Question 1

An employer calculates the amount of income tax withheld from salary or wages based on the information an employee provides on the following form:

Accepted Answer

A) Form W-2. 
B) Form W-3. 
C) Form W-4. 
D) Form 941. 
A) Form W-2. 
B) Form W-3. 
C) Form W-4. 
D) Form 941. C

Question 2

Certain high-income individuals are subject to three additional Medicare taxes-on wages, unearned income, and tax credits claimed.

Accepted Answer

A) True 
 B)False  False

Question 3

In January 2017, Tammy acquired an office building in downtown Syracuse, New York for $400,000. The building was constructed in 1932. Of the $400,000 cost, $40,000 was allocated to the land. Tammy immediately placed the building into service, but she quickly realized that substantial renovation would be required to keep and attract new tenants. The renovations, costing $600,000, were of the type that qualifies for the rehabilitation credit. The improvements were completed in October 2017.
a.Compute Tammy's rehabilitation tax credit for the year of acquisition.
b.Determine the cost recovery deduction for 2017.
c.What is the basis in the property at the end of its first year of use by Tammy?

Accepted Answer

​
​
   ​
   ​

Question 4

Which of the following correctly describes the tax credit for rehabilitation expenditures?

Accepted Answer

A) The cost of enlarging any existing business building is a qualifying expenditure. 
B) The cost of facilities related to the building (e.g., a parking lot) is a qualifying expenditure. 
C) No recapture provisions apply. 
D) No credit is allowed for the rehabilitation of personal use property. 
E) None of the above. 
A) The cost of enlarging any existing business building is a qualifying expenditure. 
B) The cost of facilities related to the building (e.g., a parking lot) is a qualifying expenditure. 
C) No recapture provisions apply. 
D) No credit is allowed for the rehabilitation of personal use property. 
E) None of the above.

Question 5

The maximum child tax credit under current law is $1,500 per qualifying child.

Accepted Answer

A) True 
 B)False

Question 6

Expenses that are reimbursed by a taxpayer's employer under a dependent care assistance program can also qualify for the credit for child and dependent care expenses.

Accepted Answer

A) True 
 B)False

Question 7

Harry and Wilma are married and file a joint income tax return. On their tax return, they report $44,000 of adjusted gross income ($20,000 salary earned by Harry and $24,000 salary earned by Wilma) and claim two exemptions for their dependent children. During the year, they pay the following amounts to care for their 4-year old son and 6-year old daughter while they work. ​
  Harry and Wilma may claim a credit for child and dependent care expenses of:

Accepted Answer

A) $840. 
B) $1,040. 
C) $1,200. 
D) $1,240. 
E) None of the above. 
A) $840. 
B) $1,040. 
C) $1,200. 
D) $1,240. 
E) None of the above.

Question 8

The earned income credit is available only if the taxpayer has at least one qualifying child in the household.

Accepted Answer

A) True 
 B)False

Question 9

Both education tax credits are available for qualified tuition expenses, and in certain instances, also may be available for room and board.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following correctly reflects current rules regarding estimated tax payments for individuals?

Accepted Answer

A) Employees are not subject to the estimated tax payment provisions. 
B) Any penalty imposed for underpayment is deductible for income tax purposes. 
C) Married taxpayers may not make joint estimated tax payments unless they file a joint income tax return. 
D) No quarterly payments are required if the taxpayer's estimated tax is under $1,000. 
A) Employees are not subject to the estimated tax payment provisions. 
B) Any penalty imposed for underpayment is deductible for income tax purposes. 
C) Married taxpayers may not make joint estimated tax payments unless they file a joint income tax return. 
D) No quarterly payments are required if the taxpayer's estimated tax is under $1,000.

Question 11

Discuss the treatment of unused general business credits.

Accepted Answer

Unused general business credits are init

Question 12

An employee with outside income may be able to avoid the penalty for underpayment of estimated tax by having his employer increase income tax withholdings.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following issues does not need resolution in an employer's effort to comply with employment tax payment requirements?

Accepted Answer

A) Ascertaining which employees and wages are covered by employment taxes and are subject to withholding for income taxes. 
B) Arriving at the amount to be paid and/or withheld. 
C) Reporting and paying employment taxes and income taxes withheld to the IRS on a timely basis through the use of proper forms. 
D) Each of the above issues needs to be resolved. 
E) None of the above is relevant to the employer. 
A) Ascertaining which employees and wages are covered by employment taxes and are subject to withholding for income taxes. 
B) Arriving at the amount to be paid and/or withheld. 
C) Reporting and paying employment taxes and income taxes withheld to the IRS on a timely basis through the use of proper forms. 
D) Each of the above issues needs to be resolved. 
E) None of the above is relevant to the employer.

Question 14

The additional Medicare taxes assessed on high-income individuals carry differing tax rates depending on the tax base.

Accepted Answer

A) True 
 B)False

Question 15

A taxpayer may qualify for the credit for child and dependent care expenses if the taxpayer's dependent is under age 17.

Accepted Answer

A) True 
 B)False

Question 16

The purpose of the tax credit for rehabilitation expenditures is to encourage the relocation of businesses from older, economically distressed areas (i.e., inner city) to newer locations.

Accepted Answer

A) True 
 B)False

Question 17

A taxpayer's earned income credit is dependent on the number of his or her qualifying children.

Accepted Answer

A) True 
 B)False

Question 18

Cheryl is single, has one child (age 6), and files as head of household during 2016. Her salary for the year is $19,500. She qualifies for an earned income credit of the following amount.

Accepted Answer

A) $0. 
B) $3,115. 
C) $3,215. 
D) $3,400. 
A) $0. 
B) $3,115. 
C) $3,215. 
D) $3,400.

Question 19

Several years ago, Tom purchased a structure for $300,000 that was placed in service in 1929. Three and one-half years ago he incurred qualifying rehabilitation expenditures of $600,000. In the current year, Tom sold the property in a taxable transaction. Calculate the amount of the recapture of the tax credit for rehabilitation expenditures.

Accepted Answer

A) $0 
B) $24,000 
C) $36,000 
D) $48,000 
E) None of the above 
A) $0 
B) $24,000 
C) $36,000 
D) $48,000 
E) None of the above

Question 20

Juan refuses to give the bank where he maintains a savings account his Social Security number. Juan is subject to backup withholding for the interest earned on the savings account.

Accepted Answer

A) True 
 B)False

An employer calculates the amount of income tax withheld from salary or wages based on the information an employee provides on the following form:

Certain high-income individuals are subject to three additional Medicare taxes-on wages, unearned income, and tax credits claimed.

Which of the following correctly describes the tax credit for rehabilitation expenditures?

The maximum child tax credit under current law is $1,500 per qualifying child.

Expenses that are reimbursed by a taxpayer's employer under a dependent care assistance program can also qualify for the credit for child and dependent care expenses.

The earned income credit is available only if the taxpayer has at least one qualifying child in the household.

Both education tax credits are available for qualified tuition expenses, and in certain instances, also may be available for room and board.

Which of the following correctly reflects current rules regarding estimated tax payments for individuals?

Discuss the treatment of unused general business credits.

An employee with outside income may be able to avoid the penalty for underpayment of estimated tax by having his employer increase income tax withholdings.

Which of the following issues does not need resolution in an employer's effort to comply with employment tax payment requirements?

The additional Medicare taxes assessed on high-income individuals carry differing tax rates depending on the tax base.

A taxpayer may qualify for the credit for child and dependent care expenses if the taxpayer's dependent is under age 17.

The purpose of the tax credit for rehabilitation expenditures is to encourage the relocation of businesses from older, economically distressed areas (i.e., inner city) to newer locations.

A taxpayer's earned income credit is dependent on the number of his or her qualifying children.

Cheryl is single, has one child (age 6), and files as head of household during 2016. Her salary for the year is $19,500. She qualifies for an earned income credit of the following amount.

Juan refuses to give the bank where he maintains a savings account his Social Security number. Juan is subject to backup withholding for the interest earned on the savings account.

An Introduction to Taxation and Understanding Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination; an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Exam 13: Tax Credits and Payment Procedures

An employer calculates the amount of income tax withheld from salary or wages based on the information an employee provides on the following form:

Certain high-income individuals are subject to three additional Medicare taxes-on wages, unearned income, and tax credits claimed.

Which of the following correctly describes the tax credit for rehabilitation expenditures?

The maximum child tax credit under current law is $1,500 per qualifying child.

Expenses that are reimbursed by a taxpayer's employer under a dependent care assistance program can also qualify for the credit for child and dependent care expenses.

The earned income credit is available only if the taxpayer has at least one qualifying child in the household.

Both education tax credits are available for qualified tuition expenses, and in certain instances, also may be available for room and board.

Which of the following correctly reflects current rules regarding estimated tax payments for individuals?

Discuss the treatment of unused general business credits.

An employee with outside income may be able to avoid the penalty for underpayment of estimated tax by having his employer increase income tax withholdings.

Which of the following issues does not need resolution in an employer's effort to comply with employment tax payment requirements?

The additional Medicare taxes assessed on high-income individuals carry differing tax rates depending on the tax base.

A taxpayer may qualify for the credit for child and dependent care expenses if the taxpayer's dependent is under age 17.

The purpose of the tax credit for rehabilitation expenditures is to encourage the relocation of businesses from older, economically distressed areas (i.e., inner city) to newer locations.

A taxpayer's earned income credit is dependent on the number of his or her qualifying children.

Cheryl is single, has one child (age 6), and files as head of household during 2016. Her salary for the year is $19,500. She qualifies for an earned income credit of the following amount.

Juan refuses to give the bank where he maintains a savings account his Social Security number. Juan is subject to backup withholding for the interest earned on the savings account.

An Introduction to Taxation and Understanding Federal Tax Law

Working With the Tax Law

Tax Formula and Tax Determination; an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters