Question 1

For federal income tax purposes,property transfers pursuant to a divorce are nontaxable events.

Accepted Answer

A) True 
 B)False

Question 2

For purposes of the child credit,a child of divorced parents is considered a dependent of the custodial parent unless that parent agrees to allow the noncustodial parent to claim the child as a dependent.

Accepted Answer

A) True 
 B)False

Question 3

A flood (federally declared disaster)destroyed an antique Persian rug owned by Mr.and Mrs.McConnell.The couple purchased the rug for $13,000 fifteen years ago,but its appraised FMV before the flood was $42,500.Unfortunately,their homeowners' insurance policy does not cover flood damage.Compute the McConnells' casualty loss (before the 10% AGI threshold).

Accepted Answer

A) $41,900 
B) $42,000 
C) $13,000 
D) $12,900 
A) $41,900 
B) $42,000 
C) $13,000 
D) $12,900

Question 4

For federal income tax purposes,a taxpayer may deduct state and federal employment taxes ($10,000 maximum)as itemized deductions.

Accepted Answer

A) True 
 B)False

Question 5

Gary is an architect who also sings at weddings.This year,he received $5,400 in fees from his singing and spent $6,250 on singing lessons,sheet music,and travel to the weddings.If Gary considers this activity as a hobby for federal tax purposes,which of the following statements is true?

Accepted Answer

A) Gary is not required to include the $5,400 in gross income. 
B) Gary is allowed to deduct $5,400 of his expenses as an above-the-line deduction. 
C) Gary is not allowed to deduct any of his hobby expenses. 
D) Gary is allowed to deduct $5,400 of his expenses as an itemized deduction. 
A) Gary is not required to include the $5,400 in gross income. 
B) Gary is allowed to deduct $5,400 of his expenses as an above-the-line deduction. 
C) Gary is not allowed to deduct any of his hobby expenses. 
D) Gary is allowed to deduct $5,400 of his expenses as an itemized deduction.

Question 6

Polly Nolan received the following items this year.   Compute Polly's gross income.

Accepted Answer

A) $47,100 
B) $42,500 
C) $45,500 
D) $47,500 
A) $47,100 
B) $42,500 
C) $45,500 
D) $47,500

Question 7

Ms.Bjorn contributed $600,000 cash to qualified public charities this year.Her AGI was $814,000.Which of the following statements is true?

Accepted Answer

A) Ms.Bjorn's charitable contribution deduction is limited to $488,400,and she has a $111,600 contribution carryover to future years. 
B) Ms.Bjorn's charitable contribution deduction is $360,000. 
C) Ms.Bjorn's charitable contribution deduction is limited to $488,400.The $111,600 nondeductible amount will never result in a tax benefit. 
D) Ms.Bjorn's charitable contribution deduction is $600,000. 
A) Ms.Bjorn's charitable contribution deduction is limited to $488,400,and she has a $111,600 contribution carryover to future years. 
B) Ms.Bjorn's charitable contribution deduction is $360,000. 
C) Ms.Bjorn's charitable contribution deduction is limited to $488,400.The $111,600 nondeductible amount will never result in a tax benefit. 
D) Ms.Bjorn's charitable contribution deduction is $600,000.

Question 8

Mr.and Mrs.Darwin sold their principal residence on September 12,2018,and purchased and moved into a new residence three weeks later.They excluded their $353,000 gain realized on this sale from gross income.On October 2,2019,the Darwins realized a gain on sale of the new residence.Which of the following statements about this second gain is true?

Accepted Answer

A) If the Darwins sold the new residence because of a change in place of Mr.Darwin's employment,they may exclude up to $500,000 of the gain from gross income. 
B) The Darwins may not exclude any of the gain from gross income. 
C) The Darwins may exclude $147,000 of the gain from gross income. 
D) None of the above statements is true. 
A) If the Darwins sold the new residence because of a change in place of Mr.Darwin's employment,they may exclude up to $500,000 of the gain from gross income. 
B) The Darwins may not exclude any of the gain from gross income. 
C) The Darwins may exclude $147,000 of the gain from gross income. 
D) None of the above statements is true.

Question 9

Mr.Jain paid the following taxes this year.
   Compute Mr.Jain's itemized deduction for taxes.

Accepted Answer

$10,000 (limit on $11,010 stat

Question 10

Which of the following government transfer payments is included in the recipient's gross income?

Accepted Answer

A) Food stamps 
B) Need-based welfare payments 
C) Unemployment compensation 
D) None of the above is included. 
A) Food stamps 
B) Need-based welfare payments 
C) Unemployment compensation 
D) None of the above is included.

Question 11

Which of the following is not a tax incentive for individuals to purchase a home instead of renting?

Accepted Answer

A) Real property taxes on the home are deductible. 
B) Premiums paid on homeowner's insurance are deductible. 
C) Interest paid on a home mortgage is deductible. 
D) All of the above are tax incentives. 
A) Real property taxes on the home are deductible. 
B) Premiums paid on homeowner's insurance are deductible. 
C) Interest paid on a home mortgage is deductible. 
D) All of the above are tax incentives.

Question 12

Which of the following items is included in the recipient's gross income?

Accepted Answer

A) Life insurance death benefit 
B) Legal award for personal injury 
C) Legal award for punitive damages 
D) Scholarship for college tuition,fees,and books 
A) Life insurance death benefit 
B) Legal award for personal injury 
C) Legal award for punitive damages 
D) Scholarship for college tuition,fees,and books

Question 13

Lori owns a vacation home that she rents out for about three months each year.Her deduction for expenses allocable to the rental periods is limited to her gross rental income.

Accepted Answer

A) True 
 B)False

Question 14

Mr.and Mrs.Trent divorced last year.Pursuant to the divorce,Mr.Trent transferred marketable securities (FMV $100,000; basis $67,000)to Mrs.Trent.This year,Mrs.Trent sold the securities for $112,000.Which of the following statements is true?

Accepted Answer

A) Mrs.Trent recognized a $45,000 gain on sale this year. 
B) Mrs.Trent recognized $100,000 income last year. 
C) Mrs.Trent recognized a $12,000 gain on sale this year. 
D) Mrs.Trent recognized no income last year and no gain on sale this year. 
A) Mrs.Trent recognized a $45,000 gain on sale this year. 
B) Mrs.Trent recognized $100,000 income last year. 
C) Mrs.Trent recognized a $12,000 gain on sale this year. 
D) Mrs.Trent recognized no income last year and no gain on sale this year.

Question 15

Ms.Ruang,a single taxpayer,purchased her principal residence on August 19,2018 and financed the purchase with a mortgage secured by the residence.In 2018,the average balance of the mortgage was $817,000,and Ms Ruang paid $35,000 of mortgage interest.How much of this interest is an itemized deduction?

Accepted Answer

A) $0 
B) $20,270 
C) $32,130 
D) $35,000 
A) $0 
B) $20,270 
C) $32,130 
D) $35,000

Question 16

On February 1,Alan,a single individual,purchased his first personal residence for $400,000.On July 1,Alan sold this residence for $460,000 because he decided to move in with his girlfriend.Consequently,Alan occupied the home for only 150 days.How much gain must Alan recognize?

Accepted Answer

A) $0 
B) $8,630 
C) $51,370 
D) $60,000 
A) $0 
B) $8,630 
C) $51,370 
D) $60,000

Question 17

Gary is an architect who also sings at weddings.This year,he received $5,400 in fees for his singing and spent $6,250 on voice lessons,sheet music,and travel to the weddings.Which of the following statements is true?

Accepted Answer

A) Because the singing activity resulted in a loss,Gary can't treat it as a business. 
B) If facts and circumstances support Gary's claim that his singing activity is a business,he can deduct an $850 above-the-line loss. 
C) Because Gary's primary source of income is his architecture practice,he can't treat the singing activity as a business. 
D) Gary can deduct his $850 hobby loss as an itemized deduction. 
A) Because the singing activity resulted in a loss,Gary can't treat it as a business. 
B) If facts and circumstances support Gary's claim that his singing activity is a business,he can deduct an $850 above-the-line loss. 
C) Because Gary's primary source of income is his architecture practice,he can't treat the singing activity as a business. 
D) Gary can deduct his $850 hobby loss as an itemized deduction.

Question 18

This year,David paid his physician $6,200 for routine examinations and lab tests and received a $3,000 reimbursement from his medical insurance company.David is allowed to deduct the $3,200 unreimbursed medical expense as an above-the-line deduction.

Accepted Answer

A) True 
 B)False

Question 19

A charitable contribution in excess of the AGI limitation may be carried forward five years.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements about tax subsidies for higher education is false?

Accepted Answer

A) Individuals may be allowed to exclude interest earned on the redemption of education savings bonds from gross income. 
B) Individuals can deduct a limited amount of interest paid on qualified education loans as an above-the-line deduction. 
C) Individuals can claim an American Opportunity Credit for a limited amount of college tuition,fees,and course materials. 
D) None of the above is false. 
A) Individuals may be allowed to exclude interest earned on the redemption of education savings bonds from gross income. 
B) Individuals can deduct a limited amount of interest paid on qualified education loans as an above-the-line deduction. 
C) Individuals can claim an American Opportunity Credit for a limited amount of college tuition,fees,and course materials. 
D) None of the above is false.

For federal income tax purposes,property transfers pursuant to a divorce are nontaxable events.

For purposes of the child credit,a child of divorced parents is considered a dependent of the custodial parent unless that parent agrees to allow the noncustodial parent to claim the child as a dependent.

For federal income tax purposes,a taxpayer may deduct state and federal employment taxes ($10,000 maximum)as itemized deductions.

Gary is an architect who also sings at weddings.This year,he received $5,400 in fees from his singing and spent $6,250 on singing lessons,sheet music,and travel to the weddings.If Gary considers this activity as a hobby for federal tax purposes,which of the following statements is true?

Polly Nolan received the following items this year. Compute Polly's gross income.

Ms.Bjorn contributed $600,000 cash to qualified public charities this year.Her AGI was $814,000.Which of the following statements is true?

Mr.Jain paid the following taxes this year. Compute Mr.Jain's itemized deduction for taxes.

Which of the following government transfer payments is included in the recipient's gross income?

Which of the following is not a tax incentive for individuals to purchase a home instead of renting?

Which of the following items is included in the recipient's gross income?

Lori owns a vacation home that she rents out for about three months each year.Her deduction for expenses allocable to the rental periods is limited to her gross rental income.

Mr.and Mrs.Trent divorced last year.Pursuant to the divorce,Mr.Trent transferred marketable securities (FMV $100,000; basis $67,000)to Mrs.Trent.This year,Mrs.Trent sold the securities for $112,000.Which of the following statements is true?

On February 1,Alan,a single individual,purchased his first personal residence for $400,000.On July 1,Alan sold this residence for $460,000 because he decided to move in with his girlfriend.Consequently,Alan occupied the home for only 150 days.How much gain must Alan recognize?

Gary is an architect who also sings at weddings.This year,he received $5,400 in fees for his singing and spent $6,250 on voice lessons,sheet music,and travel to the weddings.Which of the following statements is true?

This year,David paid his physician $6,200 for routine examinations and lab tests and received a $3,000 reimbursement from his medical insurance company.David is allowed to deduct the $3,200 unreimbursed medical expense as an above-the-line deduction.

A charitable contribution in excess of the AGI limitation may be carried forward five years.

Which of the following statements about tax subsidies for higher education is false?

Taxes and Taxing Jurisdictions

Policy Standards for a Good Tax

Taxes As Transaction Costs

Maxims of Income Tax Planning

Tax Research

Taxable Income From Business Operations

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Nontaxable Exchanges

Sole Proprietorships, partnerships, llcs, and S Corporations

The Corporate Taxpayer

The Choice of Business Entity

Jurisdictional Issues in Business Taxation

The Individual Tax Formula

Compensation and Retirement Planning

Investment and Personal Financial Planning

The Tax Compliance Process

Filters

Exam 17: Tax Consequences of Personal Activities

For federal income tax purposes,property transfers pursuant to a divorce are nontaxable events.

For purposes of the child credit,a child of divorced parents is considered a dependent of the custodial parent unless that parent agrees to allow the noncustodial parent to claim the child as a dependent.

For federal income tax purposes,a taxpayer may deduct state and federal employment taxes ($10,000 maximum)as itemized deductions.

Gary is an architect who also sings at weddings.This year,he received $5,400 in fees from his singing and spent $6,250 on singing lessons,sheet music,and travel to the weddings.If Gary considers this activity as a hobby for federal tax purposes,which of the following statements is true?

Polly Nolan received the following items this year. Compute Polly's gross income.

Ms.Bjorn contributed $600,000 cash to qualified public charities this year.Her AGI was $814,000.Which of the following statements is true?

Mr.Jain paid the following taxes this year. Compute Mr.Jain's itemized deduction for taxes.

Which of the following government transfer payments is included in the recipient's gross income?

Which of the following is not a tax incentive for individuals to purchase a home instead of renting?

Which of the following items is included in the recipient's gross income?

Lori owns a vacation home that she rents out for about three months each year.Her deduction for expenses allocable to the rental periods is limited to her gross rental income.

Mr.and Mrs.Trent divorced last year.Pursuant to the divorce,Mr.Trent transferred marketable securities (FMV $100,000; basis $67,000)to Mrs.Trent.This year,Mrs.Trent sold the securities for $112,000.Which of the following statements is true?

On February 1,Alan,a single individual,purchased his first personal residence for $400,000.On July 1,Alan sold this residence for $460,000 because he decided to move in with his girlfriend.Consequently,Alan occupied the home for only 150 days.How much gain must Alan recognize?

Gary is an architect who also sings at weddings.This year,he received $5,400 in fees for his singing and spent $6,250 on voice lessons,sheet music,and travel to the weddings.Which of the following statements is true?

This year,David paid his physician $6,200 for routine examinations and lab tests and received a $3,000 reimbursement from his medical insurance company.David is allowed to deduct the $3,200 unreimbursed medical expense as an above-the-line deduction.

A charitable contribution in excess of the AGI limitation may be carried forward five years.

Which of the following statements about tax subsidies for higher education is false?

Taxes and Taxing Jurisdictions

Policy Standards for a Good Tax

Taxes As Transaction Costs

Maxims of Income Tax Planning

Tax Research

Taxable Income From Business Operations

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Nontaxable Exchanges

Sole Proprietorships, partnerships, llcs, and S Corporations

The Corporate Taxpayer

The Choice of Business Entity

Jurisdictional Issues in Business Taxation

The Individual Tax Formula

Compensation and Retirement Planning

Investment and Personal Financial Planning

The Tax Compliance Process

Filters