by self-employed taxpayers are generally limited to the lesser of 15 percent of their net earned income (before the SEP deduction) or $45,000. 
B) The contribution limits for SEPs are the lesser of 25 percent of net self-employment income or $53,000 for a self-employed taxpayer. 
C) Employees may elect to make annual contributions to 401(k) plans up to the lesser of 15 percent of their net earned income (before the 401(k) deduction) or $45,000. 
D) The contribution limits for SEPs are a maximum of $17,500 ($23,000 for taxpayers 50 or older). 
A) Contributions to SEP plans by self-employed taxpayers are generally limited to the lesser of 15 percent of their net earned income (before the SEP deduction) or $45,000. 
B) The contribution limits for SEPs are the lesser of 25 percent of net self-employment income or $53,000 for a self-employed taxpayer. 
C) Employees may elect to make annual contributions to 401(k) plans up to the lesser of 15 percent of their net earned income (before the 401(k) deduction) or $45,000. 
D) The contribution limits for SEPs are a maximum of $17,500 ($23,000 for taxpayers 50 or older).

Question 20

Choose the incorrect answer. Money removed from a traditional IRA is taxable as ordinary income and subject to a 10 percent penalty except for taxpayers who are:

Accepted Answer

A) Paying the costs of higher education, including tuition, fees, books, and room and board for a dependent child 
B) Withdrawing up to $10,000 of first-time home-buying expenses 
C) Using the withdrawals for medical expenses in excess of 10 percent of their AGI, for persons younger than 65 years old 
D) Over 59 1/2 years old 
A) Paying the costs of higher education, including tuition, fees, books, and room and board for a dependent child 
B) Withdrawing up to $10,000 of first-time home-buying expenses 
C) Using the withdrawals for medical expenses in excess of 10 percent of their AGI, for persons younger than 65 years old 
D) Over 59 1/2 years old

A taxpayer must make contributions to a regular or Roth IRA prior to the end of the year in order to claim the deduction for that year.

Passive losses of one activity may not be used to offset passive income from another activity.

A 42-year-old single taxpayer earning a salary of $132,000 a year can make which of the following IRA contributions if he is not covered by a plan at work?

Which of the following statements is true about health savings accounts (HSAs)?

Warren invested in a limited partnership tax shelter in 2002. During 2015, his losses from the partnership amount to $100,000. If Warren has no passive income, what is the amount of Warren's deduction for passive losses for 2015?

For purposes of the passive loss rules, income is classified into three separate categories. What are the three categories of individual income? Give an example of each. (1) (2) (3)

Which of the following is not a test which must be met to qualify for the moving expense deduction?

Nancy has active modified adjusted gross income before passive losses of $125,000. She has a loss of $15,000 on a rental property she actively manages. How much of the loss is she allowed to deduct against the $125,000 of other income?

XYZ Corporation has assigned Allison to inspect their zipper manufacturing plant in China for the next 4 months. Allison has incurred the following expenses: How much may Allison deduct as moving expenses?

Which of the following statements is false about health savings acounts (HSAs)?

In most cases, an individual taxpayer reports rental income and the related expenses on Schedule E.

Norm is a real estate professional with a real estate trade or business as defined in the tax law. He has $150,000 of business income and $50,000 of losses from actively managed real estate rentals. How much of the $50,000 in losses is he allowed to claim on his tax return?

Which of the following statements is correct?

Choose the incorrect answer. Money removed from a traditional IRA is taxable as ordinary income and subject to a 10 percent penalty except for taxpayers who are:

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

A taxpayer must make contributions to a regular or Roth IRA prior to the end of the year in order to claim the deduction for that year.

Passive losses of one activity may not be used to offset passive income from another activity.

A 42-year-old single taxpayer earning a salary of $132,000 a year can make which of the following IRA contributions if he is not covered by a plan at work?

Which of the following statements is true about health savings accounts (HSAs)?

Warren invested in a limited partnership tax shelter in 2002. During 2015, his losses from the partnership amount to $100,000. If Warren has no passive income, what is the amount of Warren's deduction for passive losses for 2015?

For purposes of the passive loss rules, income is classified into three separate categories. What are the three categories of individual income? Give an example of each. (1) (2) (3)

Which of the following is not a test which must be met to qualify for the moving expense deduction?

Nancy has active modified adjusted gross income before passive losses of $125,000. She has a loss of $15,000 on a rental property she actively manages. How much of the loss is she allowed to deduct against the $125,000 of other income?

XYZ Corporation has assigned Allison to inspect their zipper manufacturing plant in China for the next 4 months. Allison has incurred the following expenses: How much may Allison deduct as moving expenses?

Which of the following statements is false about health savings acounts (HSAs)?

In most cases, an individual taxpayer reports rental income and the related expenses on Schedule E.

Norm is a real estate professional with a real estate trade or business as defined in the tax law. He has $150,000 of business income and $50,000 of losses from actively managed real estate rentals. How much of the $50,000 in losses is he allowed to claim on his tax return?

Which of the following statements is correct?

Choose the incorrect answer. Money removed from a traditional IRA is taxable as ordinary income and subject to a 10 percent penalty except for taxpayers who are:

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