Question 1

What is the amount of the net investment income tax?

Accepted Answer

A) 2)3% 
B) 3)8% 
C) 4)2% 
D) 5)3% 
A) 2)3% 
B) 3)8% 
C) 4)2% 
D) 5)3%

Question 2

What limits a taxpayer's deduction loss to the amount that the taxpayer actually has at risk of loss and affects individuals, estates and trust, partners, shareholders in S corporations, and most C corporations equally?

Accepted Answer

A) Interplay Risk Computation 
B) At-risk Rules 
C) Deduction Loss Rules and Regulation 
D) Interplay Deductions 
A) Interplay Risk Computation 
B) At-risk Rules 
C) Deduction Loss Rules and Regulation 
D) Interplay Deductions

Question 3

When were the passive activity and at-risk rules enacted?

Accepted Answer

A) 1950 
B) 1969 
C) 1986 
D) 1996 
A) 1950 
B) 1969 
C) 1986 
D) 1996

Question 4

Your client is making a $5,000 contribution to a local museum. The client realizes that there are tax deductions that can be applied to the current tax year. What would you inform the client of?

Accepted Answer

A) An appraisal must be done 
B) The appraisal fee is not deductible as contributions 
C) Both A and B 
D) Neither A nor B 
A) An appraisal must be done 
B) The appraisal fee is not deductible as contributions 
C) Both A and B 
D) Neither A nor B

Question 5

Which of the following can be an effective tax planning opportunity for individuals who may be subject to the alternative minimum tax?

Accepted Answer

A) Always deduct state income tax instead of state sales tax 
B) Increase investments in private activity tax-exempt bonds 
C) Accelerate income through IRA or pension distributions 
D) Pay off all home equity loans 
A) Always deduct state income tax instead of state sales tax 
B) Increase investments in private activity tax-exempt bonds 
C) Accelerate income through IRA or pension distributions 
D) Pay off all home equity loans

Question 6

What is a disadvantage to Roth IRAs?

Accepted Answer

A) The distributions are taxable 
B) You cannot deduct current contributions 
C) The interest rate is very low 
D) The funds can only be distributed to beneficiaries 
A) The distributions are taxable 
B) You cannot deduct current contributions 
C) The interest rate is very low 
D) The funds can only be distributed to beneficiaries

Question 7

Which item below is not a test to file for Head of Household (HOH)?

Accepted Answer

A) The taxpayer is not married at end of year. 
B) The taxpayer pays more than half the cost of the home. 
C) The taxpayer is married living separately. 
D) The taxpayer's home was the main home for more than half the year of stepchildren. 
A) The taxpayer is not married at end of year. 
B) The taxpayer pays more than half the cost of the home. 
C) The taxpayer is married living separately. 
D) The taxpayer's home was the main home for more than half the year of stepchildren.

Question 8

Where do laws concerning taxes begin?

Accepted Answer

A) White House 
B) Internal Revenue Service 
C) Senate Finance Committee 
D) House Ways and Means Committee 
A) White House 
B) Internal Revenue Service 
C) Senate Finance Committee 
D) House Ways and Means Committee

Question 9

Which of the following is NOT an adjustment to adjusted gross income, because it is allowed for alternative minimum tax purposes?

Accepted Answer

A) Standard deduction 
B) Qualified housing interest 
C) Personal exemptions 
D) State and local taxes 
A) Standard deduction 
B) Qualified housing interest 
C) Personal exemptions 
D) State and local taxes

Question 10

Your client has contributed $45,000 to the Red Cross which exceeds her AGI limit. How many years can she carryover the excess?

Accepted Answer

A) 1 year 
B) 5 years 
C) Until all excess is deducted 
D) Cannot carryover excess deductions 
A) 1 year 
B) 5 years 
C) Until all excess is deducted 
D) Cannot carryover excess deductions

Question 11

What type of corporation is subject to flat tax?

Accepted Answer

A) S Corporation 
B) Partnerships 
C) Personal Service Corporation 
D) Personal Holding Company 
A) S Corporation 
B) Partnerships 
C) Personal Service Corporation 
D) Personal Holding Company

Question 12

What form is used when filing for trusts and estates in each calendar year that it has taxable income and to report income and distributions?

Accepted Answer

A) Form 1041 
B) Form 1043 
C) Form 1441 
D) Form 1442 
A) Form 1041 
B) Form 1043 
C) Form 1441 
D) Form 1442

Question 13

What IRS publication can you use to find a complete list of qualifying charitable organizations?

Accepted Answer

A) IRS Publication 17 
B) IRS Publication 78 
C) IRS Publication 942 
D) IRS Publication 1040 
A) IRS Publication 17 
B) IRS Publication 78 
C) IRS Publication 942 
D) IRS Publication 1040

Question 14

What is the limit of loss recognition on at-risk activities?

Accepted Answer

A) $10,000 
B) The taxpayer's adjusted basis in the property 
C) The taxpayer's adjusted basis in the property, plus any loans for the activity where the taxpayer is personally liable, minus any previously allowed losses 
D) The taxpayer's adjusted basis in the property, plus any non-recourse loans, minus any previously allowed losses 
A) $10,000 
B) The taxpayer's adjusted basis in the property 
C) The taxpayer's adjusted basis in the property, plus any loans for the activity where the taxpayer is personally liable, minus any previously allowed losses 
D) The taxpayer's adjusted basis in the property, plus any non-recourse loans, minus any previously allowed losses

Question 15

What is the most common method taxpayers use to report income?

Accepted Answer

A) Cash 
B) Accrual 
C) Hybrid 
D) Accelerated 
A) Cash 
B) Accrual 
C) Hybrid 
D) Accelerated

Question 16

What is the maximum amount of charitable contributions a taxpayer can claim in any one year?

Accepted Answer

A) $5,000 
B) 25% of AGI 
C) 50% of AGI 
D) 100% of AGI 
A) $5,000 
B) 25% of AGI 
C) 50% of AGI 
D) 100% of AGI

Question 17

Your client has barter income, deductions for office-in-the-home expenses, and substantial business losses. At tax time you inform the client that the IRS may audit due to their use of what system?

Accepted Answer

A) Discriminate Functions System 
B) Targeted Programs 
C) Civil Fraud 
D) Taxpayer Compliance Measurement Program 
A) Discriminate Functions System 
B) Targeted Programs 
C) Civil Fraud 
D) Taxpayer Compliance Measurement Program

Question 18

In what year was the current alternative minimum tax system created?

Accepted Answer

A) 1950 
B) 1969 
C) 1974 
D) 1978 
A) 1950 
B) 1969 
C) 1974 
D) 1978

Question 19

What type of trust income must first be allowed by state law versus IRS statute?

Accepted Answer

A) Capital Gains 
B) Rents 
C) Royalties 
D) Dividends 
A) Capital Gains 
B) Rents 
C) Royalties 
D) Dividends

Question 20

The Revenue Act of 1916 views estates and trusts as what?

Accepted Answer

A) A way to avoid tax liability 
B) A way to transfer wealth between individuals 
C) A way to create additional tax liability 
D) A way to donate to charitable causes 
A) A way to avoid tax liability 
B) A way to transfer wealth between individuals 
C) A way to create additional tax liability 
D) A way to donate to charitable causes

What is the amount of the net investment income tax?

What limits a taxpayer's deduction loss to the amount that the taxpayer actually has at risk of loss and affects individuals, estates and trust, partners, shareholders in S corporations, and most C corporations equally?

When were the passive activity and at-risk rules enacted?

Your client is making a $5,000 contribution to a local museum. The client realizes that there are tax deductions that can be applied to the current tax year. What would you inform the client of?

Which of the following can be an effective tax planning opportunity for individuals who may be subject to the alternative minimum tax?

What is a disadvantage to Roth IRAs?

Which item below is not a test to file for Head of Household (HOH)?

Where do laws concerning taxes begin?

Which of the following is NOT an adjustment to adjusted gross income, because it is allowed for alternative minimum tax purposes?

Your client has contributed $45,000 to the Red Cross which exceeds her AGI limit. How many years can she carryover the excess?

What type of corporation is subject to flat tax?

What form is used when filing for trusts and estates in each calendar year that it has taxable income and to report income and distributions?

What IRS publication can you use to find a complete list of qualifying charitable organizations?

What is the limit of loss recognition on at-risk activities?

What is the most common method taxpayers use to report income?

What is the maximum amount of charitable contributions a taxpayer can claim in any one year?

Your client has barter income, deductions for office-in-the-home expenses, and substantial business losses. At tax time you inform the client that the IRS may audit due to their use of what system?

In what year was the current alternative minimum tax system created?

What type of trust income must first be allowed by state law versus IRS statute?

The Revenue Act of 1916 views estates and trusts as what?

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Exam 8: Tax Planning

What is the amount of the net investment income tax?

What limits a taxpayer's deduction loss to the amount that the taxpayer actually has at risk of loss and affects individuals, estates and trust, partners, shareholders in S corporations, and most C corporations equally?

When were the passive activity and at-risk rules enacted?

Your client is making a $5,000 contribution to a local museum. The client realizes that there are tax deductions that can be applied to the current tax year. What would you inform the client of?

Which of the following can be an effective tax planning opportunity for individuals who may be subject to the alternative minimum tax?

What is a disadvantage to Roth IRAs?

Which item below is not a test to file for Head of Household (HOH)?

Where do laws concerning taxes begin?

Which of the following is NOT an adjustment to adjusted gross income, because it is allowed for alternative minimum tax purposes?

Your client has contributed $45,000 to the Red Cross which exceeds her AGI limit. How many years can she carryover the excess?

What type of corporation is subject to flat tax?

What form is used when filing for trusts and estates in each calendar year that it has taxable income and to report income and distributions?

What IRS publication can you use to find a complete list of qualifying charitable organizations?

What is the limit of loss recognition on at-risk activities?

What is the most common method taxpayers use to report income?

What is the maximum amount of charitable contributions a taxpayer can claim in any one year?

Your client has barter income, deductions for office-in-the-home expenses, and substantial business losses. At tax time you inform the client that the IRS may audit due to their use of what system?

In what year was the current alternative minimum tax system created?

What type of trust income must first be allowed by state law versus IRS statute?

The Revenue Act of 1916 views estates and trusts as what?

Education Planning

Education Planning

Estate Planning

Estate Planning

General Principles of Financial Planning

General Principles of Financial Planning

Investment Planning

Investment Planning

Professional Conduct and Regulation

Professional Conduct and Regulation

Retirement Savings and Income Planning

Retirement Savings and Income Planning

Risk Management and Insurance Planning

Risk Management and Insurance Planning

Tax Planning

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