Question 1

In resolving qualified child status for dependency purposes, why are tiebreaker rules necessary? Can these rules be waived?

Accepted Answer

A person being claimed as a dependent ma

Question 2

Regarding the Tax Tables related to the Federal income tax, which of the following statements is correct?

Accepted Answer

A)  For any one year, the Tax Tables are issued by the IRS after the Tax Rate Schedules. 
B)  The Tax Tables will always yield the same amount of tax as the Tax Rate Schedules. 
C)  Taxpayers can elect as to whether the use the Tax Tables or the Tax Rate Schedules. 
D)  The Tax Tables can be used by an estate but not by a trust. 
E)  No correct answer is given. 
A)  For any one year, the Tax Tables are issued by the IRS after the Tax Rate Schedules. 
B)  The Tax Tables will always yield the same amount of tax as the Tax Rate Schedules. 
C)  Taxpayers can elect as to whether the use the Tax Tables or the Tax Rate Schedules. 
D)  The Tax Tables can be used by an estate but not by a trust. 
E)  No correct answer is given.

Question 3

Ed is divorced and maintains a home in which he and a dependent friend live. Ed does not qualify for head of household filing status.

Accepted Answer

A) True 
 B)False

Question 4

Using borrowed funds from a mortgage on her home, Leah provides 52% of her own support, and her sons furnished the rest. Leah can be claimed as a dependent under a multiple support agreement.

Accepted Answer

A) True 
 B)False

Question 5

Kohsei had the following transactions for 2019: $\begin{array}{llr}
  \text { Salary } &&\$80,000\
 \text { Alimony paid } &&(4,000)\
 \text { Recovery from car accident- } &\
 \text {  Personal injury damages} &\$40,000\
 \text {  Punitive damages} &70,000&110,000\
 \text { Gift from parents } &&20,000\
 \text {Property sales-  } &\
 \text { Loss on sale of boat (used for pleasure and owned 4 years) } &(\$4,000)\
 \text { Gain on sale of ADM stock (held for 10 months as an investment) } &4,000&(-0-)\
\end{array}$
 What is Kohsei's AGI for 2019?

Accepted Answer

$150,000 [$80,000 (salary) - $4,000 (ali

Question 6

Regarding the rules applicable to filing of income tax returns, which of the following, if any, is an incorrect statement:

Accepted Answer

A)  Married persons who file joint returns cannot later (after the due date of the return) substitute separate returns. 
B)  Married persons who file separate returns can later (after the due date of the return) substitute a joint return. 
C)  The usual test as to when a taxpayer must file a return is based on the total of the following: personal exemption + basic standard deduction + both additional standard deductions. 
D)  Special filing requirement rules exist for taxpayers who are claimed as dependents of another. 
E)  None of these. 
A)  Married persons who file joint returns cannot later (after the due date of the return) substitute separate returns. 
B)  Married persons who file separate returns can later (after the due date of the return) substitute a joint return. 
C)  The usual test as to when a taxpayer must file a return is based on the total of the following: personal exemption + basic standard deduction + both additional standard deductions. 
D)  Special filing requirement rules exist for taxpayers who are claimed as dependents of another. 
E)  None of these.

Question 7

Buddy and Hazel are ages 72 and 71, respectively, and file a joint return. If they have itemized deductions of $25,100 for 2019, they should not claim the standard deduction.

Accepted Answer

A) True 
 B)False

Question 8

Match the statements that relate to each other. Note: Some choices may be used more than once.
-Age of a qualifying child

Accepted Answer

A) Not available to 65-year old taxpayer who itemizes. 
B) Exception for U.S. citizenship or residency test (for dependency exemption purposes). 
C) Largest basic standard deduction available to a dependent who has no earned income in 2019. 
D) Considered for dependency purposes. 
E) Qualifies for head of household filing status.
F)A child (age 15) who is a dependent and has only earned income.
G)Considered in applying gross income test (for dependency exemption purposes).
H)Not considered in applying the gross income test (for dependency exemption purposes).
I)Unmarried taxpayer who can use the same tax rates as married persons filing jointly.
J)Exception to the support test (for dependency exemption purposes).
K)A child (age 16) who is a dependent and has only unearned income of $4,500.
L)No correct match provided. 
A) Not available to 65-year old taxpayer who itemizes. 
B) Exception for U.S. citizenship or residency test (for dependency exemption purposes). 
C) Largest basic standard deduction available to a dependent who has no earned income in 2019. 
D) Considered for dependency purposes. 
E) Qualifies for head of household filing status.
F)A child (age 15) who is a dependent and has only earned income.
G)Considered in applying gross income test (for dependency exemption purposes).
H)Not considered in applying the gross income test (for dependency exemption purposes).
I)Unmarried taxpayer who can use the same tax rates as married persons filing jointly.
J)Exception to the support test (for dependency exemption purposes).
K)A child (age 16) who is a dependent and has only unearned income of $4,500.
L)No correct match provided.

Question 9

Jayden and Chloe Harper are husband and wife and use the calendar year for tax purposes.
a. If the Harpers file a joint return for 2019, can they later switch to separate returns for 2019?
b. If the Harpers file separate returns for 2019, can they later switch to a joint return for 2019?

Accepted Answer

a. Unless the Harpers do so on or before

Question 10

Surviving spouse filing status begins in the year in which the deceased spouse died.

Accepted Answer

A) True 
 B)False

Question 11

Albert buys his mother a TV. For purposes of meeting the support test, Albert cannot include the cost of the TV.

Accepted Answer

A) True 
 B)False

Question 12

In 2019, Ashley earns a salary of $55,000, has capital gains of $3,000, and receives interest income of $5,000. Her husband died in 2018. Ashley has a dependent son, Tyrone, who is age eight. Her itemized deductions are $9,000.
a. What is her filing status?
b. Calculate Ashley's taxable income for 2019.

Accepted Answer

a. Ashley satisfies

Question 13

Howard, age 82, died on January 2, 2019. On his final income tax return, the full amount of the basic and additional standard deductions will be allowed even though Howard lived for only two days during the year.

Accepted Answer

A) True 
 B)False

Question 14

In terms of the tax formula applicable to individual taxpayers, which of the following statements, if any, is correct?

Accepted Answer

A)  In arriving at AGI, a taxpayer must elect between claiming deductions for AGI and deductions from AGI. 
B)  In arriving at taxable income, a taxpayer must elect between claiming deductions for AGI and deductions from AGI. 
C)  If a taxpayer has deductions for AGI, the standard deduction is not available. 
D)  In arriving at taxable income, a taxpayer must elect between deductions for AGI and the standard deduction. 
E)  None of these. 
A)  In arriving at AGI, a taxpayer must elect between claiming deductions for AGI and deductions from AGI. 
B)  In arriving at taxable income, a taxpayer must elect between claiming deductions for AGI and deductions from AGI. 
C)  If a taxpayer has deductions for AGI, the standard deduction is not available. 
D)  In arriving at taxable income, a taxpayer must elect between deductions for AGI and the standard deduction. 
E)  None of these.

Question 15

Which of the following items, if any, is deductible?

Accepted Answer

A)  Parking expenses incurred in connection with jury duty-taxpayer is a dentist. 
B)  Substantiated gambling losses (not in excess of gambling winnings) from state lottery. 
C)  Contributions to mayor's reelection campaign. 
D)  Speeding ticket incurred while on business. 
E)  Premiums paid on personal life insurance policy. 
A)  Parking expenses incurred in connection with jury duty-taxpayer is a dentist. 
B)  Substantiated gambling losses (not in excess of gambling winnings) from state lottery. 
C)  Contributions to mayor's reelection campaign. 
D)  Speeding ticket incurred while on business. 
E)  Premiums paid on personal life insurance policy.

Question 16

An above-the-line deduction refers to a deduction for AGI.

Accepted Answer

A) True 
 B)False

Question 17

Evan and Eileen Carter are husband and wife and file a joint return for 2019. Both are under 65 years of age. They provide more than half of the support of their daughter, Pamela (age 25), who is a full-time medical student. Pamela receives a $5,000 scholarship covering her tuition at college. Evan and Eileen furnish all of the support of Belinda (Evan's grandmother), who is age 80 and lives in a nursing home. They also support Peggy (age 66), who is a friend of the family and lives with them. How many dependents may the Carters claim?

Accepted Answer

A)  None 
B)  One 
C)  Two 
D)  Three 
A)  None 
B)  One 
C)  Two 
D)  Three

Question 18

During the year, Irv had the following transactions: $\begin{array}{lr}
\text { Long-term loss on the sale of business use equipment } & \$ 7,000 \
\text { Long-term loss on the sale of personal use camper } & 6,000 \
\text { Long-term gain on the sale of personal use boat } & 3,000 \
\text { Short-term loss on the sale of stock investment } & 4,000 \
\text { Long-term loss on the sale of land investment } & 5,000
\end{array}$ How are these transactions handled for income tax purposes?

Accepted Answer

The business equipment is an ordinary lo

Question 19

Lucas, age 17 and single, earns $6,000 during 2019. His parents cannot claim him as a dependent if he does not live with them.

Accepted Answer

A) True 
 B)False

Question 20

Match the statements that relate to each other. Note: Some choices may be used more than once.
-Resident of Canada or Mexico

Accepted Answer

A) Not available to 65-year old taxpayer who itemizes. 
B) Exception for U.S. citizenship or residency test (for dependency exemption purposes). 
C) Largest basic standard deduction available to a dependent who has no earned income in 2019. 
D) Considered for dependency purposes. 
E) Qualifies for head of household filing status.
F)A child (age 15) who is a dependent and has only earned income.
G)Considered in applying gross income test (for dependency exemption purposes).
H)Not considered in applying the gross income test (for dependency exemption purposes).
I)Unmarried taxpayer who can use the same tax rates as married persons filing jointly.
J)Exception to the support test (for dependency exemption purposes).
K)A child (age 16) who is a dependent and has only unearned income of $4,500.
L)No correct match provided. 
A) Not available to 65-year old taxpayer who itemizes. 
B) Exception for U.S. citizenship or residency test (for dependency exemption purposes). 
C) Largest basic standard deduction available to a dependent who has no earned income in 2019. 
D) Considered for dependency purposes. 
E) Qualifies for head of household filing status.
F)A child (age 15) who is a dependent and has only earned income.
G)Considered in applying gross income test (for dependency exemption purposes).
H)Not considered in applying the gross income test (for dependency exemption purposes).
I)Unmarried taxpayer who can use the same tax rates as married persons filing jointly.
J)Exception to the support test (for dependency exemption purposes).
K)A child (age 16) who is a dependent and has only unearned income of $4,500.
L)No correct match provided.

Exam 3: Computing the Tax

In resolving qualified child status for dependency purposes, why are tiebreaker rules necessary? Can these rules be waived?

Regarding the Tax Tables related to the Federal income tax, which of the following statements is correct?

Ed is divorced and maintains a home in which he and a dependent friend live. Ed does not qualify for head of household filing status.

Using borrowed funds from a mortgage on her home, Leah provides 52% of her own support, and her sons furnished the rest. Leah can be claimed as a dependent under a multiple support agreement.

Regarding the rules applicable to filing of income tax returns, which of the following, if any, is an incorrect statement:

Buddy and Hazel are ages 72 and 71, respectively, and file a joint return. If they have itemized deductions of $25,100 for 2019, they should not claim the standard deduction.

Match the statements that relate to each other. Note: Some choices may be used more than once. -Age of a qualifying child

Jayden and Chloe Harper are husband and wife and use the calendar year for tax purposes. a. If the Harpers file a joint return for 2019, can they later switch to separate returns for 2019? b. If the Harpers file separate returns for 2019, can they later switch to a joint return for 2019?

Surviving spouse filing status begins in the year in which the deceased spouse died.

Albert buys his mother a TV. For purposes of meeting the support test, Albert cannot include the cost of the TV.

Howard, age 82, died on January 2, 2019. On his final income tax return, the full amount of the basic and additional standard deductions will be allowed even though Howard lived for only two days during the year.

In terms of the tax formula applicable to individual taxpayers, which of the following statements, if any, is correct?

Which of the following items, if any, is deductible?

An above-the-line deduction refers to a deduction for AGI.

Lucas, age 17 and single, earns $6,000 during 2019. His parents cannot claim him as a dependent if he does not live with them.

Match the statements that relate to each other. Note: Some choices may be used more than once. -Resident of Canada or Mexico

Understanding and Working With the Federal Tax Law

Working With the Tax Law

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses, Section 1231, and Recapture Provisions

Taxing Business Income

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

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