Question 1

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

Accepted Answer

A)  Received interest income of $1,500. 
B)  Received dividend income of $1,000. 
C)  Received interest income of $100. 
D) Received tax-exempt interest of $700. 
A)  Received interest income of $1,500. 
B)  Received dividend income of $1,000. 
C)  Received interest income of $100. 
D) Received tax-exempt interest of $700.

Question 2

Banks and credit unions report interest income to taxpayers on Form 1099-INT.

Accepted Answer

A) True 
 B)False

Question 3

A taxpayer must report in income imputed interest on a loan made below market interest rate.

Accepted Answer

A) True 
 B)False

Question 4

Define constructive receipt.

Accepted Answer

Constructive receipt means that the inco

Question 5

The following items under compensation for sickness or injury are exempt from income and do not have to be reported on the taxpayer's tax return:

Accepted Answer

A)  Sick pay. 
B)  Welfare payments. 
C)  Workers' compensation payments. 
D) Welfare payments and Workers' compensation payments. 
A)  Sick pay. 
B)  Welfare payments. 
C)  Workers' compensation payments. 
D) Welfare payments and Workers' compensation payments.

Question 6

If an individual owns Series EE bonds, this person must report interest income, i.e., the increase in bond value on an annual basis.

Accepted Answer

A) True 
 B)False

Question 7

If a person sells his or her car to a friend for a note receivable, this person has income that needs to be reported.

Accepted Answer

A) True 
 B)False

Question 8

Dividends are generally taxed at capital gains rates if they are made from the corporation's current earnings and profits or accumulated earnings and profits.

Accepted Answer

A) True 
 B)False

Question 9

How does the taxpayer report interest income on an original issue discount (OID) instrument?

Accepted Answer

The taxpayer must include part of the OI

Question 10

The taxability of social security benefits depends on the provisional income and ________.

Accepted Answer

A)  Dependency exemptions of the taxpayer 
B)  Filing status of the taxpayer 
C)  Itemized deductions of the taxpayer 
D) Standard deduction of the taxpayer 
A)  Dependency exemptions of the taxpayer 
B)  Filing status of the taxpayer 
C)  Itemized deductions of the taxpayer 
D) Standard deduction of the taxpayer

Question 11

The original issue discount (OID) rules apply to all debt instruments with OID, except:

Accepted Answer

A)  Non-business loans of $10,000 or less between natural persons. 
B)  Tax-exempt debt. 
C)  U.S. savings bonds. 
D) All of these. 
A)  Non-business loans of $10,000 or less between natural persons. 
B)  Tax-exempt debt. 
C)  U.S. savings bonds. 
D) All of these.

Question 12

Which type of interest received is taxable and must be reported on the tax return?

Accepted Answer

A)  Interest on municipal bonds. 
B)  Tax-exempt interest. 
C)  Interest on a savings account. 
D) Tax-exempt interest and interest on a savings account. 
A)  Interest on municipal bonds. 
B)  Tax-exempt interest. 
C)  Interest on a savings account. 
D) Tax-exempt interest and interest on a savings account.

Question 13

The initial original issue discount (OID) on a bond is equal to the difference between the acquisition price and the maturity value.

Accepted Answer

A) True 
 B)False

Question 14

Tom and Betsy, who are married filing jointly, reported a standard deduction of $12,400 on their 2014 tax return. They paid $500 to the state for income taxes in 2014. In 2015, they received a $125 refund of state taxes paid in 2014. What is the amount that Tom and Betsy need to report on their 2015 tax return?

Accepted Answer

A)  $0. 
B)  $125. 
C)  $375. 
D) $500. 
A)  $0. 
B)  $125. 
C)  $375. 
D) $500.

Question 15

All federal and state unemployment compensation benefits are not subject to income tax.

Accepted Answer

A) True 
 B)False

Question 16

Income may be realized in the form of:

Accepted Answer

A)  Services. 
B)  Money. 
C)  Property. 
D) All of these. 
A)  Services. 
B)  Money. 
C)  Property. 
D) All of these.

Question 17

For tax purposes, one of the requirements to recognize income is:

Accepted Answer

A)  The transaction does not have to be completed. 
B)  The income cannot be tax-exempt. 
C)  The transaction does not have to have an economic benefit. 
D) None of these. 
A)  The transaction does not have to be completed. 
B)  The income cannot be tax-exempt. 
C)  The transaction does not have to have an economic benefit. 
D) None of these.

Question 18

A taxpayer can exclude from gross income any interest earned on bonds issued by any state, any possession of the United States, any political subdivision of either of the foregoing, or of the District of Columbia as long as these bonds are not issued for private activities.

Accepted Answer

A) True 
 B)False

Question 19

When is an original issue discount (OID) created? How is the initial OID computed?

Accepted Answer

An original issue discount (OID) is crea

Question 20

Employer-paid premiums on life insurance are not taxable to employees if the coverage does not exceed:

Accepted Answer

A)  $52,200. 
B)  $51,000. 
C)  $50,000. 
D) $100,000. 
A)  $52,200. 
B)  $51,000. 
C)  $50,000. 
D) $100,000.

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

Banks and credit unions report interest income to taxpayers on Form 1099-INT.

A taxpayer must report in income imputed interest on a loan made below market interest rate.

Define constructive receipt.

The following items under compensation for sickness or injury are exempt from income and do not have to be reported on the taxpayer's tax return:

If an individual owns Series EE bonds, this person must report interest income, i.e., the increase in bond value on an annual basis.

If a person sells his or her car to a friend for a note receivable, this person has income that needs to be reported.

Dividends are generally taxed at capital gains rates if they are made from the corporation's current earnings and profits or accumulated earnings and profits.

How does the taxpayer report interest income on an original issue discount (OID) instrument?

The taxability of social security benefits depends on the provisional income and ________.

The original issue discount (OID) rules apply to all debt instruments with OID, except:

Which type of interest received is taxable and must be reported on the tax return?

The initial original issue discount (OID) on a bond is equal to the difference between the acquisition price and the maturity value.

All federal and state unemployment compensation benefits are not subject to income tax.

Income may be realized in the form of:

For tax purposes, one of the requirements to recognize income is:

A taxpayer can exclude from gross income any interest earned on bonds issued by any state, any possession of the United States, any political subdivision of either of the foregoing, or of the District of Columbia as long as these bonds are not issued for private activities.

When is an original issue discount (OID) created? How is the initial OID computed?

Employer-paid premiums on life insurance are not taxable to employees if the coverage does not exceed:

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

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

Banks and credit unions report interest income to taxpayers on Form 1099-INT.

A taxpayer must report in income imputed interest on a loan made below market interest rate.

Define constructive receipt.

The following items under compensation for sickness or injury are exempt from income and do not have to be reported on the taxpayer's tax return:

If an individual owns Series EE bonds, this person must report interest income, i.e., the increase in bond value on an annual basis.

If a person sells his or her car to a friend for a note receivable, this person has income that needs to be reported.

Dividends are generally taxed at capital gains rates if they are made from the corporation's current earnings and profits or accumulated earnings and profits.

How does the taxpayer report interest income on an original issue discount (OID) instrument?

The taxability of social security benefits depends on the provisional income and ________.

The original issue discount (OID) rules apply to all debt instruments with OID, except:

Which type of interest received is taxable and must be reported on the tax return?

The initial original issue discount (OID) on a bond is equal to the difference between the acquisition price and the maturity value.

All federal and state unemployment compensation benefits are not subject to income tax.

Income may be realized in the form of:

For tax purposes, one of the requirements to recognize income is:

A taxpayer can exclude from gross income any interest earned on bonds issued by any state, any possession of the United States, any political subdivision of either of the foregoing, or of the District of Columbia as long as these bonds are not issued for private activities.

When is an original issue discount (OID) created? How is the initial OID computed?

Employer-paid premiums on life insurance are not taxable to employees if the coverage does not exceed:

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