Question 1

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 2

Robert received a tax refund in 2014 from his state,which he deducted on his prior year's return as an itemized deduction.He must report the refund in income in 2014,subject to certain computations to determine the amount that is taxable.

Accepted Answer

A) True 
 B)False

Question 3

If a taxpayer is economically better off because of a transaction,the person must normally record income.

Accepted Answer

A) True 
 B)False

Question 4

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 5

For tax purposes,name the three conditions that a transaction must meet for income recognition.

Accepted Answer

A transaction is recognized as

Question 6

If an attorney performs some estate tax work for a client and the client agrees to pay $4,000 to him and $3,000 to a local financial institution for a debt the attorney owes,the attorney has income of:

Accepted Answer

A)  $4,000. 
B)  $7,000. 
C)  $3,000. 
D)  None of these. 
A)  $4,000. 
B)  $7,000. 
C)  $3,000. 
D)  None of these.

Question 7

When an individual's marginal ordinary income tax rate is less than 25%,the tax rate on qualified dividends is:

Accepted Answer

A)  5%. 
B)  15%. 
C)  0%. 
D)  10%. 
A)  5%. 
B)  15%. 
C)  0%. 
D)  10%.

Question 8

If an employee receives a prize or award from his or her employer,the award is included in W-2 income.

Accepted Answer

A) True 
 B)False

Question 9

When an individual's marginal ordinary income tax rate is 25% and less than 39.60%,the taxation rate on qualified dividends is 15%.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Taxable income includes:

Accepted Answer

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

Question 12

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

Question 13

When an individual's marginal ordinary income tax rate is less than 25%,the tax rate on qualified dividends is _______.

Accepted Answer

A)  0% 
B)  5% 
C)  15% 
D)  10% 
A)  0% 
B)  5% 
C)  15% 
D)  10%

Question 14

What are cafeteria plans?

Accepted Answer

Flexible benefit plans,often called cafe

Question 15

An example of nontaxable income is:

Accepted Answer

A)  Vacation pay. 
B)  Alimony payment. 
C)  Child support payment. 
D)  Holiday bonus. 
A)  Vacation pay. 
B)  Alimony payment. 
C)  Child support payment. 
D)  Holiday bonus.

Question 16

Felix,a single taxpayer,claimed $180 of state tax as an itemized deduction on his 2013 tax return.The total itemized deductions on his tax return were $6,215.In 2014,he received a $25 refund from the state.What is the amount Felix has to report on his 2014 tax return?

Accepted Answer

A)  $0. 
B)  $115. 
C)  $180. 
D)  $25. 
A)  $0. 
B)  $115. 
C)  $180. 
D)  $25.

Question 17

Almost all individuals use the cash receipts and disbursements method of accounting.

Accepted Answer

A) True 
 B)False

Question 18

Betty performed bookkeeping services for Donald charging him $550.Donald agreed that he would pay Betty's credit card bill for the same amount.Betty has received an economic benefit and must report $550 in income on her tax return.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)  Received interest income of $1,500. 
B)  Received dividend income of $1,000. 
C)  Received interest income of $100. 
D)  Received tax-exempt interest of $700. 
A)  Received interest income of $1,500. 
B)  Received dividend income of $1,000. 
C)  Received interest income of $100. 
D)  Received tax-exempt interest of $700.

Question 20

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.

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

Robert received a tax refund in 2014 from his state,which he deducted on his prior year's return as an itemized deduction.He must report the refund in income in 2014,subject to certain computations to determine the amount that is taxable.

If a taxpayer is economically better off because of a transaction,the person must normally record income.

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.

For tax purposes,name the three conditions that a transaction must meet for income recognition.

If an attorney performs some estate tax work for a client and the client agrees to pay $4,000 to him and $3,000 to a local financial institution for a debt the attorney owes,the attorney has income of:

When an individual's marginal ordinary income tax rate is less than 25%,the tax rate on qualified dividends is:

If an employee receives a prize or award from his or her employer,the award is included in W-2 income.

When an individual's marginal ordinary income tax rate is 25% and less than 39.60%,the taxation rate on qualified dividends is 15%.

Taxable income does not include:

Taxable income includes:

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

When an individual's marginal ordinary income tax rate is less than 25%,the tax rate on qualified dividends is _______.

What are cafeteria plans?

An example of nontaxable income is:

Felix,a single taxpayer,claimed $180 of state tax as an itemized deduction on his 2013 tax return.The total itemized deductions on his tax return were $6,215.In 2014,he received a $25 refund from the state.What is the amount Felix has to report on his 2014 tax return?

Almost all individuals use the cash receipts and disbursements method of accounting.

Betty performed bookkeeping services for Donald charging him $550.Donald agreed that he would pay Betty's credit card bill for the same amount.Betty has received an economic benefit and must report $550 in income on her tax return.

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:

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

Capital Gains and Other Sales of Property

Rental Property, Royalties, and Income From Flow-Through Entities

Tax Credits

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

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

Robert received a tax refund in 2014 from his state,which he deducted on his prior year's return as an itemized deduction.He must report the refund in income in 2014,subject to certain computations to determine the amount that is taxable.

If a taxpayer is economically better off because of a transaction,the person must normally record income.

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.

For tax purposes,name the three conditions that a transaction must meet for income recognition.

If an attorney performs some estate tax work for a client and the client agrees to pay $4,000 to him and $3,000 to a local financial institution for a debt the attorney owes,the attorney has income of:

When an individual's marginal ordinary income tax rate is less than 25%,the tax rate on qualified dividends is:

If an employee receives a prize or award from his or her employer,the award is included in W-2 income.

When an individual's marginal ordinary income tax rate is 25% and less than 39.60%,the taxation rate on qualified dividends is 15%.

Taxable income does not include:

Taxable income includes:

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

When an individual's marginal ordinary income tax rate is less than 25%,the tax rate on qualified dividends is _______.

What are cafeteria plans?

An example of nontaxable income is:

Felix,a single taxpayer,claimed $180 of state tax as an itemized deduction on his 2013 tax return.The total itemized deductions on his tax return were $6,215.In 2014,he received a $25 refund from the state.What is the amount Felix has to report on his 2014 tax return?

Almost all individuals use the cash receipts and disbursements method of accounting.

Betty performed bookkeeping services for Donald charging him $550.Donald agreed that he would pay Betty's credit card bill for the same amount.Betty has received an economic benefit and must report $550 in income on her tax return.

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:

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

Capital Gains and Other Sales of Property

Rental Property, Royalties, and Income From Flow-Through Entities

Tax Credits

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