Question 1

All else equal, a reduction in regular income tax rates would require more taxpayers to pay the alternative minimum tax.

Accepted Answer

A) True 
 B)False

Question 2

Tamra and Jacob are married and they file a joint tax return. Tamra received nearly five times the salary that Jacob received. Which of the following statements is true?

Accepted Answer

A)  Tamra and Jacob likely pay no tax marriage penalty nor receive a tax marriage benefit. 
B)  Tamra and Jacob likely pay a tax marriage penalty. 
C)  Tamra and Jacob likely receive a tax marriage benefit. 
D)  Tamra and Jacob likely will pay a tax marriage penalty and receive a tax marriage benefit. 
A)  Tamra and Jacob likely pay no tax marriage penalty nor receive a tax marriage benefit. 
B)  Tamra and Jacob likely pay a tax marriage penalty. 
C)  Tamra and Jacob likely receive a tax marriage benefit. 
D)  Tamra and Jacob likely will pay a tax marriage penalty and receive a tax marriage benefit.

Question 3

Jamie is single. In 2014, she reported $100,000 of taxable income, including a long-term capital gain of $5,000. What is her gross tax liability, rounded to the nearest whole dollar amount (use the tax rate schedules)?

Accepted Answer

A)  $22,576 
B)  $21,176 
C)  $20,526 
D)  $15,000 
A)  $22,576 
B)  $21,176 
C)  $20,526 
D)  $15,000

Question 4

Why would a taxpayer file a tax return if not required to do so?

Accepted Answer

A)  to remain in favor with the IRS 
B)  to claim a refund of taxes paid 
C)  all taxpayers are required to file returns 
D)  in order to claim the standard deduction 
A)  to remain in favor with the IRS 
B)  to claim a refund of taxes paid 
C)  all taxpayers are required to file returns 
D)  in order to claim the standard deduction

Question 5

In certain circumstances a child with very little income may have their income taxed at the parents' marginal tax rate.

Accepted Answer

A) True 
 B)False

Question 6

Apollo is single and his AMT base is $100,250. This amount includes $500 of qualified dividends (the dividends were taxed at 15% in determining the regular tax liability). What is Apollo's tentative minimum tax?

Accepted Answer

The answer of Apollo is single and his AMT base...

Question 7

Rhianna and Jay are married filing jointly in 2014. They have six children for whom they may claim the child tax credit. Their AGI was $123,440. What amount of child tax credit may they claim on their 2014 tax return?

Accepted Answer

A)  $5,300 
B)  $6,000 
C)  $12,000 
D)  $4,000 
A)  $5,300 
B)  $6,000 
C)  $12,000 
D)  $4,000

Question 8

The alternative minimum tax base is typically ______ the regular income tax base.

Accepted Answer

A)  smaller than 
B)  about the same as 
C)  larger than 
D)  exactly the same as 
A)  smaller than 
B)  about the same as 
C)  larger than 
D)  exactly the same as

Question 9

Keith and Nicole are married filing joint with two daughters who qualify as dependents. Their gross income for 2014 is $21,000. Are they required to file a tax return? How do you know this without memorizing the gross income thresholds? In 2014, the standard deduction for taxpayers filing a joint return is $12,400 and the personal exemption is $3,950.

Accepted Answer

Yes, Keith

Question 10

A marriage penalty occurs when a couple pays more taxes by filing a joint tax return than they would have paid had they filed married filing separate returns.

Accepted Answer

A) True 
 B)False

Question 11

Wolfina's twins, Romulus and Remus, finished their first year of school at an accredited university in 2014. She paid $10,000 in qualified educational expenses for Romulus and $2,000 of qualifying expenses for Remus. Wolfina is a head of household with an AGI of $85,000. What amount of American opportunity credit may she claim?

Accepted Answer

The answer of Wolfina's twins, Romulus and Remus, finished their...

Question 12

Tax rate schedules are provided for use by (relatively) higher income taxpayers while the tax tables are provided for use by (relatively) lower income taxpayers.

Accepted Answer

A) True 
 B)False

Question 13

When applying credits against a taxpayer's gross tax liability, nonrefundable personal credits are applied first, then business credits, and finally refundable personal credits.

Accepted Answer

A) True 
 B)False

Question 14

Julien and Sarah are married, file a joint return, and have two children, Kaya and Christopher. Kaya just finished her third year at college and Christopher just finished his first year of graduate school (fifth year of college). Tuition and books for the past year were $1,800 for Kaya and $5,000 for Christopher. How much can Julien and Sarah claim in educational credits if their joint AGI was $120,000 for 2014?

Accepted Answer

The answer of Julien and Sarah are married, file a...

Question 15

Miley, a single taxpayer, plans on reporting $27,900 of taxable income this year (all of her income is from a part-time job). She is considering applying for a second part-time job that would give her an additional $10,000 of taxable income. By how much will the income from the second job increase her tax liability (use the tax rate schedules)?

Accepted Answer

A)  $1,000 
B)  $1,500 
C)  $1,600 
D)  $2,500 
A)  $1,000 
B)  $1,500 
C)  $1,600 
D)  $2,500

Question 16

Which of the following statements regarding the earned income credit is true?

Accepted Answer

A)  It is a nonrefundable credit 
B)  It is possible that a taxpayer with more earned income may receive more credit than a taxpayer with less earned income 
C)  A 70-year-old taxpayer with no dependents can qualify for the credit in certain circumstances 
D)  A taxpayer whose only source of income is interest from corporate bonds is eligible for the credit 
A)  It is a nonrefundable credit 
B)  It is possible that a taxpayer with more earned income may receive more credit than a taxpayer with less earned income 
C)  A 70-year-old taxpayer with no dependents can qualify for the credit in certain circumstances 
D)  A taxpayer whose only source of income is interest from corporate bonds is eligible for the credit

All else equal, a reduction in regular income tax rates would require more taxpayers to pay the alternative minimum tax.

Tamra and Jacob are married and they file a joint tax return. Tamra received nearly five times the salary that Jacob received. Which of the following statements is true?

Jamie is single. In 2014, she reported $100,000 of taxable income, including a long-term capital gain of $5,000. What is her gross tax liability, rounded to the nearest whole dollar amount (use the tax rate schedules)?

Why would a taxpayer file a tax return if not required to do so?

In certain circumstances a child with very little income may have their income taxed at the parents' marginal tax rate.

Apollo is single and his AMT base is $100,250. This amount includes $500 of qualified dividends (the dividends were taxed at 15% in determining the regular tax liability). What is Apollo's tentative minimum tax?

Rhianna and Jay are married filing jointly in 2014. They have six children for whom they may claim the child tax credit. Their AGI was $123,440. What amount of child tax credit may they claim on their 2014 tax return?

The alternative minimum tax base is typically ______ the regular income tax base.

A marriage penalty occurs when a couple pays more taxes by filing a joint tax return than they would have paid had they filed married filing separate returns.

Tax rate schedules are provided for use by (relatively) higher income taxpayers while the tax tables are provided for use by (relatively) lower income taxpayers.

When applying credits against a taxpayer's gross tax liability, nonrefundable personal credits are applied first, then business credits, and finally refundable personal credits.

Which of the following statements regarding the earned income credit is true?

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The US Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning of the Cfa Institute

Filters

Exam 7: Individual Income Tax Computation and Tax Credits

All else equal, a reduction in regular income tax rates would require more taxpayers to pay the alternative minimum tax.

Tamra and Jacob are married and they file a joint tax return. Tamra received nearly five times the salary that Jacob received. Which of the following statements is true?

Jamie is single. In 2014, she reported $100,000 of taxable income, including a long-term capital gain of $5,000. What is her gross tax liability, rounded to the nearest whole dollar amount (use the tax rate schedules)?

Why would a taxpayer file a tax return if not required to do so?

In certain circumstances a child with very little income may have their income taxed at the parents' marginal tax rate.

Apollo is single and his AMT base is $100,250. This amount includes $500 of qualified dividends (the dividends were taxed at 15% in determining the regular tax liability). What is Apollo's tentative minimum tax?

Rhianna and Jay are married filing jointly in 2014. They have six children for whom they may claim the child tax credit. Their AGI was $123,440. What amount of child tax credit may they claim on their 2014 tax return?

The alternative minimum tax base is typically ______ the regular income tax base.

A marriage penalty occurs when a couple pays more taxes by filing a joint tax return than they would have paid had they filed married filing separate returns.

Tax rate schedules are provided for use by (relatively) higher income taxpayers while the tax tables are provided for use by (relatively) lower income taxpayers.

When applying credits against a taxpayer's gross tax liability, nonrefundable personal credits are applied first, then business credits, and finally refundable personal credits.

Which of the following statements regarding the earned income credit is true?

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The US Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning of the Cfa Institute

Filters