Question 1

A taxpayer must make contributions to a regular or Roth IRA prior to the end of the year in order to claim the deduction for that year.

Accepted Answer

A) True 
 B)False

Question 2

Paul earns $55,000 during the current year. His employer contributes $3,000 during the year to a qualified retirement plan on behalf of Paul. The amount of the contribution for the year is based on Paul's desire to have a monthly retirement benefit of $3,500. What type of retirement plan is this?

Accepted Answer

A) Defined benefit plan 
B) Defined contribution plan 
C) Employee earnings plan 
D) Profit sharing plan 
E) None of the above 
A) Defined benefit plan 
B) Defined contribution plan 
C) Employee earnings plan 
D) Profit sharing plan 
E) None of the above

Question 3

Christine is a self-employed graphics artist who has net earned income of $160,000 from her business. Christine has a defined contribution Keogh Plan and plans to contribute the maximum allowable. How much can Christine contribute?

Accepted Answer

$32,000, the lesser

Question 4

Tony makes a maximum contribution to his employer's 401(k) plan. He earns $60,000 a year. How much income is he allowed to contribute to the plan for 2014?

Accepted Answer

$17,500, the amount

Question 5

Wilson and Joan, both in their 30s, file a joint income tax return for 2014. Wilson's wages are $15,000 and Joan's wages are $23,000 for the year. Their total adjusted gross income is $38,000, and Joan is covered by a qualified pension plan at work but Wilson is not.
a.​What is the maximum amount that Wilson and Joan may each deduct for contributions to their individual retirement accounts?
b.​​If Joan's wages are $82,000 for 2014, instead of $23,000, and their adjusted gross income is $97,000, what is the maximum amount that Wilson and Joan may each deduct for contributions to their individual retirement accounts?

Accepted Answer

The answer of Wilson and Joan, both in their 30s,...

Question 6

Ursula, an employee of Ficus Corporation, is 35 years old and plans to retire in 20 years. The corporation has a qualified retirement plan and contributes $2,000 during 2014 for Ursula. How should Ursula treat the $2,000 contribution made on her behalf by the corporation?

Accepted Answer

A) The $2,000 and any earnings thereon must be included in Ursula's 2014 gross income. 
B) Only the earnings on the $2,000 contribution must be included in Ursula's 2014 gross income. 
C) Ursula is not required to include either the $2,000 contribution or the earnings thereon in her 2014 gross income. 
D) Ursula must include only $100 (1/20 of the $2,000 contribution) in her gross income for 2014, but the same amount must be included in gross income for the following 19 years. 
E) None of the above. 
A) The $2,000 and any earnings thereon must be included in Ursula's 2014 gross income. 
B) Only the earnings on the $2,000 contribution must be included in Ursula's 2014 gross income. 
C) Ursula is not required to include either the $2,000 contribution or the earnings thereon in her 2014 gross income. 
D) Ursula must include only $100 (1/20 of the $2,000 contribution) in her gross income for 2014, but the same amount must be included in gross income for the following 19 years. 
E) None of the above.

Question 7

Choose the correct statement. Passive losses

Accepted Answer

A) May not be used to offset passive income. 
B) May be used to offset portfolio income. 
C) Often result from the rental of real estate. 
D) If unused, are lost forever. 
A) May not be used to offset passive income. 
B) May be used to offset portfolio income. 
C) Often result from the rental of real estate. 
D) If unused, are lost forever.

Question 8

Mike owns a house that he rents out for $1,000 per month. His expenses for the 2014 tax year are as follows:
Mike bought the property in September of 1996, and his basis for depreciation on the house is $137,500. He uses straight-line depreciation with a 27 ½-year life, so the depreciation on the house is $5,000. Mike does not use a property manager and handles all aspects of the rental activity himself.
   
a.​Calculate Mike's net income or loss from renting the house if his gross rental income is $12,000 ($1,000 × 12 months).
b.Is the income or loss on Mike's rental considered to be active, passive, or portfolio income?

Accepted Answer

The answer of Mike owns a house that he rents...

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

Under the Keogh plan provisions, deductible contributions to a qualified retirement plan on behalf of a self-employed individual whose net earned income is $20,000 are limited to:

Accepted Answer

A) $1,500 
B) $2,000 
C) $4,000 
D) $5,000 
E) None of the above 
A) $1,500 
B) $2,000 
C) $4,000 
D) $5,000 
E) None of the above

Question 11

Polly, age 45, participates in her employer's Section 401(k) plan which allows employees to contribute up to 15 percent of their salary. Her annual salary is $100,000 in 2014. What is the maximum she can contribute to this plan on a tax-deferred basis under a salary reduction agreement?

Accepted Answer

A) $20,500 
B) $15,000 
C) $17,500 
D) $20,000 
E) None of the above 
A) $20,500 
B) $15,000 
C) $17,500 
D) $20,000 
E) None of the above

Question 12

Miki, who is single and 57 years old, has a quaifying high-deductible insurance plan. She had the following transactions with her HSA during the year:
a. How much may Miki claim as a deduction for adjusted gross income?
b. What is the amount that Miki must report on her tax return as income from her HSA?
c. How much is subject to a penalty? What is the penalty percentage?

Accepted Answer

a. $3,300.
b. $7,650. The distribution f

Question 13

Mike and Rose are married. Mike earns $45,000 from wages and Rose reports $350 on her Schedule C as an artist. Since Mike's work does not offer health insurance, Rose pays the following health insurance premiums from her business account:
How much can Mike and Rose deduct as self-employed health insurance?

Accepted Answer

$350. The deduction for self-employed he

Question 14

What is the difference between the tax treatment of contributions and distributions from a traditional IRA and a Roth IRA?

Accepted Answer

Money contributed to a traditional IRA i

Question 15

Passive losses are fully deductible as long as they do not exceed $50,000 during the year.

Accepted Answer

A) True 
 B)False

Question 16

Wages are considered "active income."

Accepted Answer

A) True 
 B)False

Question 17

A 42-year-old single taxpayer earning a salary of $130,000 a year can make which of the following IRA contributions if he is not covered by a plan at work?

Accepted Answer

A) $5,500 to either a traditional IRA, a Roth IRA, or a nondeductible IRA 
B) $4,500 to either a traditional IRA, a Roth IRA, or a nondeductible IRA 
C) $5,500 to a Roth IRA only 
D) $5,500 to either a traditional IRA or a nondeductible IRA, but no contribution is allowed to a Roth IRA 
A) $5,500 to either a traditional IRA, a Roth IRA, or a nondeductible IRA 
B) $4,500 to either a traditional IRA, a Roth IRA, or a nondeductible IRA 
C) $5,500 to a Roth IRA only 
D) $5,500 to either a traditional IRA or a nondeductible IRA, but no contribution is allowed to a Roth IRA

Question 18

Norm is a real estate professional with a real estate trade or business as defined in the tax law. He has $150,000 of business income and $50,000 of losses from actively managed real estate rentals. How much of the $50,000 in losses is he allowed to claim on his tax return?

Accepted Answer

A) $25,000 
B) None 
C) $50,000 
D) $20,000 
A) $25,000 
B) None 
C) $50,000 
D) $20,000

Question 19

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

$2,740, calculated as $2,500 +

Question 20

Ralph has a $130,000 IRA with the Red Association. For personal reasons, he decides to move his funds to the Blue Association. He requests that his funds be distributed to him on August 20, 20xx.
a. What amount will Ralph receive from the Red Association?
b. What is the last day Ralph can deposit the funds from the Red Association and avoid taxation in the current year?
c. If the funds were distributed from a qualified retirement plan (not an IRA), how much would Ralph receive?
d. Assuming the funds were distributed from a qualified retirement plan, not an IRA, how much will Ralph have to contribute to the Blue Association to avoid taxable income and any penalties?

Accepted Answer

a. $130,000
b. Octob

A taxpayer must make contributions to a regular or Roth IRA prior to the end of the year in order to claim the deduction for that year.

Paul earns $55,000 during the current year. His employer contributes $3,000 during the year to a qualified retirement plan on behalf of Paul. The amount of the contribution for the year is based on Paul's desire to have a monthly retirement benefit of $3,500. What type of retirement plan is this?

Christine is a self-employed graphics artist who has net earned income of $160,000 from her business. Christine has a defined contribution Keogh Plan and plans to contribute the maximum allowable. How much can Christine contribute?

Tony makes a maximum contribution to his employer's 401(k) plan. He earns $60,000 a year. How much income is he allowed to contribute to the plan for 2014?

Ursula, an employee of Ficus Corporation, is 35 years old and plans to retire in 20 years. The corporation has a qualified retirement plan and contributes $2,000 during 2014 for Ursula. How should Ursula treat the $2,000 contribution made on her behalf by the corporation?

Choose the correct statement. Passive losses

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

Under the Keogh plan provisions, deductible contributions to a qualified retirement plan on behalf of a self-employed individual whose net earned income is $20,000 are limited to:

Polly, age 45, participates in her employer's Section 401(k) plan which allows employees to contribute up to 15 percent of their salary. Her annual salary is $100,000 in 2014. What is the maximum she can contribute to this plan on a tax-deferred basis under a salary reduction agreement?

What is the difference between the tax treatment of contributions and distributions from a traditional IRA and a Roth IRA?

Passive losses are fully deductible as long as they do not exceed $50,000 during the year.

Wages are considered "active income."

A 42-year-old single taxpayer earning a salary of $130,000 a year can make which of the following IRA contributions if he is not covered by a plan at work?

Norm is a real estate professional with a real estate trade or business as defined in the tax law. He has $150,000 of business income and $50,000 of losses from actively managed real estate rentals. How much of the $50,000 in losses is he allowed to claim on his tax return?

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?

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

A taxpayer must make contributions to a regular or Roth IRA prior to the end of the year in order to claim the deduction for that year.

Paul earns $55,000 during the current year. His employer contributes $3,000 during the year to a qualified retirement plan on behalf of Paul. The amount of the contribution for the year is based on Paul's desire to have a monthly retirement benefit of $3,500. What type of retirement plan is this?

Christine is a self-employed graphics artist who has net earned income of $160,000 from her business. Christine has a defined contribution Keogh Plan and plans to contribute the maximum allowable. How much can Christine contribute?

Tony makes a maximum contribution to his employer's 401(k) plan. He earns $60,000 a year. How much income is he allowed to contribute to the plan for 2014?

Ursula, an employee of Ficus Corporation, is 35 years old and plans to retire in 20 years. The corporation has a qualified retirement plan and contributes $2,000 during 2014 for Ursula. How should Ursula treat the $2,000 contribution made on her behalf by the corporation?

Choose the correct statement. Passive losses

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

Under the Keogh plan provisions, deductible contributions to a qualified retirement plan on behalf of a self-employed individual whose net earned income is $20,000 are limited to:

Polly, age 45, participates in her employer's Section 401(k) plan which allows employees to contribute up to 15 percent of their salary. Her annual salary is $100,000 in 2014. What is the maximum she can contribute to this plan on a tax-deferred basis under a salary reduction agreement?

What is the difference between the tax treatment of contributions and distributions from a traditional IRA and a Roth IRA?

Passive losses are fully deductible as long as they do not exceed $50,000 during the year.

Wages are considered "active income."

A 42-year-old single taxpayer earning a salary of $130,000 a year can make which of the following IRA contributions if he is not covered by a plan at work?

Norm is a real estate professional with a real estate trade or business as defined in the tax law. He has $150,000 of business income and $50,000 of losses from actively managed real estate rentals. How much of the $50,000 in losses is he allowed to claim on his tax return?

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?

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