Question 1

The main purpose of taxes is to:

Accepted Answer

A) generate revenue for funding government programs. 
B) reduce the chances of inflation. 
C) create jobs. 
D) discourage use of certain goods and services. 
E) decrease competition from foreign companies. 
A) generate revenue for funding government programs. 
B) reduce the chances of inflation. 
C) create jobs. 
D) discourage use of certain goods and services. 
E) decrease competition from foreign companies. A

Question 2

Which one of the following is most apt to qualify as an itemized deduction?

Accepted Answer

A) interest on a credit card or charge account 
B) unreimbursed job-related travel expenses 
C) cost of commuting to work 
D) life insurance premiums 
E) traffic violation fee 
A) interest on a credit card or charge account 
B) unreimbursed job-related travel expenses 
C) cost of commuting to work 
D) life insurance premiums 
E) traffic violation fee B

Question 3

Taxable income is used to compute a person's:

Accepted Answer

A) exemptions. 
B) income tax. 
C) deductions. 
D) capital gains. 
E) exclusions. 
A) exemptions. 
B) income tax. 
C) deductions. 
D) capital gains. 
E) exclusions. B

Question 4

Michele Walsh is considering an additional charitable contribution of $2,000 to a tax-deductible charity,bringing her total itemized deductions to $16,000.If Michele is in a 28 percent tax bracket,how much will this $2,000 contribution reduce her taxes?

Accepted Answer

A) $0 
B) $560 
C) $1,600 
D) $2,000 
E) $4,480 
A) $0 
B) $560 
C) $1,600 
D) $2,000 
E) $4,480

Question 5

A short-term capital gain is profit earned on an investment that is:

Accepted Answer

A) made involving small companies. 
B) not taxed as ordinary income. 
C) held less than 12 months. 
D) in foreign companies. 
E) made in real estatE. 
A) made involving small companies. 
B) not taxed as ordinary income. 
C) held less than 12 months. 
D) in foreign companies. 
E) made in real estatE.

Question 6

Mary Watson bought 20 shares of stock one and half years ago.She recently sold her stock making a profit of $1,400.She is in the 28% tax bracket.Her tax on this investment is:

Accepted Answer

A) $140. 
B) $210. 
C) $280. 
D) $392. 
E) $462. 
A) $140. 
B) $210. 
C) $280. 
D) $392. 
E) $462.

Question 7

Elizabeth Gleason just died.At the time of her death the total value of her assets was $150,000.The federal government collected $7,500 in taxes based on this value.What type of tax is this most likely to be?

Accepted Answer

A) general sales tax 
B) excise tax 
C) personal property tax 
D) income tax 
E) estate tax 
A) general sales tax 
B) excise tax 
C) personal property tax 
D) income tax 
E) estate tax

Question 8

Thomas Franklin claimed an additional $3,000 in deductions he knowingly knew he did not qualify for so he could reduce his tax bill.This is referred to as tax:

Accepted Answer

A) avoidance. 
B) acceleration. 
C) evasion. 
D) delaying. 
E) deferment. 
A) avoidance. 
B) acceleration. 
C) evasion. 
D) delaying. 
E) deferment.

Question 9

A person's filing status is affected by marital status and dependents.

Accepted Answer

A) True 
 B)False

Question 10

An office audit requires that a taxpayer visit an IRS office to clarify some aspect of his or her tax return.

Accepted Answer

A) True 
 B)False

Question 11

A person has $4,000 in medical expenses and an adjusted gross income of $32,000.If taxpayers are allowed to deduct the amount of medical expenses that exceed 7.5 percent of adjusted gross income,what would be the amount of the deduction in this situation?

Accepted Answer

A) $300 
B) $1,600 
C) $2,400 
D) $4,000 
E) $32,000 
A) $300 
B) $1,600 
C) $2,400 
D) $4,000 
E) $32,000

Question 12

Mr.and Mrs.Keating want to give their son Dudley a total of $24,000.They each write him a check for $12,000 so they won't have to pay any gift tax.This is an example of:

Accepted Answer

A) fraud. 
B) tax evasion. 
C) tax exclusion. 
D) tax avoidance. 
E) tax deferred incomE. 
A) fraud. 
B) tax evasion. 
C) tax exclusion. 
D) tax avoidance. 
E) tax deferred incomE.

Question 13

Which type of audit is the least complicated for taxpayers?

Accepted Answer

A) a field audit 
B) an office audit 
C) a research audit 
D) a correspondence audit 
E) a documentation audit 
A) a field audit 
B) an office audit 
C) a research audit 
D) a correspondence audit 
E) a documentation audit

Question 14

An estate tax is imposed on the value of an individual's property at the time of his or her death.

Accepted Answer

A) True 
 B)False

Question 15

When a taxpayer's income increases $1,000 and the taxes owed increases from $7,867 to $8,177,the marginal tax rate is ______ percent.

Accepted Answer

A) 15 
B) 20 
C) 25 
D) 28 
E) 31 
A) 15 
B) 20 
C) 25 
D) 28 
E) 31

Question 16

Tim Bridges owns a bass fishing boat.His state imposes an annual 3.25 percent tax on the current value of this boat.What type of tax is this most likely to be?

Accepted Answer

A) general sales tax 
B) excise tax 
C) personal property tax 
D) income tax 
E) estate tax 
A) general sales tax 
B) excise tax 
C) personal property tax 
D) income tax 
E) estate tax

Question 17

An expense that would be included in the itemized deductions of a taxpayer is:

Accepted Answer

A) personal postage expenses. 
B) life insurance premiums. 
C) real estate property taxes. 
D) a driver's license fee. 
E) annual interest paid on credit cards. 
A) personal postage expenses. 
B) life insurance premiums. 
C) real estate property taxes. 
D) a driver's license fee. 
E) annual interest paid on credit cards.

Question 18

Most people pay federal income tax by:

Accepted Answer

A) paying the total amount owed on April 15. 
B) filing quarterly tax payments. 
C) having amounts withheld from income. 
D) earning tax credits for various deductions. 
E) filing the 1040 EZ form. 
A) paying the total amount owed on April 15. 
B) filing quarterly tax payments. 
C) having amounts withheld from income. 
D) earning tax credits for various deductions. 
E) filing the 1040 EZ form.

Question 19

Maryellen Epplin worked in Poland for part of the year and earned $50,000 while she was there.This income will not be included in her taxable income for the year.This represents a tax:

Accepted Answer

A) deduction. 
B) exclusion. 
C) exemption. 
D) credit. 
E) refund. 
A) deduction. 
B) exclusion. 
C) exemption. 
D) credit. 
E) refund.

Question 20

What type of tax is imposed on the value of an individual's property at the time of his or her death?

Accepted Answer

A) inheritance 
B) excise 
C) gift 
D) personal property 
E) estate 
A) inheritance 
B) excise 
C) gift 
D) personal property 
E) estate

The main purpose of taxes is to:

Which one of the following is most apt to qualify as an itemized deduction?

Taxable income is used to compute a person's:

Michele Walsh is considering an additional charitable contribution of $2,000 to a tax-deductible charity,bringing her total itemized deductions to $16,000.If Michele is in a 28 percent tax bracket,how much will this $2,000 contribution reduce her taxes?

A short-term capital gain is profit earned on an investment that is:

Mary Watson bought 20 shares of stock one and half years ago.She recently sold her stock making a profit of $1,400.She is in the 28% tax bracket.Her tax on this investment is:

Elizabeth Gleason just died.At the time of her death the total value of her assets was $150,000.The federal government collected $7,500 in taxes based on this value.What type of tax is this most likely to be?

Thomas Franklin claimed an additional $3,000 in deductions he knowingly knew he did not qualify for so he could reduce his tax bill.This is referred to as tax:

A person's filing status is affected by marital status and dependents.

An office audit requires that a taxpayer visit an IRS office to clarify some aspect of his or her tax return.

A person has $4,000 in medical expenses and an adjusted gross income of $32,000.If taxpayers are allowed to deduct the amount of medical expenses that exceed 7.5 percent of adjusted gross income,what would be the amount of the deduction in this situation?

Mr.and Mrs.Keating want to give their son Dudley a total of $24,000.They each write him a check for $12,000 so they won't have to pay any gift tax.This is an example of:

Which type of audit is the least complicated for taxpayers?

An estate tax is imposed on the value of an individual's property at the time of his or her death.

When a taxpayer's income increases $1,000 and the taxes owed increases from $7,867 to $8,177,the marginal tax rate is ______ percent.

Tim Bridges owns a bass fishing boat.His state imposes an annual 3.25 percent tax on the current value of this boat.What type of tax is this most likely to be?

An expense that would be included in the itemized deductions of a taxpayer is:

Most people pay federal income tax by:

Maryellen Epplin worked in Poland for part of the year and earned $50,000 while she was there.This income will not be included in her taxable income for the year.This represents a tax:

What type of tax is imposed on the value of an individual's property at the time of his or her death?

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: The Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health, Disability, and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

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Exam 4: Planning Your Tax Strategy

The main purpose of taxes is to:

Which one of the following is most apt to qualify as an itemized deduction?

Taxable income is used to compute a person's:

Michele Walsh is considering an additional charitable contribution of $2,000 to a tax-deductible charity,bringing her total itemized deductions to $16,000.If Michele is in a 28 percent tax bracket,how much will this $2,000 contribution reduce her taxes?

A short-term capital gain is profit earned on an investment that is:

Mary Watson bought 20 shares of stock one and half years ago.She recently sold her stock making a profit of $1,400.She is in the 28% tax bracket.Her tax on this investment is:

Elizabeth Gleason just died.At the time of her death the total value of her assets was $150,000.The federal government collected $7,500 in taxes based on this value.What type of tax is this most likely to be?

Thomas Franklin claimed an additional $3,000 in deductions he knowingly knew he did not qualify for so he could reduce his tax bill.This is referred to as tax:

A person's filing status is affected by marital status and dependents.

An office audit requires that a taxpayer visit an IRS office to clarify some aspect of his or her tax return.

A person has $4,000 in medical expenses and an adjusted gross income of $32,000.If taxpayers are allowed to deduct the amount of medical expenses that exceed 7.5 percent of adjusted gross income,what would be the amount of the deduction in this situation?

Mr.and Mrs.Keating want to give their son Dudley a total of $24,000.They each write him a check for $12,000 so they won't have to pay any gift tax.This is an example of:

Which type of audit is the least complicated for taxpayers?

An estate tax is imposed on the value of an individual's property at the time of his or her death.

When a taxpayer's income increases $1,000 and the taxes owed increases from $7,867 to $8,177,the marginal tax rate is ______ percent.

Tim Bridges owns a bass fishing boat.His state imposes an annual 3.25 percent tax on the current value of this boat.What type of tax is this most likely to be?

An expense that would be included in the itemized deductions of a taxpayer is:

Most people pay federal income tax by:

Maryellen Epplin worked in Poland for part of the year and earned $50,000 while she was there.This income will not be included in her taxable income for the year.This represents a tax:

What type of tax is imposed on the value of an individual's property at the time of his or her death?

Personal Finance Basics and the Time Value of Money

Financial Aspects of Career Planning

Money Management Strategy: Financial Statements and Budgeting

Financial Services: Savings Plans and Payment Accounts

Introduction to Consumer Credit

Choosing a Source of Credit: The Costs of Credit Alternatives

Consumer Purchasing Strategies and Legal Protection

The Housing Decision: Factors and Finances

Property and Motor Vehicle Insurance

Health, Disability, and Long-Term Care Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Investing in Real Estate and Other Investment Alternatives

Starting Early: Retirement Planning

Estate Planning

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