Question 1

Which of the following relationships does NOT pass the relationship test for a qualifying child?

Accepted Answer

A) Stepsister's daughter. 
B) Half-brother. 
C) Cousin. 
D) Stepsister. 
A) Stepsister's daughter. 
B) Half-brother. 
C) Cousin. 
D) Stepsister.

Question 2

Tax credits reduce taxable income dollar for dollar.

Accepted Answer

A) True 
 B)False

Question 3

An individual with gross income of $5,000 could qualify as a qualifying child of another taxpayer but could not qualify as a qualifying relative of another taxpayer.

Accepted Answer

A) True 
 B)False

Question 4

Hannah,who is single,received a qualified dividend of $1,000.Hannah's marginal ordinary income tax rate is 32 percent.What amount of tax must she pay on the $1,000 dividend?

Accepted Answer

$150 ($1,0

Question 5

In Year 1,the Bennetts' 25-year-old daughter,Jane,is a full-time student at an out-of-state university but she plans to return home after the school year ends.In previous years,Jane has never worked and her parents have always been able to claim her as a dependent.In Year 1,a kind neighbor offers to pay for all of Jane's educational and living expenses.Which of the following statements is most accurate regarding whether Jane's parents would be allowed to claim Jane as a dependent for Year 1,assuming the neighbor pays for all of Jane's support?

Accepted Answer

A) No,Jane must include her neighbor's gift as income and thus fails the gross income test for a qualifying relative. 
B) Yes,because she is a full-time student and does not provide more than half of her own support,Jane is considered her parent's qualifying child. 
C) No,Jane is too old to be considered a qualifying child and her parents fail the support test of a qualifying relative because they did not provide more than half her support. 
D) Yes,because she is a student,her absence is considered as "temporary." Consequently she meets the residence test and is considered a qualifying child of the Bennetts. 
A) No,Jane must include her neighbor's gift as income and thus fails the gross income test for a qualifying relative. 
B) Yes,because she is a full-time student and does not provide more than half of her own support,Jane is considered her parent's qualifying child. 
C) No,Jane is too old to be considered a qualifying child and her parents fail the support test of a qualifying relative because they did not provide more than half her support. 
D) Yes,because she is a student,her absence is considered as "temporary." Consequently she meets the residence test and is considered a qualifying child of the Bennetts.

Question 6

Which of the following types of income are not considered ordinary income?

Accepted Answer

A) Compensation income. 
B) Net long-term capital gains (in excess of short-term capital losses). 
C) Qualified dividend income. 
D) Both compensation income and qualified dividend income. 
E) Both net long-term capital gains (in excess of short-term capital losses)and qualified dividend income. 
A) Compensation income. 
B) Net long-term capital gains (in excess of short-term capital losses). 
C) Qualified dividend income. 
D) Both compensation income and qualified dividend income. 
E) Both net long-term capital gains (in excess of short-term capital losses)and qualified dividend income.

Question 7

An individual may never be considered as both a qualifying relative and a qualifying child of the same taxpayer.

Accepted Answer

A) True 
 B)False

Question 8

Itemized deductions and the standard deduction are deductions from AGI but the deduction for qualified business income is a deduction for AGI.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not a filing status?

Accepted Answer

A) Head of household. 
B) Unmarried. 
C) Qualifying widow or widower. 
D) Married filing jointly. 
A) Head of household. 
B) Unmarried. 
C) Qualifying widow or widower. 
D) Married filing jointly.

Question 10

Taxpayers are allowed to claim a child tax credit for their qualifying children and certain other qualifying dependents.

Accepted Answer

A) True 
 B)False

Question 11

The income tax base for an individual tax return is:

Accepted Answer

A) Realized income from whatever source derived. 
B) Gross income. 
C) Adjusted gross income. 
D) Adjusted gross income minus from AGI deductions. 
A) Realized income from whatever source derived. 
B) Gross income. 
C) Adjusted gross income. 
D) Adjusted gross income minus from AGI deductions.

Question 12

Which of the following statements regarding tax credits is true?

Accepted Answer

A) Tax credits reduce taxable income dollar for dollar. 
B) Tax credits provide a greater tax benefit the greater the taxpayer's marginal tax rate. 
C) Tax credits reduce taxes due dollar for dollar. 
D) None of these statements are true. 
A) Tax credits reduce taxable income dollar for dollar. 
B) Tax credits provide a greater tax benefit the greater the taxpayer's marginal tax rate. 
C) Tax credits reduce taxes due dollar for dollar. 
D) None of these statements are true.

Question 13

If an unmarried taxpayer provides more than half the support for a cousin who lives in the taxpayer's home for the entire year,the taxpayer will qualify for head of household filing status.

Accepted Answer

A) True 
 B)False

Question 14

In certain circumstances,a married taxpayer who does not file a joint tax return with her spouse may qualify for the head of household filing status.

Accepted Answer

A) True 
 B)False

Question 15

Jane and Ed Rochester are married with a 2-year-old child,who lives with them and whom they support financially.In 2019,Ed and Jane realized the following items of income and expense:
   They also qualified for a $2,000 child tax credit.Their employers withheld $5,800 in federal income taxes from their paychecks (in the aggregate).Finally,the 2019 standard deduction amount for MFJ taxpayers is $24,400.
What is the couple's adjusted gross income?

Accepted Answer

$99,000,se

Question 16

Miguel,a widower whose wife died in Year 1,maintains a household for himself and his daughter,who qualifies as his dependent.Miguel did not remarry.What is the most favorable filing status that Miguel qualifies for in Year 3?

Accepted Answer

A) Single. 
B) Qualifying widower. 
C) Head of household. 
D) Married filing separately. 
A) Single. 
B) Qualifying widower. 
C) Head of household. 
D) Married filing separately.

Question 17

Taxpayers may prepay their tax liability through withholdings and through estimated tax payments.

Accepted Answer

A) True 
 B)False

Question 18

All of the following are for AGI deductions except:

Accepted Answer

A) Contributions to qualified retirement accounts. 
B) Rental and royalty expenses. 
C) Business expenses for a self-employed taxpayer. 
D) Charitable contributions. 
A) Contributions to qualified retirement accounts. 
B) Rental and royalty expenses. 
C) Business expenses for a self-employed taxpayer. 
D) Charitable contributions.

Question 19

In 2019,Brittany,who is single,cares for her father,Raymond.Brittany pays the bills relating to Raymond's home.She also buys groceries and provides the rest of his support.Raymond has no gross income.Brittany received $45,000 of salary from her employer during the year.Brittany reports $3,000 of itemized deductions.What is Brittany's taxable income?

Accepted Answer

$26,650 ($45,000 − $

Question 20

Catherine de Bourgh has one child,Anne,who is 18 years old at the end of the year.Anne lived at home for seven months during the year before leaving home to attend State University for the remaining five months of the year.During the year,Anne earned $6,000 while working part time.Catherine provided 80 percent of Anne's support and Anne provided the rest.Which of the following statements regarding whether Anne is Catherine's qualifying child for the current year is correct?

Accepted Answer

A) Anne is a qualifying child of Catherine. 
B) Anne is not a qualifying child of Catherine because she fails the gross income test. 
C) Anne is not a qualifying child of Catherine because she fails the residence test. 
D) Anne is not a qualifying child of Catherine because she fails the support test. 
A) Anne is a qualifying child of Catherine. 
B) Anne is not a qualifying child of Catherine because she fails the gross income test. 
C) Anne is not a qualifying child of Catherine because she fails the residence test. 
D) Anne is not a qualifying child of Catherine because she fails the support test.

Exam 4: Individual Income Tax Overview,dependents,and Filing Status

Which of the following relationships does NOT pass the relationship test for a qualifying child?

Tax credits reduce taxable income dollar for dollar.

An individual with gross income of $5,000 could qualify as a qualifying child of another taxpayer but could not qualify as a qualifying relative of another taxpayer.

Hannah,who is single,received a qualified dividend of $1,000.Hannah's marginal ordinary income tax rate is 32 percent.What amount of tax must she pay on the $1,000 dividend?

Which of the following types of income are not considered ordinary income?

An individual may never be considered as both a qualifying relative and a qualifying child of the same taxpayer.

Itemized deductions and the standard deduction are deductions from AGI but the deduction for qualified business income is a deduction for AGI.

Which of the following is not a filing status?

Taxpayers are allowed to claim a child tax credit for their qualifying children and certain other qualifying dependents.

The income tax base for an individual tax return is:

Which of the following statements regarding tax credits is true?

If an unmarried taxpayer provides more than half the support for a cousin who lives in the taxpayer's home for the entire year,the taxpayer will qualify for head of household filing status.

In certain circumstances,a married taxpayer who does not file a joint tax return with her spouse may qualify for the head of household filing status.

Miguel,a widower whose wife died in Year 1,maintains a household for himself and his daughter,who qualifies as his dependent.Miguel did not remarry.What is the most favorable filing status that Miguel qualifies for in Year 3?

Taxpayers may prepay their tax liability through withholdings and through estimated tax payments.

All of the following are for AGI deductions except:

An Introduction to Tax

Tax Compliance,the Irs,and Tax Authorities

Tax Planning Strategies and Related Limitations

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income,deductions,and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation,reorganization,and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Ustaxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters