Question 1

Karen is single and earns wages of $250,000 in 2019. She has no other income. How much is her 0.9 percent Medicare tax on earned income?

Accepted Answer

$450 = 0.9

Question 2

Salary earned by minors may be included on the parents' tax return.

Accepted Answer

A) True 
 B)False

Question 3

In 2019, which of the following children would have income taxed at trust and estate rates?

Accepted Answer

A) A 13-year-old child with salary income of $12,000 
B) A 12-year-old child with net unearned income of $3,200 
C) A nonstudent, 19-year-old child with net unearned income of $12,000 
D) A 9-year-old child with salary income of $1,000 
E) All of these 
A) A 13-year-old child with salary income of $12,000 
B) A 12-year-old child with net unearned income of $3,200 
C) A nonstudent, 19-year-old child with net unearned income of $12,000 
D) A 9-year-old child with salary income of $1,000 
E) All of these

Question 4

Which of the following types of income is subject to the self-employment tax?

Accepted Answer

A) Interest income 
B) Gain on sale of real estate 
C) Income from a sole proprietor's law practice 
D) Dividends from stock 
E) None of these 
A) Interest income 
B) Gain on sale of real estate 
C) Income from a sole proprietor's law practice 
D) Dividends from stock 
E) None of these

Question 5

Choose the incorrect statement.

Accepted Answer

A) Books and records may be kept on a different year-end basis than the year-end used for tax purposes. 
B) The choice to file on a fiscal year-end basis must be made with an initial tax return. 
C) Almost all individuals file tax returns using a calendar year accounting period. 
D) An individual may request IRS approval to change to a fiscal year-end basis if certain conditions are met. 
A) Books and records may be kept on a different year-end basis than the year-end used for tax purposes. 
B) The choice to file on a fiscal year-end basis must be made with an initial tax return. 
C) Almost all individuals file tax returns using a calendar year accounting period. 
D) An individual may request IRS approval to change to a fiscal year-end basis if certain conditions are met.

Question 6

Most partnerships, S corporations, and personal service corporations owned by individuals choose a September 30 year-end so that they may defer 3 months of income.

Accepted Answer

A) True 
 B)False

Question 7

If a corporation has a short tax year, other than their first or last year of operation, explain how the corporation calculates the tax for the short period.

Accepted Answer

Corporations with a short tax year are r

Question 8

Countryside Acres Apartment Complex had the following transactions during the year:
? Rental income collected for Apts A-F
12 months prepaid rental income from new tenant in Apt $G$ who moved in on
November 1
Operating expenses (except for interest)
Prepaid interest expense on bankloan, paid in December, for 6 months (including December) Using the accrual method, calculate the net income: Rental income Apts A-F
Rental income from new tenant
Total income
Operating expenses (except for interest)
Prepaid interest expense
Total expenses
Total net income ?

Accepted Answer

? \[\begin{array} { l c } 
& \text { Acc

Question 9

Beverly is the sole owner of Bev & Associates, an accrual basis corporation. In 2019, Bev & Associates has an unprofitable year and Beverly lends the corporation $50,000 to meet expenses. The corporation accrues interest expense of $5,000 on the loan from Beverly, but does not pay the interest to her in cash.
​
How much of the $5,000 in accrued interest expense can Bev & Associates deduct on its 2019 corporate tax return? Explain.

Accepted Answer

$0. Because Beverly and Bev &

Question 10

Which of the common deductions below are allowed for both regular tax purposes and for AMT purposes in 2019?

Accepted Answer

A) The standard deduction 
B) Personal and dependency exemptions 
C) State income taxes, property taxes, and all other taxes deducted on Schedule A 
D) Mortgage interest from the acquisition of a residence with a loan balance less than $750,000 
E) Miscellaneous itemized deductions taken on Schedule A 
A) The standard deduction 
B) Personal and dependency exemptions 
C) State income taxes, property taxes, and all other taxes deducted on Schedule A 
D) Mortgage interest from the acquisition of a residence with a loan balance less than $750,000 
E) Miscellaneous itemized deductions taken on Schedule A

Question 11

In cash basis accounting, for tax purposes:

Accepted Answer

A) Income is recognized when it is actually or constructively received and expenses are recognized when they are actually or constructively incurred, regardless of when paid. 
B) Income is recognized when it is earned regardless of when received and expenses are recognized when they are actually or constructively incurred. 
C) Income is generally recognized when it is actually or constructively received and expenses are generally recognized when they are paid. 
D) The cash basis is not allowed for businesses reported on Schedule C. 
A) Income is recognized when it is actually or constructively received and expenses are recognized when they are actually or constructively incurred, regardless of when paid. 
B) Income is recognized when it is earned regardless of when received and expenses are recognized when they are actually or constructively incurred. 
C) Income is generally recognized when it is actually or constructively received and expenses are generally recognized when they are paid. 
D) The cash basis is not allowed for businesses reported on Schedule C.

Question 12

Self-employment taxes:

Accepted Answer

A) Consist of Medicare tax and Social Security tax. 
B) Are not affected by wages the taxpayer earns as an employee. 
C) Apply to taxpayers with less than $400 in self-employment earnings. 
D) Are calculated based on unearned income such as interest and dividends as well as net earnings from self-employment. 
A) Consist of Medicare tax and Social Security tax. 
B) Are not affected by wages the taxpayer earns as an employee. 
C) Apply to taxpayers with less than $400 in self-employment earnings. 
D) Are calculated based on unearned income such as interest and dividends as well as net earnings from self-employment.

Question 13

Dividend income is not subject to the self-employment tax.

Accepted Answer

A) True 
 B)False

Question 14

If the net unearned income of a minor child is to be taxed at trust and estate rates, the parents may elect, under certain conditions, to include the child's gross income on their tax return.

Accepted Answer

A) True 
 B)False

Question 15

The 0.9 percent Medicare tax applies to:
a.Earned income
b.Tax exempt income
c.Gain on the sale of a principal residence
d.IRA distributions

Accepted Answer

a
Subjecti

Question 16

Which one of the following entities cannot use the cash method for tax purposes in 2019?

Accepted Answer

A) A large almond farm with $40 million in average annual gross receipts. 
B) A corporation with $24 million in average annual gross receipts and 200 employees. 
C) A law firm operating as a personal service corporation with $5.4 million in average annual gross receipts. 
D) A small sole proprietorship with $150,000 in average annual gross receipts. 
E) All of these may use the cash method. 
A) A large almond farm with $40 million in average annual gross receipts. 
B) A corporation with $24 million in average annual gross receipts and 200 employees. 
C) A law firm operating as a personal service corporation with $5.4 million in average annual gross receipts. 
D) A small sole proprietorship with $150,000 in average annual gross receipts. 
E) All of these may use the cash method.

Question 17

Generally, cash basis taxpayers must deduct payments of prepaid interest using the accrual method.

Accepted Answer

A) True 
 B)False

Question 18

What was the original purpose of the alternative minimum tax?

Accepted Answer

The purpose of the original alternative

Question 19

Which of the following is true with respect to the related party rules?

Accepted Answer

A) Bill sells stock to his sister for a $3,000 loss. Bill can deduct the loss on his tax return. 
B) A taxpayer's uncle is a related party for purposes of Section 267. 
C) A disallowed loss on a related party transaction can be used to offset any future gain when the property is sold to an unrelated party. 
D) Under the constructive ownership rules of Section 267, a shareholder owns 10 percent of the stock owned by a corporation in which he or she is a shareholder. 
E) None of these 
A) Bill sells stock to his sister for a $3,000 loss. Bill can deduct the loss on his tax return. 
B) A taxpayer's uncle is a related party for purposes of Section 267. 
C) A disallowed loss on a related party transaction can be used to offset any future gain when the property is sold to an unrelated party. 
D) Under the constructive ownership rules of Section 267, a shareholder owns 10 percent of the stock owned by a corporation in which he or she is a shareholder. 
E) None of these

Question 20

Tom, age 13, is claimed as a dependent by his parents. Tom has unearned income of $3,400 and $300 of income from mowing lawns in the neighborhood. If the first $2,600 of Tom's net unearned income is taxed at 10%, what is Tom's 2019 income tax liability?

Accepted Answer

A) $0 
B) $260 
C) $459 
D) $370 
E) None of these 
A) $0 
B) $260 
C) $459 
D) $370 
E) None of these

Karen is single and earns wages of $250,000 in 2019. She has no other income. How much is her 0.9 percent Medicare tax on earned income?

Salary earned by minors may be included on the parents' tax return.

In 2019, which of the following children would have income taxed at trust and estate rates?

Which of the following types of income is subject to the self-employment tax?

Choose the incorrect statement.

Most partnerships, S corporations, and personal service corporations owned by individuals choose a September 30 year-end so that they may defer 3 months of income.

If a corporation has a short tax year, other than their first or last year of operation, explain how the corporation calculates the tax for the short period.

Which of the common deductions below are allowed for both regular tax purposes and for AMT purposes in 2019?

In cash basis accounting, for tax purposes:

Self-employment taxes:

Dividend income is not subject to the self-employment tax.

If the net unearned income of a minor child is to be taxed at trust and estate rates, the parents may elect, under certain conditions, to include the child's gross income on their tax return.

The 0.9 percent Medicare tax applies to: a.Earned income b.Tax exempt income c.Gain on the sale of a principal residence d.IRA distributions

Which one of the following entities cannot use the cash method for tax purposes in 2019?

Generally, cash basis taxpayers must deduct payments of prepaid interest using the accrual method.

What was the original purpose of the alternative minimum tax?

Which of the following is true with respect to the related party rules?

Tom, age 13, is claimed as a dependent by his parents. Tom has unearned income of $3,400 and $300 of income from mowing lawns in the neighborhood. If the first $2,600 of Tom's net unearned income is taxed at 10%, what is Tom's 2019 income tax liability?

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

Karen is single and earns wages of $250,000 in 2019. She has no other income. How much is her 0.9 percent Medicare tax on earned income?

Salary earned by minors may be included on the parents' tax return.

In 2019, which of the following children would have income taxed at trust and estate rates?

Which of the following types of income is subject to the self-employment tax?

Choose the incorrect statement.

Most partnerships, S corporations, and personal service corporations owned by individuals choose a September 30 year-end so that they may defer 3 months of income.

If a corporation has a short tax year, other than their first or last year of operation, explain how the corporation calculates the tax for the short period.

Which of the common deductions below are allowed for both regular tax purposes and for AMT purposes in 2019?

In cash basis accounting, for tax purposes:

Self-employment taxes:

Dividend income is not subject to the self-employment tax.

If the net unearned income of a minor child is to be taxed at trust and estate rates, the parents may elect, under certain conditions, to include the child's gross income on their tax return.

The 0.9 percent Medicare tax applies to: a.Earned income b.Tax exempt income c.Gain on the sale of a principal residence d.IRA distributions

Which one of the following entities cannot use the cash method for tax purposes in 2019?

Generally, cash basis taxpayers must deduct payments of prepaid interest using the accrual method.

What was the original purpose of the alternative minimum tax?

Which of the following is true with respect to the related party rules?

Tom, age 13, is claimed as a dependent by his parents. Tom has unearned income of $3,400 and $300 of income from mowing lawns in the neighborhood. If the first $2,600 of Tom's net unearned income is taxed at 10%, what is Tom's 2019 income tax liability?

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