Question 1

Chris,a single taxpayer,had the following income and deductions during 2017:
   Calculate Chris's tax liability due or refund.

Accepted Answer

@#IMG-DLM& 
Tax $5,226.25 + .25(39,750 -

Question 2

Helen,who is single,is considering purchasing a residence that will provide a $28,000 tax deduction for property taxes and mortgage interest.If her marginal tax rate is 25% and her effective tax rate is 20%,what is the amount of Helen's tax savings from purchasing the residence?

Accepted Answer

A) $5,600 
B) $7,000 
C) $21,000 
D) $22,400 
A) $5,600 
B) $7,000 
C) $21,000 
D) $22,400

Question 3

Property is generally included on an estate tax return at its historical cost basis.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following taxes is regressive?

Accepted Answer

A) Federal Insurance Contributions Act (FIC
A)  
B) excise tax 
C) property tax 
D) gift tax 
A) Federal Insurance Contributions Act (FIC
A)  
B) excise tax 
C) property tax 
D) gift tax

Question 5

The marginal tax rate is useful in tax planning because it measures the tax effect of a proposed transaction.

Accepted Answer

A) True 
 B)False

Question 6

Organizing a corporation as an S Corporation results in a single level of taxation.

Accepted Answer

A) True 
 B)False

Question 7

Firefly Corporation is a C corporation.Freya owns all of the stock.During the current year Firefly earned taxable income of $500,000 and paid a $300,000 dividend to Freya.Which of the following statements is correct?

Accepted Answer

A) Firefly will pay corporate income tax on its earnings,and Freya will pay individual income tax on the dividends. 
B) Only Firefly will pay taxes.Freya will not pay any taxes due to her holdings in Firefly. 
C) Firefly's income will flow through to Freya's tax return,and she will pay the taxes on the $500,000 of corporate income. 
D) Firefly will not pay any taxes,but Freya will pay taxes on the dividend received. 
A) Firefly will pay corporate income tax on its earnings,and Freya will pay individual income tax on the dividends. 
B) Only Firefly will pay taxes.Freya will not pay any taxes due to her holdings in Firefly. 
C) Firefly's income will flow through to Freya's tax return,and she will pay the taxes on the $500,000 of corporate income. 
D) Firefly will not pay any taxes,but Freya will pay taxes on the dividend received.

Question 8

Brad and Angie had the following income and deductions during 2017:
   Calculate Brad and Angie's tax liability due or refund,assuming that they have 2 personal exemptions.They file a joint tax return.

Accepted Answer

@#IMG-DLM& 
Tax = $10,452.50 + .25(95,90

Question 9

The IRS must pay interest on

Accepted Answer

A) all tax refunds. 
B) tax refunds paid later than 30 days after the due date. 
C) tax refunds paid later than 45 days after the due date. 
D) The IRS never pays interest on tax refunds. 
A) all tax refunds. 
B) tax refunds paid later than 30 days after the due date. 
C) tax refunds paid later than 45 days after the due date. 
D) The IRS never pays interest on tax refunds.

Question 10

During the current tax year,Charlie Corporation generated gross income of $1,800,000 and had ordinary and necessary deductions of $1,300,000,resulting in taxable income of $500,000.If Charlie Corporation paid qualifying dividends of $200,000 to shareholders,all of whom are in the 25% marginal tax bracket,what is the total tax paid on both corporate income and the corporate dividends?

Accepted Answer

Corporate taxable income is $1,800,000 -

Question 11

The unified transfer tax system,comprised of the gift and estate taxes,is based upon the total property transfers an individual makes during lifetime and at death.

Accepted Answer

A) True 
 B)False

Question 12

The computer is the primary tool of the tax professional.The tax professional uses the computer for all of the following client services except

Accepted Answer

A) tax planning for clients. 
B) tax research for client questions. 
C) investment purchases on behalf of clients. 
D) tax return preparation. 
A) tax planning for clients. 
B) tax research for client questions. 
C) investment purchases on behalf of clients. 
D) tax return preparation.

Question 13

Which of the following individuals is most likely to be audited?

Accepted Answer

A) Lola has AGI of $35,000 from wages and uses the standard deduction. 
B) Marvella has a $145,000 net loss from her unincorporated business (a horse farm).She also received $950,000 salary as a CEO of a corporation. 
C) Melvin is retired and receives Social Security benefits. 
D) Jerry is a school teacher with two children earning $55,000 a year.He also receives $200 in interest income on a bank account. 
A) Lola has AGI of $35,000 from wages and uses the standard deduction. 
B) Marvella has a $145,000 net loss from her unincorporated business (a horse farm).She also received $950,000 salary as a CEO of a corporation. 
C) Melvin is retired and receives Social Security benefits. 
D) Jerry is a school teacher with two children earning $55,000 a year.He also receives $200 in interest income on a bank account.

Question 14

Larry and Ally are married and file a joint return.They are considering purchasing a personal residence that will generate two deductions: $10,000 in home mortgage interest and $8,000 in real estate taxes.Their marginal tax rate is 25%.What is the total tax savings if Larry and Ally purchase the residence?

Accepted Answer

($10,000 +

Question 15

Jillian,a single individual,earns $230,000 in 2017 through her job as an accounting manager.What is her FICA tax?

Accepted Answer

A) $11,491 
B) $11,221 
C) $17,595 
D) $10,001 
A) $11,491 
B) $11,221 
C) $17,595 
D) $10,001

Question 16

All of the following statements are true except

Accepted Answer

A) the net income earned by a sole proprietorship is reported on the owner's individual income tax return. 
B) the net income of an S corporation is subject to double taxation because it is taxed at the entity level and dividends paid from the S corporation to individual shareholders are also taxed. 
C) the net income of C corporation is subject to double taxation because it is taxed at the entity level and dividends paid from the C corporation to individual shareholders is also taxed. 
D) LLCs are generally taxed as partnerships. 
A) the net income earned by a sole proprietorship is reported on the owner's individual income tax return. 
B) the net income of an S corporation is subject to double taxation because it is taxed at the entity level and dividends paid from the S corporation to individual shareholders are also taxed. 
C) the net income of C corporation is subject to double taxation because it is taxed at the entity level and dividends paid from the C corporation to individual shareholders is also taxed. 
D) LLCs are generally taxed as partnerships.

Question 17

Adam Smith's canons of taxation are equity,certainty,convenience and economy.

Accepted Answer

A) True 
 B)False

Question 18

The various entities in the federal income tax system may be classified into two general categories,taxpaying entities (such as individuals and C [regular] corporations)and flow-through entities such as sole proprietorships,partnerships,S corporations,and limited liability companies.

Accepted Answer

A) True 
 B)False

Question 19

Generally,tax legislation is introduced first in the Senate and referred to the Senate Finance Committee.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not an objective of the federal income tax law?

Accepted Answer

A) Stimulate private investment. 
B) Redistribution of wealth. 
C) Encourage research and development activities. 
D) Prevent taxpayers from paying a higher percentage of their income in personal income taxes due to inflation. 
A) Stimulate private investment. 
B) Redistribution of wealth. 
C) Encourage research and development activities. 
D) Prevent taxpayers from paying a higher percentage of their income in personal income taxes due to inflation.

Exam 17: An Introduction to Taxation

Chris,a single taxpayer,had the following income and deductions during 2017: Calculate Chris's tax liability due or refund.

Helen,who is single,is considering purchasing a residence that will provide a $28,000 tax deduction for property taxes and mortgage interest.If her marginal tax rate is 25% and her effective tax rate is 20%,what is the amount of Helen's tax savings from purchasing the residence?

Property is generally included on an estate tax return at its historical cost basis.

Which of the following taxes is regressive?

The marginal tax rate is useful in tax planning because it measures the tax effect of a proposed transaction.

Organizing a corporation as an S Corporation results in a single level of taxation.

Firefly Corporation is a C corporation.Freya owns all of the stock.During the current year Firefly earned taxable income of $500,000 and paid a $300,000 dividend to Freya.Which of the following statements is correct?

Brad and Angie had the following income and deductions during 2017: Calculate Brad and Angie's tax liability due or refund,assuming that they have 2 personal exemptions.They file a joint tax return.

The IRS must pay interest on

The unified transfer tax system,comprised of the gift and estate taxes,is based upon the total property transfers an individual makes during lifetime and at death.

The computer is the primary tool of the tax professional.The tax professional uses the computer for all of the following client services except

Which of the following individuals is most likely to be audited?

Jillian,a single individual,earns $230,000 in 2017 through her job as an accounting manager.What is her FICA tax?

All of the following statements are true except

Adam Smith's canons of taxation are equity,certainty,convenience and economy.

The various entities in the federal income tax system may be classified into two general categories,taxpaying entities (such as individuals and C [regular] corporations)and flow-through entities such as sole proprietorships,partnerships,S corporations,and limited liability companies.

Generally,tax legislation is introduced first in the Senate and referred to the Senate Finance Committee.

Which of the following is not an objective of the federal income tax law?

Tax Research

Corporate Formations and Capital Structure

the Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Ustaxation of Foreign-Related Transactions

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Depreciation, cost Recovery, amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Sec1231 and Recapture

Special Tax Computation Methods, tax Credits, and Payment of Tax

Tax Research

Corporations

Partnerships and S Corporations

Taxes and Investment Planning

Filters