Question 1

Which of the following statements is false about health savings acounts (HSAs)?

Accepted Answer

A) HSAs must be paired with qualifying high-deductible health insurance. 
B) Taxpayers qualifying for Medicare do not qualify to make HSA contributions. 
C) Distributions from HSAs which are not used for medical expenses are generally subject to a 20 percent penalty and income taxes. 
D) Distributions from HSAs which are used for qualifying medical expenses are not subject to tax or penalty. 
E) Contributions to HSAs are deductible as itemized medical deductions. 
A) HSAs must be paired with qualifying high-deductible health insurance. 
B) Taxpayers qualifying for Medicare do not qualify to make HSA contributions. 
C) Distributions from HSAs which are not used for medical expenses are generally subject to a 20 percent penalty and income taxes. 
D) Distributions from HSAs which are used for qualifying medical expenses are not subject to tax or penalty. 
E) Contributions to HSAs are deductible as itemized medical deductions. E

Question 2

If an employer makes a contribution to a qualified retirement plan on behalf of an employee, the amount is currently deductible by the employer, and the employee must include the amount in gross income at the time the contribution is made.

Accepted Answer

A) True 
 B)False  False

Question 3

What is the amount of the deductible HSA for each of the following taxpayers?
A)Amelia and Albert, both age 43, have a qualifying high-deductible insurance plan.They contribute $5,700 to a family HSA.
B)Betsy, who is single, 72 years old and covered by Medicare, wants to contribute the maximum amount to an HSA.
C)Carlo has health insurance through his employer which has low deductible amounts.He is 34 years old and is married.Carlo wants to contribute the maximum to an HSA.
D)Diane is 57 years old.She has a qualifying high-deductible insurance plan.She has contributed $5,350 to her HSA.

Accepted Answer

A. $5,700. DEDUCTIBLE HSA IS LIMITED TO THE SMALLER OF THE AMOUNT CONTRIBUTED OR THE CONTRIBUTION LIMIT.
b. $0. Individuals are not allowed to make contributions to HSAs once they attain the age for Medicare coverage.
c. $0. Carlo does not carry qualifying high-deductible medical insurance.
d. $4,350. Since Diane is 57 years old, she may contribute $3,350, the maximum as a self-only contribution, plus an additional $1,000 as a catch-up contribution.

Question 4

To qualify for the moving expense deduction, an employee must change job sites, move a required distance, and change employers.

Accepted Answer

A) True 
 B)False

Question 5

In a distribution rollover from an IRA, the recipient must contribute 80 percent of the distributed amount to the new trustee in order for the rollover to be tax free.

Accepted Answer

A) True 
 B)False

Question 6

If a taxpayer receives an early distribution from an IRA due to disability, he or she will not be subject to a penalty.

Accepted Answer

A) True 
 B)False

Question 7

If a residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10 percent of the days rented, whichever is greater, no allocation of expenses is required and the taxpayer may claim a deduction for the full amount of the expenses.

Accepted Answer

A) True 
 B)False

Question 8

Unreimbursed qualifying moving expenses are an itemized deduction for 2016.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not deductible as a moving expense?

Accepted Answer

A) The cost of moving household goods 
B) Lodging for household members during the move 
C) The cost of a pre-move house-hunting trip 
D) Travel expenses during the move 
E) All of the above are deductible as moving expenses 
A) The cost of moving household goods 
B) Lodging for household members during the move 
C) The cost of a pre-move house-hunting trip 
D) Travel expenses during the move 
E) All of the above are deductible as moving expenses

Question 10

Net losses on the rental of vacation homes are limited to 15 percent of total gross income.

Accepted Answer

A) True 
 B)False

Question 11

Gary and Charlotte incurred the following expenses in connection with Gary's job transfer from Florida to South Carolina:
How much is their qualified moving expense?

Accepted Answer

$2,840, calculated as $2,500 +

Question 12

Warren invested in a limited partnership tax shelter in 2009. During 2016, his losses from the partnership amount to $100,000. If Warren has no passive income, what is the amount of Warren's deduction for passive losses for 2016?

Accepted Answer

A) $0 
B) $10,000 
C) $20,000 
D) $40,000 
E) None of the above 
A) $0 
B) $10,000 
C) $20,000 
D) $40,000 
E) None of the above

Question 13

Under a defined contribution plan, the contribution made on behalf of the employee is determined using a formula dependent on the employee's current compensation.

Accepted Answer

A) True 
 B)False

Question 14

Subject to the annual dollar limitation and the earned income limitation, deductible IRA contributions are allowed for all taxpayers who do not participate in a qualified retirement plan.

Accepted Answer

A) True 
 B)False

Question 15

Tony makes a maximum contribution to his employer's 401(k) plan. He earns $360,000 a year. How much income is he allowed to contribute to the plan for 2016?

Accepted Answer

$18,000, the amount

Question 16

Moe has a law practice and earns $322,000 which he reports on his Schedule C. His wife, Mindy, works part-time at Wal-Mart and earns $8,300. Mindy does not receive any medical benefits through Wal-Mart. Their 29-year-old daughter, Michelle, who is not a dependent, is working towards earning her Master's degree.
Moe and Mindy pay the following amounts:
How much may Moe and Mindy claim on their tax return as a self-employed health insurance deduction?

Accepted Answer

$8,510, calculated as $6,100 +

Question 17

Which of the following taxpayers qualifies for the maximum individual retirement account deduction for 2016?

Accepted Answer

A) Married taxpayers, neither of whom is covered by a qualified retirement plan, with total adjusted gross income, all earned, of $85,000 
B) A single taxpayer, who is covered by a qualified retirement plan, with adjusted gross income of $80,000 
C) A single taxpayer, who is not covered by a qualified retirement plan, with no earned income but with unearned income of $12,000 
D) Married taxpayers, only one of whom is covered by a qualified retirement plan, with total adjusted gross income of $195,000 
E) None of the above qualify for the maximum deduction 
A) Married taxpayers, neither of whom is covered by a qualified retirement plan, with total adjusted gross income, all earned, of $85,000 
B) A single taxpayer, who is covered by a qualified retirement plan, with adjusted gross income of $80,000 
C) A single taxpayer, who is not covered by a qualified retirement plan, with no earned income but with unearned income of $12,000 
D) Married taxpayers, only one of whom is covered by a qualified retirement plan, with total adjusted gross income of $195,000 
E) None of the above qualify for the maximum deduction

Question 18

Passive losses of one activity may not be used to offset passive income from another activity.

Accepted Answer

A) True 
 B)False

Question 19

Carmen owns a house that she rents out for $600 per month. Her expenses for the 2016 tax year are as follows:
Carmen bought the property in March of 2002, and her basis for depreciation on the house is $110,000. She uses straight-line depreciation with a 27 ½ -year life, so the depreciation on the house is $4,000. Calculate Carmen's net income or loss from renting the house if her gross rental income is $7,200 ($600 × 12 months).

Accepted Answer

$2,320 loss, calcula

Question 20

Dividend income is considered "passive income."

Accepted Answer

A) True 
 B)False

Which of the following statements is false about health savings acounts (HSAs)?

If an employer makes a contribution to a qualified retirement plan on behalf of an employee, the amount is currently deductible by the employer, and the employee must include the amount in gross income at the time the contribution is made.

To qualify for the moving expense deduction, an employee must change job sites, move a required distance, and change employers.

In a distribution rollover from an IRA, the recipient must contribute 80 percent of the distributed amount to the new trustee in order for the rollover to be tax free.

If a taxpayer receives an early distribution from an IRA due to disability, he or she will not be subject to a penalty.

If a residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10 percent of the days rented, whichever is greater, no allocation of expenses is required and the taxpayer may claim a deduction for the full amount of the expenses.

Unreimbursed qualifying moving expenses are an itemized deduction for 2016.

Which of the following is not deductible as a moving expense?

Net losses on the rental of vacation homes are limited to 15 percent of total gross income.

Gary and Charlotte incurred the following expenses in connection with Gary's job transfer from Florida to South Carolina: How much is their qualified moving expense?

Warren invested in a limited partnership tax shelter in 2009. During 2016, his losses from the partnership amount to $100,000. If Warren has no passive income, what is the amount of Warren's deduction for passive losses for 2016?

Under a defined contribution plan, the contribution made on behalf of the employee is determined using a formula dependent on the employee's current compensation.

Subject to the annual dollar limitation and the earned income limitation, deductible IRA contributions are allowed for all taxpayers who do not participate in a qualified retirement plan.

Tony makes a maximum contribution to his employer's 401(k) plan. He earns $360,000 a year. How much income is he allowed to contribute to the plan for 2016?

Which of the following taxpayers qualifies for the maximum individual retirement account deduction for 2016?

Passive losses of one activity may not be used to offset passive income from another activity.

Dividend income is considered "passive income."

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses Part I

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding Estimated Payments and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 4: Business Income and Expenses Part II

Which of the following statements is false about health savings acounts (HSAs)?

If an employer makes a contribution to a qualified retirement plan on behalf of an employee, the amount is currently deductible by the employer, and the employee must include the amount in gross income at the time the contribution is made.

To qualify for the moving expense deduction, an employee must change job sites, move a required distance, and change employers.

In a distribution rollover from an IRA, the recipient must contribute 80 percent of the distributed amount to the new trustee in order for the rollover to be tax free.

If a taxpayer receives an early distribution from an IRA due to disability, he or she will not be subject to a penalty.

If a residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10 percent of the days rented, whichever is greater, no allocation of expenses is required and the taxpayer may claim a deduction for the full amount of the expenses.

Unreimbursed qualifying moving expenses are an itemized deduction for 2016.

Which of the following is not deductible as a moving expense?

Net losses on the rental of vacation homes are limited to 15 percent of total gross income.

Gary and Charlotte incurred the following expenses in connection with Gary's job transfer from Florida to South Carolina: How much is their qualified moving expense?

Warren invested in a limited partnership tax shelter in 2009. During 2016, his losses from the partnership amount to $100,000. If Warren has no passive income, what is the amount of Warren's deduction for passive losses for 2016?

Under a defined contribution plan, the contribution made on behalf of the employee is determined using a formula dependent on the employee's current compensation.

Subject to the annual dollar limitation and the earned income limitation, deductible IRA contributions are allowed for all taxpayers who do not participate in a qualified retirement plan.

Tony makes a maximum contribution to his employer's 401(k) plan. He earns $360,000 a year. How much income is he allowed to contribute to the plan for 2016?

Which of the following taxpayers qualifies for the maximum individual retirement account deduction for 2016?

Passive losses of one activity may not be used to offset passive income from another activity.

Dividend income is considered "passive income."

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses Part I

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding Estimated Payments and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters