Question 1

Which of the following government transfer payments is included in the recipient's gross income?

Accepted Answer

A)  Food stamps 
B)  Need-based welfare payments 
C)  Unemployment compensation 
D)  None of the above is included. 
A)  Food stamps 
B)  Need-based welfare payments 
C)  Unemployment compensation 
D)  None of the above is included.

Question 2

Taxpayers include a maximum of 85% of Social Security benefits in gross income.

Accepted Answer

A) True 
 B)False

Question 3

Ben received a $5,000 tuition scholarship from his local community college. He can exclude the $5,000 from gross income.

Accepted Answer

A) True 
 B)False

Question 4

This year, David paid his physician $6,200 for routine examinations and received a $3,000 reimbursement from his medical insurance company. David is allowed a $3,200 medical expense as an above-the-line deduction.

Accepted Answer

A) True 
 B)False

Question 5

James Dean received the following this year. Scholarship for college tuition ard fees $ \quad $$\$ 20,000$
Scholarship for college rocm ard board $ \quad $$\$ 12,500$
Chamber of Cormuerce citizenship award $ \quad $$\$ 1,500$
Irheritarce from great wacle$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$\$ 38,000$ Compute James' gross income.

Accepted Answer

A)  $12,500 
B)  $14,000 
C)  $34,000 
D)  None of the above. 
A)  $12,500 
B)  $14,000 
C)  $34,000 
D)  None of the above.

Question 6

For federal income tax purposes, a taxpayer may elect to deduct state and local sales taxes as an itemized deduction.

Accepted Answer

A) True 
 B)False

Question 7

Mr. and Mrs. Frazier recognized a $723,000 gain on sale of a home that had been their principal residence for 29 years. They moved into a rented condominium in Naples, Florida. What are the tax consequences of the sale to the Fraziers?

Accepted Answer

A)  $723,000 long-term capital gain 
B)  $223,000 long-term capital gain 
C)  $473,000 ordinary gain 
D)  $473,000 long-term capital gain 
A)  $723,000 long-term capital gain 
B)  $223,000 long-term capital gain 
C)  $473,000 ordinary gain 
D)  $473,000 long-term capital gain

Question 8

Ted and Alice divorced this year. Pursuant to the divorce agreement, Ted pays $5,000 alimony and $7,500 child support to Alice every month. Which of the following statements is true?

Accepted Answer

A)  Alice includes the monthly alimony and child support payments in gross income. 
B)  Ted is allowed to deduct the monthly alimony and child support payments. 
C)  Ted is entitled to the exemptions for the couples' two minor children because he is paying child support. 
D)  None of the above is true. 
A)  Alice includes the monthly alimony and child support payments in gross income. 
B)  Ted is allowed to deduct the monthly alimony and child support payments. 
C)  Ted is entitled to the exemptions for the couples' two minor children because he is paying child support. 
D)  None of the above is true.

Question 9

Mr. and Mrs. King had only one casualty loss this year. A tornado severely damaged their home, decreasing its value by $70,000. The couple received a $48,000 reimbursement from their insurance company. Compute the Kings' itemized deduction for casualty losses if their AGI was $98,200.

Accepted Answer

A)  $22,000 
B)  $21,900 
C)  $12,080 
D)  $60,080 
A)  $22,000 
B)  $21,900 
C)  $12,080 
D)  $60,080

Question 10

For federal income tax purposes, a taxpayer may deduct state and federal employment taxes as an itemized deduction.

Accepted Answer

A) True 
 B)False

Question 11

Violet took out a $900,000 mortgage to purchase her personal residence. She can deduct the mortgage interest payments as an itemized deduction.

Accepted Answer

A) True 
 B)False

Question 12

Mr. and Mrs. Oliva, ages 70 and 67, incurred the following unreimbursed medical expenses this year. Payments to physiciars ard dentists$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$\$ 2,290$
Payment for hospital emergency roenl visit$ \quad $$ \quad $$\$ 3,520$
Prescription dugs$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$\$ 750$
Cost of wheelchair$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$\$ 1800$ If the Olivas' AGI is $23,200, compute their medical expense deduction.

Accepted Answer

A)  $0 
B)  $6,040 
C)  $8,360 
D)  None of the above. 
A)  $0 
B)  $6,040 
C)  $8,360 
D)  None of the above.

Question 13

Mr. and Mrs. Alvarez paid $130,000 for their home 30 years ago. They recently sold this home and moved into a retirement apartment. Describe the tax consequences of the sale assuming that the amount realized was:
a. $125,000
b. $450,000
c. $850,000

Accepted Answer

a. $(5,000) loss realized; $0 recognized

Question 14

Under the terms of a divorce decree, Harold transferred his one-half interest in the marital residence to his former wife Francine. Francine must include the value of the interest in gross income.

Accepted Answer

A) True 
 B)False

Question 15

Gary is a successful architect who also sings at weddings. This year, he received $5,400 of fees for his singing and spent $6,250 on voice lessons, sheet music, and travel to the weddings. Which of the following statements is true?

Accepted Answer

A)  Because the singing activity resulted in a loss, Gary can't treat it as a business. 
B)  If facts and circumstances support Gary's claim that his singing activity is a business, he can deduct an $850 above-the-line loss. 
C)  Because Gary's primary source of income is his architecture practice, he can't treat the singing activity as a business. 
D)  None of the above is true. 
A)  Because the singing activity resulted in a loss, Gary can't treat it as a business. 
B)  If facts and circumstances support Gary's claim that his singing activity is a business, he can deduct an $850 above-the-line loss. 
C)  Because Gary's primary source of income is his architecture practice, he can't treat the singing activity as a business. 
D)  None of the above is true.

Question 16

Unemployment benefits are excluded from gross income.

Accepted Answer

A) True 
 B)False

Question 17

Mrs. Hanson's financial support this year consisted of: $14,650 Social Security benefits; $9,600 pension from her former employer's qualified retirement plan, and $15,000 cash gifts from her children. Compute Mrs. Hanson's AGI.

Accepted Answer

AGI = $9,6

Question 18

Which of the following itemized deductions is disallowed in the computation of alternative minimum taxable income (AMTI)?

Accepted Answer

A)  State and local income tax 
B)  Casualty loss 
C)  Charitable contribution 
D)  Gambling loss 
A)  State and local income tax 
B)  Casualty loss 
C)  Charitable contribution 
D)  Gambling loss

Question 19

Congress provides an indirect subsidy to charities by allowing a deduction for charitable contributions.

Accepted Answer

A) True 
 B)False

Question 20

Tax return preparation fees are miscellaneous itemized deductions subject to the 2% AGI floor.

Accepted Answer

A) True 
 B)False

Which of the following government transfer payments is included in the recipient's gross income?

Taxpayers include a maximum of 85% of Social Security benefits in gross income.

Ben received a $5,000 tuition scholarship from his local community college. He can exclude the $5,000 from gross income.

This year, David paid his physician $6,200 for routine examinations and received a $3,000 reimbursement from his medical insurance company. David is allowed a $3,200 medical expense as an above-the-line deduction.

For federal income tax purposes, a taxpayer may elect to deduct state and local sales taxes as an itemized deduction.

Mr. and Mrs. Frazier recognized a $723,000 gain on sale of a home that had been their principal residence for 29 years. They moved into a rented condominium in Naples, Florida. What are the tax consequences of the sale to the Fraziers?

Ted and Alice divorced this year. Pursuant to the divorce agreement, Ted pays $5,000 alimony and $7,500 child support to Alice every month. Which of the following statements is true?

Mr. and Mrs. King had only one casualty loss this year. A tornado severely damaged their home, decreasing its value by $70,000. The couple received a $48,000 reimbursement from their insurance company. Compute the Kings' itemized deduction for casualty losses if their AGI was $98,200.

For federal income tax purposes, a taxpayer may deduct state and federal employment taxes as an itemized deduction.

Violet took out a $900,000 mortgage to purchase her personal residence. She can deduct the mortgage interest payments as an itemized deduction.

Mr. and Mrs. Alvarez paid $130,000 for their home 30 years ago. They recently sold this home and moved into a retirement apartment. Describe the tax consequences of the sale assuming that the amount realized was: a. $125,000 b. $450,000 c. $850,000

Under the terms of a divorce decree, Harold transferred his one-half interest in the marital residence to his former wife Francine. Francine must include the value of the interest in gross income.

Gary is a successful architect who also sings at weddings. This year, he received $5,400 of fees for his singing and spent $6,250 on voice lessons, sheet music, and travel to the weddings. Which of the following statements is true?

Unemployment benefits are excluded from gross income.

Mrs. Hanson's financial support this year consisted of: $14,650 Social Security benefits; $9,600 pension from her former employer's qualified retirement plan, and $15,000 cash gifts from her children. Compute Mrs. Hanson's AGI.

Which of the following itemized deductions is disallowed in the computation of alternative minimum taxable income (AMTI)?

Congress provides an indirect subsidy to charities by allowing a deduction for charitable contributions.

Tax return preparation fees are miscellaneous itemized deductions subject to the 2% AGI floor.

Taxes and Taxing Jurisdictions

Policy Standards for a Good Tax

Taxes As Transaction Costs

Maxims of Income Tax Planning

Tax Research

Taxable Income From Business Operations

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Nontaxable Exchanges

Sole Proprietorships, Partnerships, Llcs, and S Corporations

The Corporate Taxpayer

The Choice of Business Entity

Jurisdictional Issues in Business Taxation

The Individual Tax Formula

Compensation and Retirement Planning

Investment and Personal Financial Planning

The Tax Compliance Process

Filters

Exam 17: Tax Consequences of Personal Activities

Which of the following government transfer payments is included in the recipient's gross income?

Taxpayers include a maximum of 85% of Social Security benefits in gross income.

Ben received a $5,000 tuition scholarship from his local community college. He can exclude the $5,000 from gross income.

This year, David paid his physician $6,200 for routine examinations and received a $3,000 reimbursement from his medical insurance company. David is allowed a $3,200 medical expense as an above-the-line deduction.

For federal income tax purposes, a taxpayer may elect to deduct state and local sales taxes as an itemized deduction.

Mr. and Mrs. Frazier recognized a $723,000 gain on sale of a home that had been their principal residence for 29 years. They moved into a rented condominium in Naples, Florida. What are the tax consequences of the sale to the Fraziers?

Ted and Alice divorced this year. Pursuant to the divorce agreement, Ted pays $5,000 alimony and $7,500 child support to Alice every month. Which of the following statements is true?

Mr. and Mrs. King had only one casualty loss this year. A tornado severely damaged their home, decreasing its value by $70,000. The couple received a $48,000 reimbursement from their insurance company. Compute the Kings' itemized deduction for casualty losses if their AGI was $98,200.

For federal income tax purposes, a taxpayer may deduct state and federal employment taxes as an itemized deduction.

Violet took out a $900,000 mortgage to purchase her personal residence. She can deduct the mortgage interest payments as an itemized deduction.

Mr. and Mrs. Alvarez paid $130,000 for their home 30 years ago. They recently sold this home and moved into a retirement apartment. Describe the tax consequences of the sale assuming that the amount realized was: a. $125,000 b. $450,000 c. $850,000

Under the terms of a divorce decree, Harold transferred his one-half interest in the marital residence to his former wife Francine. Francine must include the value of the interest in gross income.

Gary is a successful architect who also sings at weddings. This year, he received $5,400 of fees for his singing and spent $6,250 on voice lessons, sheet music, and travel to the weddings. Which of the following statements is true?

Unemployment benefits are excluded from gross income.

Mrs. Hanson's financial support this year consisted of: $14,650 Social Security benefits; $9,600 pension from her former employer's qualified retirement plan, and $15,000 cash gifts from her children. Compute Mrs. Hanson's AGI.

Which of the following itemized deductions is disallowed in the computation of alternative minimum taxable income (AMTI)?

Congress provides an indirect subsidy to charities by allowing a deduction for charitable contributions.

Tax return preparation fees are miscellaneous itemized deductions subject to the 2% AGI floor.

Taxes and Taxing Jurisdictions

Policy Standards for a Good Tax

Taxes As Transaction Costs

Maxims of Income Tax Planning

Tax Research

Taxable Income From Business Operations

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Nontaxable Exchanges

Sole Proprietorships, Partnerships, Llcs, and S Corporations

The Corporate Taxpayer

The Choice of Business Entity

Jurisdictional Issues in Business Taxation

The Individual Tax Formula

Compensation and Retirement Planning

Investment and Personal Financial Planning

The Tax Compliance Process

Filters