Question 1

Interest on state bonds is tax-exempt if the bonds were issued for private activities,such as convention centers,industrial parks,or stadiums.

Accepted Answer

A) True 
 B)False

Question 2

For purposes of computing the amount of savings bond interest exempt from tax,Modified AGI is adjusted gross income plus:

Accepted Answer

A) deduction for student loan interest. 
B) deduction for moving expenses. 
C) itemized deductions. 
D) standard deduction. 
A) deduction for student loan interest. 
B) deduction for moving expenses. 
C) itemized deductions. 
D) standard deduction.

Question 3

Laura is a student at a state university.In 2017,she received a scholarship of $6,000 for tuition and fees and an assistantship for $3,000.What is the amount that Laura must report in income?

Accepted Answer

A) $9,000. 
B) $6,000. 
C) $0. 
D) $3,000. 
A) $9,000. 
B) $6,000. 
C) $0. 
D) $3,000.

Question 4

Taxable income does not include:

Accepted Answer

A) Alimony payments. 
B) Qualified dividend payments. 
C) Interest payments. 
D) Child support payments. 
A) Alimony payments. 
B) Qualified dividend payments. 
C) Interest payments. 
D) Child support payments.

Question 5

A de minimis benefit is one whose value is so small that keeping track of which employees received the benefit is administratively impractical.

Accepted Answer

A) True 
 B)False

Question 6

Employer-paid premiums on life insurance are not taxable to employees if the coverage does not exceed:

Accepted Answer

A) $52,200. 
B) $51,000. 
C) $50,000. 
D) $100,000. 
A) $52,200. 
B) $51,000. 
C) $50,000. 
D) $100,000.

Question 7

Under the cash receipts and disbursements method,the taxpayer reports income in the year:

Accepted Answer

A) Income is received. 
B) Income is accrued. 
C) Income is earned. 
D) Income is negotiated. 
A) Income is received. 
B) Income is accrued. 
C) Income is earned. 
D) Income is negotiated.

Question 8

Morris redeemed $6,000 (principal of $4,500 and interest of $1,500)of Series I Savings Bonds to pay qualified higher education expenses.His qualified expenses for the year totaled $6,500 and AGI consists of wages of $32,000.What is the amount of interest that Morris can exclude from income?

Accepted Answer

A) $0. 
B) $500. 
C) $1,000. 
D) $1,500. 
A) $0. 
B) $500. 
C) $1,000. 
D) $1,500.

Question 9

Under the cash method,an individual reports income when:

Accepted Answer

A) income is received or constructively received. 
B) income is accrued. 
C) income is earned. 
D) income is received or earned. 
A) income is received or constructively received. 
B) income is accrued. 
C) income is earned. 
D) income is received or earned.

Question 10

Payments under written dependent care assistance plans are tax-free,except that the exclusion for a single person cannot exceed his or her earned income and cannot exceed ________.

Accepted Answer

A) $5,000 
B) $2,500 
C) $5,150 
D) $5,250 
A) $5,000 
B) $2,500 
C) $5,150 
D) $5,250

Question 11

If Raphael,a roofer,decides to fix the roof of his neighbor,Angela,in exchange for Angela providing bookkeeping services for his business,then ________ must report income on the tax return.

Accepted Answer

A) Raphael 
B) Raphael and Angela 
C) Angela 
D) Either Raphael or Angela 
A) Raphael 
B) Raphael and Angela 
C) Angela 
D) Either Raphael or Angela

Question 12

If a student must perform certain services for the educational institution (e.g. ,graduate assistantships),the amount paid for services is considered:

Accepted Answer

A) A scholarship. 
B) A fellowship. 
C) Wages. 
D) All of these. 
A) A scholarship. 
B) A fellowship. 
C) Wages. 
D) All of these.

Question 13

A taxpayer does not have to report part of an original issue discount (OID)as income every year.

Accepted Answer

A) True 
 B)False

Question 14

How does the taxpayer report interest income on an original issue discount (OID)instrument?

Accepted Answer

The taxpayer must include part of the OI

Question 15

When is an original issue discount (OID)created? How is the initial OID computed?

Accepted Answer

An original issue discount (OID)is creat

Question 16

An individual must complete Schedule B (Forms 1040A or 1040)if the following situation occurs:

Accepted Answer

A) Received interest income of $600. 
B) Received interest income of $1,500. 
C) Received interest income of $1,300. 
D) Received interest income of $1,750. 
A) Received interest income of $600. 
B) Received interest income of $1,500. 
C) Received interest income of $1,300. 
D) Received interest income of $1,750.

Question 17

The imputed interest rules do not apply to the following:

Accepted Answer

A) Sales in which all payments are due in 6 months or less. 
B) Sales of property for $3,000 or less. 
C) Certain carrying charges. 
D) All of these. 
A) Sales in which all payments are due in 6 months or less. 
B) Sales of property for $3,000 or less. 
C) Certain carrying charges. 
D) All of these.

Question 18

Dividends are generally taxed at capital gains rates if they are made from the corporation's current earnings and profits or accumulated earnings and profits.

Accepted Answer

A) True 
 B)False

Question 19

There are some instances where a cash-basis taxpayer can report income as though he or she is an accrual basis taxpayer.

Accepted Answer

A) True 
 B)False

Question 20

For most individuals,interest income comes from interest-earning deposits at banks,savings and loans,or credit unions.

Accepted Answer

A) True 
 B)False

Interest on state bonds is tax-exempt if the bonds were issued for private activities,such as convention centers,industrial parks,or stadiums.

For purposes of computing the amount of savings bond interest exempt from tax,Modified AGI is adjusted gross income plus:

Laura is a student at a state university.In 2017,she received a scholarship of $6,000 for tuition and fees and an assistantship for $3,000.What is the amount that Laura must report in income?

Taxable income does not include:

A de minimis benefit is one whose value is so small that keeping track of which employees received the benefit is administratively impractical.

Employer-paid premiums on life insurance are not taxable to employees if the coverage does not exceed:

Under the cash receipts and disbursements method,the taxpayer reports income in the year:

Morris redeemed $6,000 (principal of $4,500 and interest of $1,500)of Series I Savings Bonds to pay qualified higher education expenses.His qualified expenses for the year totaled $6,500 and AGI consists of wages of $32,000.What is the amount of interest that Morris can exclude from income?

Under the cash method,an individual reports income when:

Payments under written dependent care assistance plans are tax-free,except that the exclusion for a single person cannot exceed his or her earned income and cannot exceed ________.

If Raphael,a roofer,decides to fix the roof of his neighbor,Angela,in exchange for Angela providing bookkeeping services for his business,then ________ must report income on the tax return.

If a student must perform certain services for the educational institution (e.g. ,graduate assistantships),the amount paid for services is considered:

A taxpayer does not have to report part of an original issue discount (OID)as income every year.

How does the taxpayer report interest income on an original issue discount (OID)instrument?

When is an original issue discount (OID)created? How is the initial OID computed?

An individual must complete Schedule B (Forms 1040A or 1040)if the following situation occurs:

The imputed interest rules do not apply to the following:

Dividends are generally taxed at capital gains rates if they are made from the corporation's current earnings and profits or accumulated earnings and profits.

There are some instances where a cash-basis taxpayer can report income as though he or she is an accrual basis taxpayer.

For most individuals,interest income comes from interest-earning deposits at banks,savings and loans,or credit unions.

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

Interest on state bonds is tax-exempt if the bonds were issued for private activities,such as convention centers,industrial parks,or stadiums.

For purposes of computing the amount of savings bond interest exempt from tax,Modified AGI is adjusted gross income plus:

Laura is a student at a state university.In 2017,she received a scholarship of $6,000 for tuition and fees and an assistantship for $3,000.What is the amount that Laura must report in income?

Taxable income does not include:

A de minimis benefit is one whose value is so small that keeping track of which employees received the benefit is administratively impractical.

Employer-paid premiums on life insurance are not taxable to employees if the coverage does not exceed:

Under the cash receipts and disbursements method,the taxpayer reports income in the year:

Morris redeemed $6,000 (principal of $4,500 and interest of $1,500)of Series I Savings Bonds to pay qualified higher education expenses.His qualified expenses for the year totaled $6,500 and AGI consists of wages of $32,000.What is the amount of interest that Morris can exclude from income?

Under the cash method,an individual reports income when:

Payments under written dependent care assistance plans are tax-free,except that the exclusion for a single person cannot exceed his or her earned income and cannot exceed ________.

If Raphael,a roofer,decides to fix the roof of his neighbor,Angela,in exchange for Angela providing bookkeeping services for his business,then ________ must report income on the tax return.

If a student must perform certain services for the educational institution (e.g. ,graduate assistantships),the amount paid for services is considered:

A taxpayer does not have to report part of an original issue discount (OID)as income every year.

How does the taxpayer report interest income on an original issue discount (OID)instrument?

When is an original issue discount (OID)created? How is the initial OID computed?

An individual must complete Schedule B (Forms 1040A or 1040)if the following situation occurs:

The imputed interest rules do not apply to the following:

Dividends are generally taxed at capital gains rates if they are made from the corporation's current earnings and profits or accumulated earnings and profits.

There are some instances where a cash-basis taxpayer can report income as though he or she is an accrual basis taxpayer.

For most individuals,interest income comes from interest-earning deposits at banks,savings and loans,or credit unions.

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