Question 1

Which of the following statements regarding exemptions is false?

Accepted Answer

A)  Taxpayers can claim a dependency exemption for a qualifying child or a qualifying relative. 
B)  A qualifying child must be the natural child, the adopted child, or the stepchild of the taxpayer. 
C)  A qualifying relative may include an unrelated individual who is a member of the taxpayer's household for the year. 
D)  There is no limit on the amount of gross income that a qualifying child may earn in a year. 
A)  Taxpayers can claim a dependency exemption for a qualifying child or a qualifying relative. 
B)  A qualifying child must be the natural child, the adopted child, or the stepchild of the taxpayer. 
C)  A qualifying relative may include an unrelated individual who is a member of the taxpayer's household for the year. 
D)  There is no limit on the amount of gross income that a qualifying child may earn in a year.

Question 2

Which of the following taxpayers can't use the tax rates for married filing jointly in 2015?

Accepted Answer

A)  Mr. Lane died on August 10, 2015. Mrs. Lane has not remarried and has no dependent children. 
B)  Mrs. Holden died on January 15, 2014. Mr. Holden has not remarried and maintains a home for two dependent children. 
C)  Mr. and Mrs. West were legally divorced on December 21, 2015. Mrs. West has not remarried and maintains a home for three dependent children. 
D)  All of the above taxpayers qualify for married filing jointly filing status. 
A)  Mr. Lane died on August 10, 2015. Mrs. Lane has not remarried and has no dependent children. 
B)  Mrs. Holden died on January 15, 2014. Mr. Holden has not remarried and maintains a home for two dependent children. 
C)  Mr. and Mrs. West were legally divorced on December 21, 2015. Mrs. West has not remarried and maintains a home for three dependent children. 
D)  All of the above taxpayers qualify for married filing jointly filing status.

Question 3

Mr. and Mrs. Dell, ages 29 and 26, file a joint return and have no dependents for the year. Here is their relevant information.   Compute their adjusted gross income (AGI) and taxable income.

Accepted Answer

A)  AGI $64,900; taxable income $42,900 
B)  AGI $58,700; taxable income $36,700 
C)  AGI $58,700; taxable income $38,500 
D)  AGI $64,900; taxable income $36,700 
A)  AGI $64,900; taxable income $42,900 
B)  AGI $58,700; taxable income $36,700 
C)  AGI $58,700; taxable income $38,500 
D)  AGI $64,900; taxable income $36,700

Question 4

An itemized deduction doesn't result in any tax savings in a year in which an individual taxpayer takes the standard deduction.

Accepted Answer

A) True 
 B)False

Question 5

Mr. and Mrs. Liddy, ages 39 and 41, file a joint return and have no dependents for the year. Here is their relevant information.   Compute their adjusted gross income (AGI) and taxable income.

Accepted Answer

A)  AGI $50,200; taxable income $29,600 
B)  AGI $52,000; taxable income $31,400 
C)  AGI $52,000; taxable income $39,000 
D)  AGI $50,200; taxable income $39,000 
A)  AGI $50,200; taxable income $29,600 
B)  AGI $52,000; taxable income $31,400 
C)  AGI $52,000; taxable income $39,000 
D)  AGI $50,200; taxable income $39,000

Question 6

Mr. and Mrs. Jelk file a joint return. They provide 65% of the financial support for David, the 14-year old son of a friend who died three years ago. David lives in the home of his aunt Sarah, who provides 35% of his financial support. Which of the following statements is true?

Accepted Answer

A)  David is a qualifying child of the Jelks. 
B)  If David earns less than $4,000 gross income this year, he is a qualifying child of the Jelks. 
C)  If David earns less than $4,000 gross income this year, he is a qualifying relative of the Jelks. 
D)  David is neither a qualifying child nor a qualifying relative of the Jelks. 
A)  David is a qualifying child of the Jelks. 
B)  If David earns less than $4,000 gross income this year, he is a qualifying child of the Jelks. 
C)  If David earns less than $4,000 gross income this year, he is a qualifying relative of the Jelks. 
D)  David is neither a qualifying child nor a qualifying relative of the Jelks.

Question 7

Ruth Anne, a single taxpayer, reported $152,600 alternative minimum taxable income before any exemption on her 2015 Form 1040. Calculate Ruth Anne's AMT exemption.

Accepted Answer

A)  $8,350 
B)  $45,250 
C)  $53,600 
D)  None of the above. 
A)  $8,350 
B)  $45,250 
C)  $53,600 
D)  None of the above.

Question 8

The unextended due date for the individual tax return (Form 1040) is the 15th day of the third month following the close of the taxable year.

Accepted Answer

A) True 
 B)False

Question 9

Ms. Lewis' maintains a household which is the principal place of residence for Kathy. Ms. Lewis' provides more than 50% of Kathy's financial support. In which of the following cases can Ms. Lewis' claim Kathy as a qualifying child?

Accepted Answer

A)  Kathy is age 8 and the child of Ms. Lewis' best friend, who died three years ago. 
B)  Kathy is Ms. Lewis' 15-year old niece. 
C)  Kathy is Ms. Lewis' 30-year old unmarried sister. 
D)  Both B. and C. 
A)  Kathy is age 8 and the child of Ms. Lewis' best friend, who died three years ago. 
B)  Kathy is Ms. Lewis' 15-year old niece. 
C)  Kathy is Ms. Lewis' 30-year old unmarried sister. 
D)  Both B. and C.

Question 10

Marie, an unmarried taxpayer, is 26 years old. This year, Marie earned $50,000 gross income. Her itemized deductions totaled $5,100. Marie maintained a home for her 12-year-old sister who qualifies as Marie's dependent. Compute Marie's taxable income.

Accepted Answer

A)  $40,900 
B)  $32,750 
C)  $36,900 
D)  None of the above. 
A)  $40,900 
B)  $32,750 
C)  $36,900 
D)  None of the above.

Question 11

It is impossible for a progressive income tax system to be both marriage neutral and horizontally equitable.

Accepted Answer

A) True 
 B)False

Question 12

Mr. and Mrs. King's regular tax liability on their joint return was $111,850. Which of the following statements is true?

Accepted Answer

A)  If the Kings' tentative minimum tax is $103,300, their total tax liability is $103,300. 
B)  If the Kings' tentative minimum tax is $103,300, their total tax liability is $111,850. 
C)  If the Kings' tentative minimum tax is $143,800, their total tax liability is $143,800. 
D)  Both B. and C. are true. 
A)  If the Kings' tentative minimum tax is $103,300, their total tax liability is $103,300. 
B)  If the Kings' tentative minimum tax is $103,300, their total tax liability is $111,850. 
C)  If the Kings' tentative minimum tax is $143,800, their total tax liability is $143,800. 
D)  Both B. and C. are true.

Question 13

An individual's taxable income equals adjusted gross income less the greater of the standard deduction or itemized deductions less the exemption amount.

Accepted Answer

A) True 
 B)False

Question 14

Melissa, age 16, is claimed as a dependent on her parents' tax return. This year, Melissa earned $2,000 from babysitting and $1,280 interest income from a savings account. Compute Melissa's standard deduction.

Accepted Answer

A)  $2,000 
B)  $2,350 
C)  $0 
D)  $1,050 
A)  $2,000 
B)  $2,350 
C)  $0 
D)  $1,050

Question 15

Kent, an unmarried individual, invited his widowed father, Martin, to move into his home in January of this year. Martin's only income item was a $14,000 taxable pension from his former employer. Kent provides about 75% of his father's financial support. What is Kent's filing status and number of exemptions for the year?

Accepted Answer

A)  Single and one exemption 
B)  Single and two exemptions 
C)  Head of household and one exemption 
D)  Head of household and two exemptions 
A)  Single and one exemption 
B)  Single and two exemptions 
C)  Head of household and one exemption 
D)  Head of household and two exemptions

Question 16

An individual who files his own tax return but is claimed as a dependent on another individual's return is not allowed any standard deduction or personal exemption.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements regarding tax payments is true?

Accepted Answer

A)  Sole proprietors must make quarterly estimated payments of income tax, but self-employment tax is not due until the return is filed. 
B)  Sole proprietors must make quarterly estimated payments of self-employment tax, but income tax is not due until the return is filed. 
C)  Sole proprietors must make quarterly estimated payments of income tax and self-employment tax. 
D)  Sole proprietors are not required to pay income tax or self-employment tax until the return is filed. 
A)  Sole proprietors must make quarterly estimated payments of income tax, but self-employment tax is not due until the return is filed. 
B)  Sole proprietors must make quarterly estimated payments of self-employment tax, but income tax is not due until the return is filed. 
C)  Sole proprietors must make quarterly estimated payments of income tax and self-employment tax. 
D)  Sole proprietors are not required to pay income tax or self-employment tax until the return is filed.

Question 18

Mr. and Mrs. Stern reported $312,440 alternative minimum taxable income before any exemption on their 2015 Form 1040. Calculate their AMT exemption.

Accepted Answer

A)  $0 
B)  $38,385 
C)  $83,400 
D)  None of the above. 
A)  $0 
B)  $38,385 
C)  $83,400 
D)  None of the above.

Question 19

Benjamin, who files as a single taxpayer, has $359,900 taxable income in 2015. Compute his regular tax liability.

Accepted Answer

A)  $101,341 
B)  $112,684 
C)  $118,767 
D)  None of the above. 
A)  $101,341 
B)  $112,684 
C)  $118,767 
D)  None of the above.

Question 20

The highest individual marginal rate for regular tax purposes is 39.6%, while the highest individual marginal rate for alternative minimum tax (AMT) purposes is only 28%.

Accepted Answer

A) True 
 B)False

Which of the following statements regarding exemptions is false?

Which of the following taxpayers can't use the tax rates for married filing jointly in 2015?

Mr. and Mrs. Dell, ages 29 and 26, file a joint return and have no dependents for the year. Here is their relevant information. Compute their adjusted gross income (AGI) and taxable income.

An itemized deduction doesn't result in any tax savings in a year in which an individual taxpayer takes the standard deduction.

Mr. and Mrs. Liddy, ages 39 and 41, file a joint return and have no dependents for the year. Here is their relevant information. Compute their adjusted gross income (AGI) and taxable income.

Mr. and Mrs. Jelk file a joint return. They provide 65% of the financial support for David, the 14-year old son of a friend who died three years ago. David lives in the home of his aunt Sarah, who provides 35% of his financial support. Which of the following statements is true?

Ruth Anne, a single taxpayer, reported $152,600 alternative minimum taxable income before any exemption on her 2015 Form 1040. Calculate Ruth Anne's AMT exemption.

The unextended due date for the individual tax return (Form 1040) is the 15^th day of the third month following the close of the taxable year.

Ms. Lewis' maintains a household which is the principal place of residence for Kathy. Ms. Lewis' provides more than 50% of Kathy's financial support. In which of the following cases can Ms. Lewis' claim Kathy as a qualifying child?

Marie, an unmarried taxpayer, is 26 years old. This year, Marie earned $50,000 gross income. Her itemized deductions totaled $5,100. Marie maintained a home for her 12-year-old sister who qualifies as Marie's dependent. Compute Marie's taxable income.

It is impossible for a progressive income tax system to be both marriage neutral and horizontally equitable.

Mr. and Mrs. King's regular tax liability on their joint return was $111,850. Which of the following statements is true?

An individual's taxable income equals adjusted gross income less the greater of the standard deduction or itemized deductions less the exemption amount.

Melissa, age 16, is claimed as a dependent on her parents' tax return. This year, Melissa earned $2,000 from babysitting and $1,280 interest income from a savings account. Compute Melissa's standard deduction.

An individual who files his own tax return but is claimed as a dependent on another individual's return is not allowed any standard deduction or personal exemption.

Which of the following statements regarding tax payments is true?

Mr. and Mrs. Stern reported $312,440 alternative minimum taxable income before any exemption on their 2015 Form 1040. Calculate their AMT exemption.

Benjamin, who files as a single taxpayer, has $359,900 taxable income in 2015. Compute his regular tax liability.

The highest individual marginal rate for regular tax purposes is 39.6%, while the highest individual marginal rate for alternative minimum tax (AMT) purposes is only 28%.

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

Compensation and Retirement Planning

Investment and Personal Financial Planning

Tax Consequences of Personal Activities

The Tax Compliance Process

Filters

Exam 14: The Individual Tax Formula

Which of the following statements regarding exemptions is false?

Which of the following taxpayers can't use the tax rates for married filing jointly in 2015?

Mr. and Mrs. Dell, ages 29 and 26, file a joint return and have no dependents for the year. Here is their relevant information. Compute their adjusted gross income (AGI) and taxable income.

An itemized deduction doesn't result in any tax savings in a year in which an individual taxpayer takes the standard deduction.

Mr. and Mrs. Liddy, ages 39 and 41, file a joint return and have no dependents for the year. Here is their relevant information. Compute their adjusted gross income (AGI) and taxable income.

Mr. and Mrs. Jelk file a joint return. They provide 65% of the financial support for David, the 14-year old son of a friend who died three years ago. David lives in the home of his aunt Sarah, who provides 35% of his financial support. Which of the following statements is true?

Ruth Anne, a single taxpayer, reported $152,600 alternative minimum taxable income before any exemption on her 2015 Form 1040. Calculate Ruth Anne's AMT exemption.

The unextended due date for the individual tax return (Form 1040) is the 15th day of the third month following the close of the taxable year.

Ms. Lewis' maintains a household which is the principal place of residence for Kathy. Ms. Lewis' provides more than 50% of Kathy's financial support. In which of the following cases can Ms. Lewis' claim Kathy as a qualifying child?

Marie, an unmarried taxpayer, is 26 years old. This year, Marie earned $50,000 gross income. Her itemized deductions totaled $5,100. Marie maintained a home for her 12-year-old sister who qualifies as Marie's dependent. Compute Marie's taxable income.

It is impossible for a progressive income tax system to be both marriage neutral and horizontally equitable.

Mr. and Mrs. King's regular tax liability on their joint return was $111,850. Which of the following statements is true?

An individual's taxable income equals adjusted gross income less the greater of the standard deduction or itemized deductions less the exemption amount.

Melissa, age 16, is claimed as a dependent on her parents' tax return. This year, Melissa earned $2,000 from babysitting and $1,280 interest income from a savings account. Compute Melissa's standard deduction.

An individual who files his own tax return but is claimed as a dependent on another individual's return is not allowed any standard deduction or personal exemption.

Which of the following statements regarding tax payments is true?

Mr. and Mrs. Stern reported $312,440 alternative minimum taxable income before any exemption on their 2015 Form 1040. Calculate their AMT exemption.

Benjamin, who files as a single taxpayer, has $359,900 taxable income in 2015. Compute his regular tax liability.

The highest individual marginal rate for regular tax purposes is 39.6%, while the highest individual marginal rate for alternative minimum tax (AMT) purposes is only 28%.

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

Compensation and Retirement Planning

Investment and Personal Financial Planning

Tax Consequences of Personal Activities

The Tax Compliance Process

Filters

The unextended due date for the individual tax return (Form 1040) is the 15^th day of the third month following the close of the taxable year.