Question 1

Which of the following is not a tax incentive for individuals to purchase a home instead of renting?

Accepted Answer

A)  Real property taxes on the home are deductible. 
B)  Premiums paid on homeowner's insurance are deductible. 
C)  Interest paid on a home mortgage is deductible. 
D)  All of the above are tax incentives. 
A)  Real property taxes on the home are deductible. 
B)  Premiums paid on homeowner's insurance are deductible. 
C)  Interest paid on a home mortgage is deductible. 
D)  All of the above are tax incentives.

Question 2

Mr. and Mrs. Trent divorced last year. Pursuant to the divorce, Mr. Trent transferred marketable securities (FMV $100,000; basis $67,000) to Mrs. Trent. This year, Mrs. Trent sold the securities for $112,000. Which of the following statements is true?

Accepted Answer

A)  Mrs. Trent recognized a $45,000 gain on sale this year. 
B)  Mrs. Trent recognized $100,000 income last year. 
C)  Mrs. Trent recognized a $12,000 gain on sale this year. 
D)  Mrs. Trent recognized no income last year and no gain on sale this year. 
A)  Mrs. Trent recognized a $45,000 gain on sale this year. 
B)  Mrs. Trent recognized $100,000 income last year. 
C)  Mrs. Trent recognized a $12,000 gain on sale this year. 
D)  Mrs. Trent recognized no income last year and no gain on sale this year.

Question 3

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 4

Alimony payments are included in the recipient's gross income.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A)  Alimony. 
B)  Charitable contributions. 
C)  Interest paid on a home equity debt. 
D)  None of the above deductions is disallowed. 
A)  Alimony. 
B)  Charitable contributions. 
C)  Interest paid on a home equity debt. 
D)  None of the above deductions is disallowed.

Question 7

Mr. and Mrs. Hunt, ages 38 and 33, have the following allowable itemized deductions this year.
   Determine the effect on the amount of each deduction if the Hunts engage in a transaction generating $10,000 additional AGI this year.

Accepted Answer

Medical expense deduction is reduced by

Question 8

Which of the following is excluded from gross income?

Accepted Answer

A)  $50,000 slot machine winnings 
B)  $13,900 value of Hawaiian vacation won on a game show 
C)  $85,000 Pulitzer prize for journalism 
D)  None of the above is excluded. 
A)  $50,000 slot machine winnings 
B)  $13,900 value of Hawaiian vacation won on a game show 
C)  $85,000 Pulitzer prize for journalism 
D)  None of the above is excluded.

Question 9

James Dean received the following this year.   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 10

Personal exemptions are allowed in computing alternative minimum taxable income (AMTI).

Accepted Answer

A) True 
 B)False

Question 11

This year, Mr. and Mrs. Franklin paid $93,000 interest on a mortgage they incurred to build their home in Santa Fe. The average principal balance of the mortgage was $1.43 million. The home has an appraised FMV of only $900,000. Compute the Franklin's itemized deduction for their home mortgage interest.

Accepted Answer

A)  $65,035 
B)  $58,531 
C)  $93,000 
D)  None of the above. 
A)  $65,035 
B)  $58,531 
C)  $93,000 
D)  None of the above.

Question 12

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 13

Spencer paid the following taxes this year.   Compute Spencer's itemized deduction for taxes.

Accepted Answer

A)  $5,725 
B)  $13,615 
C)  $9,025 
D)  $12,023 
A)  $5,725 
B)  $13,615 
C)  $9,025 
D)  $12,023

Question 14

Mr. and Mrs. Shohler received $25,200 Social Security benefits this year. Their only other source of income was Mrs. Shohler's $10,479 taxable pension from her former employer. How much of their Social Security is included in gross income?

Accepted Answer

A)  $0 
B)  $12,600 
C)  $21420 
D)  $25,200 
A)  $0 
B)  $12,600 
C)  $21420 
D)  $25,200

Question 15

Three years ago, Suzanne bought a new personal automobile for $26,900. This year, she sold it for $19,000. What is the amount and character of Suzanne's recognized loss?

Accepted Answer

A)  No loss recognized on the sale of a personal asset. 
B)  $26,900 long-term capital loss. 
C)  $7,900 ordinary loss. 
D)  $7,900 long-term capital loss. 
A)  No loss recognized on the sale of a personal asset. 
B)  $26,900 long-term capital loss. 
C)  $7,900 ordinary loss. 
D)  $7,900 long-term capital loss.

Question 16

On February 1, 2015, Alan, a single individual, purchased his first personal residence for $400,000. On July 1, 2015, Alan sold this residence for $460,000 because he accepted a new job in another state. Consequently, Alan occupied the home for only 150 days. How much gain must Alan recognize?

Accepted Answer

A)  $0 
B)  $8,630 
C)  $30,000 
D)  $51,370 
A)  $0 
B)  $8,630 
C)  $30,000 
D)  $51,370

Question 17

Six years ago, Milo Lenz, an amateur artist, sculpted a garden gnome as a gift for his mother. This year, his mother sold the gnome on eBay for $1,200. What is the amount and character of the mother's gain?

Accepted Answer

A)  No gain recognized on the sale of a personal asset. 
B)  $1,200 ordinary gain. 
C)  $1,200 long-term capital gain. 
D)  None of the above. 
A)  No gain recognized on the sale of a personal asset. 
B)  $1,200 ordinary gain. 
C)  $1,200 long-term capital gain. 
D)  None of the above.

Question 18

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 19

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 20

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

Which of the following is not a tax incentive for individuals to purchase a home instead of renting?

Mr. and Mrs. Trent divorced last year. Pursuant to the divorce, Mr. Trent transferred marketable securities (FMV $100,000; basis $67,000) to Mrs. Trent. This year, Mrs. Trent sold the securities for $112,000. Which of the following statements is true?

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?

Alimony payments are included in the recipient's gross income.

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

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

Mr. and Mrs. Hunt, ages 38 and 33, have the following allowable itemized deductions this year. Determine the effect on the amount of each deduction if the Hunts engage in a transaction generating $10,000 additional AGI this year.

Which of the following is excluded from gross income?

James Dean received the following this year. Compute James' gross income.

Personal exemptions are allowed in computing alternative minimum taxable income (AMTI).

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

Spencer paid the following taxes this year. Compute Spencer's itemized deduction for taxes.

Mr. and Mrs. Shohler received $25,200 Social Security benefits this year. Their only other source of income was Mrs. Shohler's $10,479 taxable pension from her former employer. How much of their Social Security is included in gross income?

Three years ago, Suzanne bought a new personal automobile for $26,900. This year, she sold it for $19,000. What is the amount and character of Suzanne's recognized loss?

On February 1, 2015, Alan, a single individual, purchased his first personal residence for $400,000. On July 1, 2015, Alan sold this residence for $460,000 because he accepted a new job in another state. Consequently, Alan occupied the home for only 150 days. How much gain must Alan recognize?

Six years ago, Milo Lenz, an amateur artist, sculpted a garden gnome as a gift for his mother. This year, his mother sold the gnome on eBay for $1,200. What is the amount and character of the mother's gain?

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

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

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

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 is not a tax incentive for individuals to purchase a home instead of renting?

Mr. and Mrs. Trent divorced last year. Pursuant to the divorce, Mr. Trent transferred marketable securities (FMV $100,000; basis $67,000) to Mrs. Trent. This year, Mrs. Trent sold the securities for $112,000. Which of the following statements is true?

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?

Alimony payments are included in the recipient's gross income.

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

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

Mr. and Mrs. Hunt, ages 38 and 33, have the following allowable itemized deductions this year. Determine the effect on the amount of each deduction if the Hunts engage in a transaction generating $10,000 additional AGI this year.

Which of the following is excluded from gross income?

James Dean received the following this year. Compute James' gross income.

Personal exemptions are allowed in computing alternative minimum taxable income (AMTI).

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

Spencer paid the following taxes this year. Compute Spencer's itemized deduction for taxes.

Mr. and Mrs. Shohler received $25,200 Social Security benefits this year. Their only other source of income was Mrs. Shohler's $10,479 taxable pension from her former employer. How much of their Social Security is included in gross income?

Three years ago, Suzanne bought a new personal automobile for $26,900. This year, she sold it for $19,000. What is the amount and character of Suzanne's recognized loss?

On February 1, 2015, Alan, a single individual, purchased his first personal residence for $400,000. On July 1, 2015, Alan sold this residence for $460,000 because he accepted a new job in another state. Consequently, Alan occupied the home for only 150 days. How much gain must Alan recognize?

Six years ago, Milo Lenz, an amateur artist, sculpted a garden gnome as a gift for his mother. This year, his mother sold the gnome on eBay for $1,200. What is the amount and character of the mother's gain?

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

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

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

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