Question 1

Employers can reimburse employees for up to ________ per year of educational assistance,whether or not job-related.

Accepted Answer

A) $5,250 
B) $5,150 
C) $5,000 
D) $5,520 
A) $5,250 
B) $5,150 
C) $5,000 
D) $5,520 A

Question 2

For tax purposes,one of the requirements to recognize income is:

Accepted Answer

A) The transaction does not have to be completed. 
B) The income cannot be tax-exempt. 
C) The transaction does not have to have an economic benefit. 
D) None of these. 
A) The transaction does not have to be completed. 
B) The income cannot be tax-exempt. 
C) The transaction does not have to have an economic benefit. 
D) None of these. B

Question 3

Tom and Betsy,who are married filing jointly,reported a standard deduction of $12,600 on their 2016 tax return.They paid $500 to the state for income taxes in 2016.In 2017,they received a $125 refund of state taxes paid in 2016.What is the amount that Tom and Betsy need to report on their 2017 tax return?

Accepted Answer

A) $0. 
B) $125. 
C) $375. 
D) $500. 
A) $0. 
B) $125. 
C) $375. 
D) $500. A

Question 4

Joel purchased $125,000 of A and D Corporation's newly issued bonds for $114,500.The bonds carry an interest rate of 8% and mature in 5 years.What is the initial OID on these bonds?

Accepted Answer

A) $2,000. 
B) $2,100. 
C) $10,500. 
D) $10,000. 
A) $2,000. 
B) $2,100. 
C) $10,500. 
D) $10,000.

Question 5

Which type of interest received is taxable and must be reported on the tax return?

Accepted Answer

A) Interest on municipal bonds. 
B) Tax-exempt interest. 
C) Interest on a savings account. 
D) Tax-exempt interest and interest on a savings account. 
A) Interest on municipal bonds. 
B) Tax-exempt interest. 
C) Interest on a savings account. 
D) Tax-exempt interest and interest on a savings account.

Question 6

Caroline,who files as head of household,received $9,000 of social security benefits.Her AGI before the social security benefits was $27,000.She also received $200 of tax- exempt interest.What is the amount of taxable social security benefits?

Accepted Answer

A) $9,000. 
B) $7,650. 
C) $4,500. 
D) $3,350. 
A) $9,000. 
B) $7,650. 
C) $4,500. 
D) $3,350.

Question 7

The initial original issue discount (OID)on a bond is equal to the difference between the acquisition price and the maturity value.

Accepted Answer

A) True 
 B)False

Question 8

If an attorney performs some estate tax work for a client and the client agrees to pay $6,000 to him and $5,000 to a local financial institution for a debt the attorney owes,the attorney has income of:

Accepted Answer

A) $5,000. 
B) $11,000. 
C) $6,000. 
D) None of these. 
A) $5,000. 
B) $11,000. 
C) $6,000. 
D) None of these.

Question 9

On December 30,2017,Robert agreed to repair a damaged house wall and started to work on that date.He will finish and get paid for the job in January of 2018.Robert needs to record the income received from his work in the year:

Accepted Answer

A) 2017. 
B) Half in 2017 and the other half in 2018. 
C) 2018. 
D) He does not have to report the income at all. 
A) 2017. 
B) Half in 2017 and the other half in 2018. 
C) 2018. 
D) He does not have to report the income at all.

Question 10

A taxpayer can exclude from income interest received from:

Accepted Answer

A) Municipal bonds issued by the state. 
B) A credit union. 
C) A seller-financed mortgage transaction. 
D) A savings account established at a local bank. 
A) Municipal bonds issued by the state. 
B) A credit union. 
C) A seller-financed mortgage transaction. 
D) A savings account established at a local bank.

Question 11

The taxability of social security benefits depends on the provisional income and ________.

Accepted Answer

A) Dependency exemptions of the taxpayer 
B) Filing status of the taxpayer 
C) Itemized deductions of the taxpayer 
D) Standard deduction of the taxpayer 
A) Dependency exemptions of the taxpayer 
B) Filing status of the taxpayer 
C) Itemized deductions of the taxpayer 
D) Standard deduction of the taxpayer

Question 12

Life insurance proceeds because of the death of the insured are fully excludable from the gross income of the recipient if the payment is made:

Accepted Answer

A) It does not matter how these payments are made. 
B) Over time. 
C) As a lump sum. 
D) It does not matter how these payments are made and over time. 
A) It does not matter how these payments are made. 
B) Over time. 
C) As a lump sum. 
D) It does not matter how these payments are made and over time.

Question 13

The original issue discount (OID)rules apply to all debt instruments with OID,except:

Accepted Answer

A) Non-business loans of $10,000 or less between natural persons. 
B) Tax-exempt debt. 
C) U.S.savings bonds. 
D) All of these. 
A) Non-business loans of $10,000 or less between natural persons. 
B) Tax-exempt debt. 
C) U.S.savings bonds. 
D) All of these.

Question 14

Determine the amount of tax liability under the following two situations.
1.The taxpayer is single with taxable income of $54,690 that includes qualified dividends of $450.
2.The taxpayer is married filing jointly with taxable income of $64,500 that includes qualified dividends of $300.

Accepted Answer

Answers are rounded to the nearest dolla

Question 15

Jury duty pay is taxable income,but it can be deducted from gross income if the amount must be given to the employer.

Accepted Answer

A) True 
 B)False

Question 16

Welfare payments received by a taxpayer must be reported in income.

Accepted Answer

A) True 
 B)False

Question 17

The following items under compensation for sickness or injury are exempt from income and do not have to be reported on the taxpayer's tax return:

Accepted Answer

A) Sick pay. 
B) Welfare payments. 
C) Workers' compensation payments. 
D) Welfare payments and Workers' compensation payments. 
A) Sick pay. 
B) Welfare payments. 
C) Workers' compensation payments. 
D) Welfare payments and Workers' compensation payments.

Question 18

When filing their tax returns,almost all individuals use:

Accepted Answer

A) The accrual method. 
B) The accounting method. 
C) The recognition method. 
D) The cash receipts and disbursements method. 
A) The accrual method. 
B) The accounting method. 
C) The recognition method. 
D) The cash receipts and disbursements method.

Question 19

For tax purposes,one of the requirements to recognize income is:

Accepted Answer

A) The income can be tax-exempt. 
B) The transaction must occur but it's not necessary to complete it. 
C) There must be an economic benefit. 
D) All of these. 
A) The income can be tax-exempt. 
B) The transaction must occur but it's not necessary to complete it. 
C) There must be an economic benefit. 
D) All of these.

Question 20

Imputed interest rules apply to term loans or demand loans in which the interest rate is less than the Applicable Federal Rate (AFR).Which of the following transaction does not fall under these rules? Assume in all situations that interest is below the AFR.

Accepted Answer

A) Gift loans of $14,000 in which interest foregone is in the form of a gift. 
B) Loans in which a principal purpose is to avoid tax. 
C) Loans in which the below-market or interest-free loan would have a significant effect on the tax liability of the borrower or lender. 
D) Both gift loans of $14,000 in which interest foregone is in the form of a gift and loans in which a principal purpose is to avoid tax. 
A) Gift loans of $14,000 in which interest foregone is in the form of a gift. 
B) Loans in which a principal purpose is to avoid tax. 
C) Loans in which the below-market or interest-free loan would have a significant effect on the tax liability of the borrower or lender. 
D) Both gift loans of $14,000 in which interest foregone is in the form of a gift and loans in which a principal purpose is to avoid tax.

Employers can reimburse employees for up to ________ per year of educational assistance,whether or not job-related.

For tax purposes,one of the requirements to recognize income is:

Joel purchased $125,000 of A and D Corporation's newly issued bonds for $114,500.The bonds carry an interest rate of 8% and mature in 5 years.What is the initial OID on these bonds?

Which type of interest received is taxable and must be reported on the tax return?

Caroline,who files as head of household,received $9,000 of social security benefits.Her AGI before the social security benefits was $27,000.She also received $200 of tax- exempt interest.What is the amount of taxable social security benefits?

The initial original issue discount (OID)on a bond is equal to the difference between the acquisition price and the maturity value.

If an attorney performs some estate tax work for a client and the client agrees to pay $6,000 to him and $5,000 to a local financial institution for a debt the attorney owes,the attorney has income of:

On December 30,2017,Robert agreed to repair a damaged house wall and started to work on that date.He will finish and get paid for the job in January of 2018.Robert needs to record the income received from his work in the year:

A taxpayer can exclude from income interest received from:

The taxability of social security benefits depends on the provisional income and ________.

Life insurance proceeds because of the death of the insured are fully excludable from the gross income of the recipient if the payment is made:

The original issue discount (OID)rules apply to all debt instruments with OID,except:

Determine the amount of tax liability under the following two situations. 1.The taxpayer is single with taxable income of $54,690 that includes qualified dividends of $450. 2.The taxpayer is married filing jointly with taxable income of $64,500 that includes qualified dividends of $300.

Jury duty pay is taxable income,but it can be deducted from gross income if the amount must be given to the employer.

Welfare payments received by a taxpayer must be reported in income.

The following items under compensation for sickness or injury are exempt from income and do not have to be reported on the taxpayer's tax return:

When filing their tax returns,almost all individuals use:

For tax purposes,one of the requirements to recognize income is:

Imputed interest rules apply to term loans or demand loans in which the interest rate is less than the Applicable Federal Rate (AFR).Which of the following transaction does not fall under these rules? Assume in all situations that interest is below the AFR.

Introduction to Taxation, the Income Tax Formula, and Form 1040EZ

Expanded Tax Formula, forms 1040A and 1040, and Basic Concepts

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income Line 12 of Form 1040 and Schedule C

Capital Gains and Other Sales of Property Schedule D and Form 4797

Rental Property, Royalties, and Income From Flow- Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040,lines 48 Through 54 and Lines 66A Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters

Exam 3: Gross Income: Inclusions and Exclusions

Employers can reimburse employees for up to ________ per year of educational assistance,whether or not job-related.

For tax purposes,one of the requirements to recognize income is:

Joel purchased $125,000 of A and D Corporation's newly issued bonds for $114,500.The bonds carry an interest rate of 8% and mature in 5 years.What is the initial OID on these bonds?

Which type of interest received is taxable and must be reported on the tax return?

Caroline,who files as head of household,received $9,000 of social security benefits.Her AGI before the social security benefits was $27,000.She also received $200 of tax- exempt interest.What is the amount of taxable social security benefits?

The initial original issue discount (OID)on a bond is equal to the difference between the acquisition price and the maturity value.

If an attorney performs some estate tax work for a client and the client agrees to pay $6,000 to him and $5,000 to a local financial institution for a debt the attorney owes,the attorney has income of:

On December 30,2017,Robert agreed to repair a damaged house wall and started to work on that date.He will finish and get paid for the job in January of 2018.Robert needs to record the income received from his work in the year:

A taxpayer can exclude from income interest received from:

The taxability of social security benefits depends on the provisional income and ________.

Life insurance proceeds because of the death of the insured are fully excludable from the gross income of the recipient if the payment is made:

The original issue discount (OID)rules apply to all debt instruments with OID,except:

Determine the amount of tax liability under the following two situations. 1.The taxpayer is single with taxable income of $54,690 that includes qualified dividends of $450. 2.The taxpayer is married filing jointly with taxable income of $64,500 that includes qualified dividends of $300.

Jury duty pay is taxable income,but it can be deducted from gross income if the amount must be given to the employer.

Welfare payments received by a taxpayer must be reported in income.

The following items under compensation for sickness or injury are exempt from income and do not have to be reported on the taxpayer's tax return:

When filing their tax returns,almost all individuals use:

For tax purposes,one of the requirements to recognize income is:

Imputed interest rules apply to term loans or demand loans in which the interest rate is less than the Applicable Federal Rate (AFR).Which of the following transaction does not fall under these rules? Assume in all situations that interest is below the AFR.

Introduction to Taxation, the Income Tax Formula, and Form 1040EZ

Expanded Tax Formula, forms 1040A and 1040, and Basic Concepts

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income Line 12 of Form 1040 and Schedule C

Capital Gains and Other Sales of Property Schedule D and Form 4797

Rental Property, Royalties, and Income From Flow- Through Entities Line 17, form 1040, and Schedule E

Tax Credits Form 1040,lines 48 Through 54 and Lines 66A Through 73

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters