Question 1

A parent may elect to include a child's income in the parent's return if:

Accepted Answer

A) No estimated tax has been paid in the name of the child and the child is not subject to backup withholding. 
B) The child's income is only from interest and dividend distributions. 
C) The child's gross income is more than $1,100 and less than $11,000. 
D) All of these must be met for a parent to elect to include a child's income in the parent's return. 
A) No estimated tax has been paid in the name of the child and the child is not subject to backup withholding. 
B) The child's income is only from interest and dividend distributions. 
C) The child's gross income is more than $1,100 and less than $11,000. 
D) All of these must be met for a parent to elect to include a child's income in the parent's return.

Question 2

For purposes of the additional 0.9% Medicare tax on earned income, a single taxpayer having earned income of more than $200,000 is generally subject to the tax.

Accepted Answer

A) True 
 B)False

Question 3

The hybrid method of accounting involves the use of both the accrual and cash methods of accounting.

Accepted Answer

A) True 
 B)False

Question 4

Under the cash basis of accounting, most expenses are generally deducted in the year they are paid.

Accepted Answer

A) True 
 B)False

Question 5

Lucinda is a self-employed veterinarian in 2019. Her Schedule C net earnings are $86,000 for the year. Calculate the total amount of Lucinda's self-employment tax liability for 2019.

Accepted Answer

$12,151.41

Question 6

Tom, a cash basis sole proprietor, provides the following information: $$\begin{array} { l r } 
\text { Gross receipts } & \$ 30,000 \
\text { Dividend income (on personal investments) } & 200 \
\text { Cost of sal es } & 15,400 \
\text { Other operating expenses } & 3,000 \
\text { State business taxes paid } & 300
\end{array}$$ What amount should Tom report as net earnings from self-employment?

Accepted Answer

A) $10,900 
B) $11,300 
C) $11,400 
D) $14,400 
E) None of these 
A) $10,900 
B) $11,300 
C) $11,400 
D) $14,400 
E) None of these

Question 7

Which of the following itemized deductions may not be deducted in computing the individual alternative minimum tax?

Accepted Answer

A) Qualified home mortgage interest 
B) State income taxes 
C) Medical expenses (limited to 10 percent of AGI) 
D) Charitable deductions 
E) All of these 
A) Qualified home mortgage interest 
B) State income taxes 
C) Medical expenses (limited to 10 percent of AGI) 
D) Charitable deductions 
E) All of these

Question 8

BOND Corporation is owned 25 percent by Brian, 30 percent by Orville, 20 percent by Nate, and 25 percent by Dart Corporation. Dart Corporation is owned 80 percent by Brian and 20 percent by Nate. Brian and Orville are brothers. Answer each of the following questions about BOND Corporation under the constructive ownership rules of Section 267:
a.What is Brian's constructive ownership percentage for Section 267 purposes?
b.If Nate sells property to BOND Corporation for a $7,500 loss, what amount of that loss can be recognized for tax purposes (before any annual limitations)?

Accepted Answer

a. 75% = 25% + 30% + (80% × 25

Question 9

The 3.8 percent ACA Medicare tax does not apply to:

Accepted Answer

A) Interest 
B) Dividends 
C) Capital gains 
D) Wages 
A) Interest 
B) Dividends 
C) Capital gains 
D) Wages

Question 10

Gerald is single and earns $80,000 in dividend income and $180,000 in wage income in 2019. Compute his additional 3.8 percent Medicare tax on net investment income.

Accepted Answer

$2,280 = 3.8% × [the

Question 11

Which of the following items may be subject to the self-employment tax?

Accepted Answer

A) A partner's distributive share of partnership income 
B) Dividend income 
C) Capital gains 
D) Interest income 
E) None of these 
A) A partner's distributive share of partnership income 
B) Dividend income 
C) Capital gains 
D) Interest income 
E) None of these

Question 12

Sales of property at a gain may be restricted under the related party rules of the Internal Revenue Code.

Accepted Answer

A) True 
 B)False

Question 13

Jerry and Julie are brother and sister. Jerry sold stock to Julie for $5,000, its fair market value. The stock cost Jerry $10,000 five years ago. Also, Jerry sold Carol (an unrelated party) stock for $2,000 that cost $10,000 three years ago. What is Jerry's recognized loss before the $3,000 capital loss limitation?

Accepted Answer

A) $0 
B) $8,000 
C) $5,000 
D) $13,000 
E) $14,000 
A) $0 
B) $8,000 
C) $5,000 
D) $13,000 
E) $14,000

Question 14

In 2019, household employers are not required to pay FICA taxes on cash payments of less than $2,100 paid to any household employee in a calendar year.

Accepted Answer

A) True 
 B)False

Question 15

Kate is an accrual basis, calendar-year taxpayer. On November 1, 2019, Kate leased out a building for $4,500 a month. On that day Kate received 7 months rental income on the building, a total of $31,500 ($4,500 × 7 months). How much income must Kate include on her 2019 tax return as a result of this transaction?

Accepted Answer

A) $4,500 
B) $9,000 
C) $31,500 
D) $54,000 
E) None of these 
A) $4,500 
B) $9,000 
C) $31,500 
D) $54,000 
E) None of these

Question 16

Annualizing" is a method by which the taxpayer can usually decrease the amount of tax he or she pays.

Accepted Answer

A) True 
 B)False

Question 17

Amy is a calendar year taxpayer reporting on the cash basis. Indicate which of the following income or expense items should not be included in her 2019 tax return.

Accepted Answer

A) On April 15, 2020, she makes a deductible contribution to her IRA for 2019. 
B) She prepays half a year of interest in advance on her mortgage on the last day of 2019. 
C) She pays all her outstanding invoices for standard business expenses in the last week of December 2019. 
D) She sends out a big bill to a customer on January 1, 2020, even though she did all of the work in December of 2019. 
A) On April 15, 2020, she makes a deductible contribution to her IRA for 2019. 
B) She prepays half a year of interest in advance on her mortgage on the last day of 2019. 
C) She pays all her outstanding invoices for standard business expenses in the last week of December 2019. 
D) She sends out a big bill to a customer on January 1, 2020, even though she did all of the work in December of 2019.

Question 18

William, a cash-basis sole proprietor, had the following receipts and disbursements for the current year: $$\begin{array} { l r } 
\text { Gross receipts } & \$ 50,000 \
\text { Cost of sal es } & 30,000 \
\text { Other operating expenses } & 5,000 \
\text { Personal medical expenses } & 600
\end{array}$$ For the current year, what amount should William report as net earnings from self-employment?

Accepted Answer

A) $13,400 
B) $14,000 
C) $15,000 
D) $20,000 
E) None of these 
A) $13,400 
B) $14,000 
C) $15,000 
D) $20,000 
E) None of these

Question 19

Unearned income of a 16-year-old child may be taxed at trust and estate rates.

Accepted Answer

A) True 
 B)False

Question 20

There is a Medicare tax of 3.8 percent on net investment income.

Accepted Answer

A) True 
 B)False

A parent may elect to include a child's income in the parent's return if:

For purposes of the additional 0.9% Medicare tax on earned income, a single taxpayer having earned income of more than $200,000 is generally subject to the tax.

The hybrid method of accounting involves the use of both the accrual and cash methods of accounting.

Under the cash basis of accounting, most expenses are generally deducted in the year they are paid.

Lucinda is a self-employed veterinarian in 2019. Her Schedule C net earnings are $86,000 for the year. Calculate the total amount of Lucinda's self-employment tax liability for 2019.

Tom, a cash basis sole proprietor, provides the following information: Gross receipts \ 30,000 Dividend income (on personal investments) 200 Cost of sal es 15,400 Other operating expenses 3,000 State business taxes paid 300 What amount should Tom report as net earnings from self-employment?

Which of the following itemized deductions may not be deducted in computing the individual alternative minimum tax?

The 3.8 percent ACA Medicare tax does not apply to:

Gerald is single and earns $80,000 in dividend income and $180,000 in wage income in 2019. Compute his additional 3.8 percent Medicare tax on net investment income.

Which of the following items may be subject to the self-employment tax?

Sales of property at a gain may be restricted under the related party rules of the Internal Revenue Code.

In 2019, household employers are not required to pay FICA taxes on cash payments of less than $2,100 paid to any household employee in a calendar year.

Annualizing" is a method by which the taxpayer can usually decrease the amount of tax he or she pays.

Amy is a calendar year taxpayer reporting on the cash basis. Indicate which of the following income or expense items should not be included in her 2019 tax return.

Unearned income of a 16-year-old child may be taxed at trust and estate rates.

There is a Medicare tax of 3.8 percent on net investment income.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses

Additional Income and the Qualified Business Income Deduction

Deductions for and From AGI

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments and Retirement Plans

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 6: Accounting Periods and Other Taxes

A parent may elect to include a child's income in the parent's return if:

For purposes of the additional 0.9% Medicare tax on earned income, a single taxpayer having earned income of more than $200,000 is generally subject to the tax.

The hybrid method of accounting involves the use of both the accrual and cash methods of accounting.

Under the cash basis of accounting, most expenses are generally deducted in the year they are paid.

Lucinda is a self-employed veterinarian in 2019. Her Schedule C net earnings are $86,000 for the year. Calculate the total amount of Lucinda's self-employment tax liability for 2019.

Tom, a cash basis sole proprietor, provides the following information: Gross receipts \ 30,000 Dividend income (on personal investments) 200 Cost of sal es 15,400 Other operating expenses 3,000 State business taxes paid 300 What amount should Tom report as net earnings from self-employment?

Which of the following itemized deductions may not be deducted in computing the individual alternative minimum tax?

The 3.8 percent ACA Medicare tax does not apply to:

Gerald is single and earns $80,000 in dividend income and $180,000 in wage income in 2019. Compute his additional 3.8 percent Medicare tax on net investment income.

Which of the following items may be subject to the self-employment tax?

Sales of property at a gain may be restricted under the related party rules of the Internal Revenue Code.

In 2019, household employers are not required to pay FICA taxes on cash payments of less than $2,100 paid to any household employee in a calendar year.

Annualizing" is a method by which the taxpayer can usually decrease the amount of tax he or she pays.

Amy is a calendar year taxpayer reporting on the cash basis. Indicate which of the following income or expense items should not be included in her 2019 tax return.

Unearned income of a 16-year-old child may be taxed at trust and estate rates.

There is a Medicare tax of 3.8 percent on net investment income.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses

Additional Income and the Qualified Business Income Deduction

Deductions for and From AGI

Tax Credits

Depreciation and Sale of Business Property

Payroll, Estimated Payments and Retirement Plans

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters