Question 1

Recipients of the Nobel Peace Prize must include the prize in gross income.

Accepted Answer

A) True 
 B)False

Question 2

Mr. and Mrs. McGraw received $50,160 Social Security benefits this year. They also received $108,000 taxable pension payments and earned $47,300 interest and dividends from their investment portfolio. How much of the McGraw's Social Security is included in gross income?

Accepted Answer

A)  $0 
B)  $25,080 
C)  $42,636 
D)  $50,160 
A)  $0 
B)  $25,080 
C)  $42,636 
D)  $50,160

Question 3

A flood destroyed an antique Persian rug owned by Mr. and Mrs. McConnell. The couple purchased the rug for $13,000 fifteen years ago, but its appraised FMV before the flood was $42,500. Unfortunately, their homeowners' insurance policy does not cover flood damage. Compute the McConnells' casualty loss resulting from the flood.

Accepted Answer

A)  $41,900 
B)  $42,000 
C)  $13,000 
D)  $12,900 
A)  $41,900 
B)  $42,000 
C)  $13,000 
D)  $12,900

Question 4

Mr. and Mrs. Stimson incurred $3,937 of miscellaneous itemized deductions this year. Their AGI was $97,300, and their marginal rate on ordinary income was 25%. Which of the following statements is false?

Accepted Answer

A)  If the Stimsons itemized deductions and do not owe any alternative minimum tax (AMT), the tax savings from their miscellaneous itemized deductions is $498. 
B)  If the Stimsons do not itemize deductions, the tax savings from their miscellaneous itemized deductions is zero. 
C)  If the Stimsons owe alternative minimum tax (AMT), the tax savings from their miscellaneous itemized deductions is zero. 
D)  None of the above statements is false. 
A)  If the Stimsons itemized deductions and do not owe any alternative minimum tax (AMT), the tax savings from their miscellaneous itemized deductions is $498. 
B)  If the Stimsons do not itemize deductions, the tax savings from their miscellaneous itemized deductions is zero. 
C)  If the Stimsons owe alternative minimum tax (AMT), the tax savings from their miscellaneous itemized deductions is zero. 
D)  None of the above statements is false.

Question 5

An activity will be classified as a hobby if the taxpayer fails to make a profit from the activity.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements about the tax consequences of gambling is true?

Accepted Answer

A)  Gambling winnings are not taxable, and gambling losses are not deductible. 
B)  Gambling losses are deductible as miscellaneous itemized deductions only to the extent of gambling winnings. 
C)  Gambling losses are deductible as itemized deductions only to the extent of gambling winnings. 
D)  Gambling winnings are taxable, but gambling losses are not deductible. 
A)  Gambling winnings are not taxable, and gambling losses are not deductible. 
B)  Gambling losses are deductible as miscellaneous itemized deductions only to the extent of gambling winnings. 
C)  Gambling losses are deductible as itemized deductions only to the extent of gambling winnings. 
D)  Gambling winnings are taxable, but gambling losses are not deductible.

Question 7

Which of the following statements about tax subsidies for higher education is false?

Accepted Answer

A)  Individuals can deduct a limited amount of qualified tuition expenses as an above-the-line deduction. 
B)  Individuals can deduct a limited amount of interest paid on qualified education loans as an above-the-line deduction. 
C)  Individuals can claim an American Opportunity Credit for a limited amount of college tuition, fees, and course materials. 
D)  None of the above is false. 
A)  Individuals can deduct a limited amount of qualified tuition expenses as an above-the-line deduction. 
B)  Individuals can deduct a limited amount of interest paid on qualified education loans as an above-the-line deduction. 
C)  Individuals can claim an American Opportunity Credit for a limited amount of college tuition, fees, and course materials. 
D)  None of the above is false.

Question 8

Which of the following tax payments is allowed as an itemized income tax deduction?

Accepted Answer

A)  Federal gift tax 
B)  Payroll tax on wages paid to a housekeeper 
C)  Social Security tax withheld from salary 
D)  Local property tax on personal automobile 
A)  Federal gift tax 
B)  Payroll tax on wages paid to a housekeeper 
C)  Social Security tax withheld from salary 
D)  Local property tax on personal automobile

Question 9

Mr. and Mrs. Allen made the following interest payments. Determine their deduction for each payment.
a. $28,000 on a $400,000 acquisition mortgage secured by their personal residence
b. $5,000 on a $60,000 second mortgage secured by their personal residence. The Allens used the proceeds to pay off credit card debt and take a second honeymoon.
c. $2,400 on credit card debt
d. $1,500 on a bank loan incurred to purchase a new family car
e. $1,890 on an unsecured bank loan incurred to pay for a new roof on their personal residence

Accepted Answer

a. $28,000
b. $5,000

Question 10

A nondeductible charitable contribution may be carried forward five years.

Accepted Answer

A) True 
 B)False

Question 11

Any gain recognized on the sale of a personal residence is excluded from the seller's gross income.

Accepted Answer

A) True 
 B)False

Question 12

Losses realized on the sale of personal use assets are deductible.

Accepted Answer

A) True 
 B)False

Question 13

Polly received the following items this year. Irterest on New York City Bchoolbonds$ \quad $$ \quad $$51,600$
Gift from grardparents$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$\$ 5,000$
Jackpot From state lottery$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$\$ 50,000$
Carbling wiruings$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$\$ 3,000$ Compute Polly's gross income.

Accepted Answer

A)  $59,600 
B)  $58,000 
C)  $53,000 
D)  $50,000 
A)  $59,600 
B)  $58,000 
C)  $53,000 
D)  $50,000

Recipients of the Nobel Peace Prize must include the prize in gross income.

Mr. and Mrs. McGraw received $50,160 Social Security benefits this year. They also received $108,000 taxable pension payments and earned $47,300 interest and dividends from their investment portfolio. How much of the McGraw's Social Security is included in gross income?

Mr. and Mrs. Stimson incurred $3,937 of miscellaneous itemized deductions this year. Their AGI was $97,300, and their marginal rate on ordinary income was 25%. Which of the following statements is false?

An activity will be classified as a hobby if the taxpayer fails to make a profit from the activity.

Which of the following statements about the tax consequences of gambling is true?

Which of the following statements about tax subsidies for higher education is false?

Which of the following tax payments is allowed as an itemized income tax deduction?

A nondeductible charitable contribution may be carried forward five years.

Any gain recognized on the sale of a personal residence is excluded from the seller's gross income.

Losses realized on the sale of personal use assets are deductible.

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

Recipients of the Nobel Peace Prize must include the prize in gross income.

Mr. and Mrs. McGraw received $50,160 Social Security benefits this year. They also received $108,000 taxable pension payments and earned $47,300 interest and dividends from their investment portfolio. How much of the McGraw's Social Security is included in gross income?

Mr. and Mrs. Stimson incurred $3,937 of miscellaneous itemized deductions this year. Their AGI was $97,300, and their marginal rate on ordinary income was 25%. Which of the following statements is false?

An activity will be classified as a hobby if the taxpayer fails to make a profit from the activity.

Which of the following statements about the tax consequences of gambling is true?

Which of the following statements about tax subsidies for higher education is false?

Which of the following tax payments is allowed as an itemized income tax deduction?

A nondeductible charitable contribution may be carried forward five years.

Any gain recognized on the sale of a personal residence is excluded from the seller's gross income.

Losses realized on the sale of personal use assets are deductible.

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