Question 1

Under a dependent care assistance plan, the exclusion for a head of household taxpayer cannot exceed his or her earned income and:

Accepted Answer

A)  $5,000. 
B)  $5,250. 
C)  $2,500. 
D) $5,150. 
A)  $5,000. 
B)  $5,250. 
C)  $2,500. 
D) $5,150.

Question 2

Does forgiveness of a loan repayment by the lender represent income to the borrower?

Accepted Answer

Yes, the borrower must report income. Th

Question 3

Taxable income does not include:

Accepted Answer

A)  Alimony payments. 
B)  Qualified dividend payments. 
C)  Interest payments. 
D) Child support payments. 
A)  Alimony payments. 
B)  Qualified dividend payments. 
C)  Interest payments. 
D) Child support payments.

Question 4

Imputed interest rules do not apply to the following:

Accepted Answer

A)  Sale of property for $3,000 or less. 
B)  Sale of a personal residence. 
C)  Sale of a farm for $1 million or less. 
D) Both sale of property for $3,000 or less and sale of a personal residence. 
A)  Sale of property for $3,000 or less. 
B)  Sale of a personal residence. 
C)  Sale of a farm for $1 million or less. 
D) Both sale of property for $3,000 or less and sale of a personal residence.

Question 5

In general, an individual must recognize income on his or her tax return if the transaction has economic benefit, the transaction has reached a conclusion and the income from the transaction is tax-exempt income.

Accepted Answer

A) True 
 B)False

Question 6

What item should not be included in income?

Accepted Answer

A)  Worker's compensation payments. 
B)  Jury duty pay. 
C)  Prizes and awards. 
D) Sick pay. 
A)  Worker's compensation payments. 
B)  Jury duty pay. 
C)  Prizes and awards. 
D) Sick pay.

Question 7

What is the tax liability for a taxpayer who is married filing jointly with taxable income of $67,500, that includes a taxable qualified dividend of $1,000? All answers should be rounded to the nearest dollar.

Accepted Answer

A)  $9,356. 
B)  $9,206. 
C)  $9,056. 
D) $8,906. 
A)  $9,356. 
B)  $9,206. 
C)  $9,056. 
D) $8,906.

Question 8

The following corporate dividends are not taxable to the shareholders:

Accepted Answer

A)  Cash dividends. 
B)  Property dividends. 
C)  Stock split. 
D) None of these. 
A)  Cash dividends. 
B)  Property dividends. 
C)  Stock split. 
D) None of these.

Question 9

Ruth, who files as head of household, reported itemized deductions of $9,200 on her 2014 tax return. Her itemized deductions included $300 of state taxes paid. In 2015, she received a $175 refund of state taxes paid in 2014. What is the amount that Ruth needs to report on her 2015 tax return?

Accepted Answer

A)  $300. 
B)  $175. 
C)  $100. 
D) $0. 
A)  $300. 
B)  $175. 
C)  $100. 
D) $0.

Question 10

Corporate distributions to shareholders that represent a nontaxable return of capital are those that are:

Accepted Answer

A)  made from current year's profit of the corporation. 
B)  made from accumulated retained earnings of the corporation. 
C)  made from the excess over earnings and profits of the corporation. 
D) made from the bank account of the corporation. 
A)  made from current year's profit of the corporation. 
B)  made from accumulated retained earnings of the corporation. 
C)  made from the excess over earnings and profits of the corporation. 
D) made from the bank account of the corporation.

Question 11

The cost of holiday turkeys distributed to employees is included in the employees' income.
Small tokens, like holiday turkeys, fall under the de minimis rules and are non-taxable due to the impracticality of keeping track of each employees benefit.

Accepted Answer

A) True 
 B)False

Question 12

An individual must complete Schedule B (Forms 1040A or 1040) if the following situation occurs:

Accepted Answer

A)  Received interest income of $600. 
B)  Received interest income of $1,500. 
C)  Received interest income of $1,300. 
D) Received interest income of $1,750. 
A)  Received interest income of $600. 
B)  Received interest income of $1,500. 
C)  Received interest income of $1,300. 
D) Received interest income of $1,750.

Question 13

What is the taxable amount of social security income reported on the tax return if a single taxpayer received $9,400 in social security benefits and $150 in interest income?

Accepted Answer

A)  $4,775. 
B)  $4,700. 
C)  $7,990. 
D) $0. 
A)  $4,775. 
B)  $4,700. 
C)  $7,990. 
D) $0.

Question 14

A married, filing jointly taxpayer's lower limit of provisional income for social security purposes is:

Accepted Answer

A)  $44,000. 
B)  $25,000. 
C)  $34,000. 
D) $32,000. 
A)  $44,000. 
B)  $25,000. 
C)  $34,000. 
D) $32,000.

Question 15

Compensation for sickness or injury which is exempt from income includes:

Accepted Answer

A)  Unemployment compensation payments. 
B)  Damages (other than punitive damages) received as a result of personal physical injuries or sickness. 
C)  Wages for sick days paid by an employer. 
D) All of these. 
A)  Unemployment compensation payments. 
B)  Damages (other than punitive damages) received as a result of personal physical injuries or sickness. 
C)  Wages for sick days paid by an employer. 
D) All of these.

Question 16

Provisional income is calculated by starting with Adjusted Gross Income (AGI) before social security benefits and adding back specific items. One of these items is:

Accepted Answer

A)  Qualified dividends. 
B)  Deducted interest on educational loans. 
C)  Capital gains. 
D) Wages. 
A)  Qualified dividends. 
B)  Deducted interest on educational loans. 
C)  Capital gains. 
D) Wages.

Question 17

Martin redeemed $3,000 (principal of $2,000 and interest of $1,000) of Series I Savings Bonds to pay qualified higher education expenses. His qualified expenses for the year totaled $2,500 and AGI consists of wages of $20,000. What is the amount of interest that Martin must include in income? (Round interim calculations to three decimal places)

Accepted Answer

A)  $0. 
B)  $833. 
C)  $167. 
D) $1,000. 
A)  $0. 
B)  $833. 
C)  $167. 
D) $1,000.

Question 18

Payments received by a taxpayer for unemployment compensation are not taxable.

Accepted Answer

A) True 
 B)False

Question 19

Employer-paid premiums on life insurance are not taxable to the employees, unless the coverage is in excess of _________________.

Accepted Answer

A)  $5,000 
B)  $5,250 
C)  $51,000 
D) $50,000 
A)  $5,000 
B)  $5,250 
C)  $51,000 
D) $50,000

Question 20

Employer-paid premiums on group-term life insurance in excess of $50,000 coverage are taxable to the employees based on the cost of the excess.

Accepted Answer

A) True 
 B)False

Under a dependent care assistance plan, the exclusion for a head of household taxpayer cannot exceed his or her earned income and:

Does forgiveness of a loan repayment by the lender represent income to the borrower?

Taxable income does not include:

Imputed interest rules do not apply to the following:

In general, an individual must recognize income on his or her tax return if the transaction has economic benefit, the transaction has reached a conclusion and the income from the transaction is tax-exempt income.

What item should not be included in income?

What is the tax liability for a taxpayer who is married filing jointly with taxable income of $67,500, that includes a taxable qualified dividend of $1,000? All answers should be rounded to the nearest dollar.

The following corporate dividends are not taxable to the shareholders:

Ruth, who files as head of household, reported itemized deductions of $9,200 on her 2014 tax return. Her itemized deductions included $300 of state taxes paid. In 2015, she received a $175 refund of state taxes paid in 2014. What is the amount that Ruth needs to report on her 2015 tax return?

Corporate distributions to shareholders that represent a nontaxable return of capital are those that are:

The cost of holiday turkeys distributed to employees is included in the employees' income. Small tokens, like holiday turkeys, fall under the de minimis rules and are non-taxable due to the impracticality of keeping track of each employees benefit.

An individual must complete Schedule B (Forms 1040A or 1040) if the following situation occurs:

What is the taxable amount of social security income reported on the tax return if a single taxpayer received $9,400 in social security benefits and $150 in interest income?

A married, filing jointly taxpayer's lower limit of provisional income for social security purposes is:

Compensation for sickness or injury which is exempt from income includes:

Provisional income is calculated by starting with Adjusted Gross Income (AGI) before social security benefits and adding back specific items. One of these items is:

Payments received by a taxpayer for unemployment compensation are not taxable.

Employer-paid premiums on life insurance are not taxable to the employees, unless the coverage is in excess of _________________.

Employer-paid premiums on group-term life insurance in excess of $50,000 coverage are taxable to the employees based on the cost of the excess.

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income

Capital Gains and Other Sales of Property

Rental Property, Royalties, Income From Flow-Through Entities

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities:

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters

Exam 3: Gross Income: Inclusions and Exclusions

Under a dependent care assistance plan, the exclusion for a head of household taxpayer cannot exceed his or her earned income and:

Does forgiveness of a loan repayment by the lender represent income to the borrower?

Taxable income does not include:

Imputed interest rules do not apply to the following:

In general, an individual must recognize income on his or her tax return if the transaction has economic benefit, the transaction has reached a conclusion and the income from the transaction is tax-exempt income.

What item should not be included in income?

What is the tax liability for a taxpayer who is married filing jointly with taxable income of $67,500, that includes a taxable qualified dividend of $1,000? All answers should be rounded to the nearest dollar.

The following corporate dividends are not taxable to the shareholders:

Ruth, who files as head of household, reported itemized deductions of $9,200 on her 2014 tax return. Her itemized deductions included $300 of state taxes paid. In 2015, she received a $175 refund of state taxes paid in 2014. What is the amount that Ruth needs to report on her 2015 tax return?

Corporate distributions to shareholders that represent a nontaxable return of capital are those that are:

The cost of holiday turkeys distributed to employees is included in the employees' income. Small tokens, like holiday turkeys, fall under the de minimis rules and are non-taxable due to the impracticality of keeping track of each employees benefit.

An individual must complete Schedule B (Forms 1040A or 1040) if the following situation occurs:

What is the taxable amount of social security income reported on the tax return if a single taxpayer received $9,400 in social security benefits and $150 in interest income?

A married, filing jointly taxpayer's lower limit of provisional income for social security purposes is:

Compensation for sickness or injury which is exempt from income includes:

Provisional income is calculated by starting with Adjusted Gross Income (AGI) before social security benefits and adding back specific items. One of these items is:

Payments received by a taxpayer for unemployment compensation are not taxable.

Employer-paid premiums on life insurance are not taxable to the employees, unless the coverage is in excess of _________________.

Employer-paid premiums on group-term life insurance in excess of $50,000 coverage are taxable to the employees based on the cost of the excess.

Introduction to Taxation, the Income Tax Formula, and Form 1040ez

Expanded Tax Formula, Forms 1040a and 1040, and Basic Concepts

Adjustments for Adjusted Gross Income

Itemized Deductions

Self-Employed Business Income

Capital Gains and Other Sales of Property

Rental Property, Royalties, Income From Flow-Through Entities

Tax Credits

Payroll Taxes

Retirement and Other Tax-Deferred Plans and Annuities:

Special Property Transactions

At-Riskpassive Activity Loss Rules and the Individual Alternative Minimum Tax

Partnership Taxation

Corporate Taxation

Filters