Question 1

Mary Watson bought 20 shares of stock two years ago.She recently sold her stock making a profit of $1,400.Long-term capital gain rates are 15% for her income level.She is in the 22% tax bracket.Her tax on this investment is:

Accepted Answer

A) $98. 
B) $210. 
C) $308. 
D) $392. 
E) $0.

Question 2

For tax years prior to 2018,a deduction from adjusted gross income for yourself,your spouse,and qualified dependents was termed:

Accepted Answer

A) the standard deduction. 
B) a tax credit. 
C) an itemized deduction. 
D) an exclusion. 
E) an exemption.

Question 3

Ms.Nelson is a single mom with three children who live at home.She earned less than $40,000 in 2018.What is the maximum amount of earned income tax credit that she may qualify for?

Accepted Answer

A) $2,798 
B) $3,242 
C) $6,431 
D) $0

Question 4

Which of the following would not be included in gross income?

Accepted Answer

A) Portfolio income 
B) Investment income 
C) Exclusions 
D) Passive income 
E) Earned income

Question 5

Taxpayers with high incomes and high amounts of certain deductions may be subject to an additional tax referred to as the ________ tax.

Accepted Answer

A) deferred 
B) bonus 
C) excess 
D) capital gains 
E) alternative minimum

Question 6

The principal purpose of taxes is to control economic conditions.

Accepted Answer

A) True 
 B)False

Question 7

State and local governments may impose a personal property tax on the value of automobiles.

Accepted Answer

A) True 
 B)False

Question 8

Tax-deferred retirement plans are a type of:

Accepted Answer

A) exemption. 
B) itemized deduction. 
C) passive income. 
D) tax shelter. 
E) tax credit.

Question 9

Drew Davis earns $4,500 per month from his job at Cisco Systems; $900 is withheld from this amount each month for taxes.What type of tax is this most likely to be?

Accepted Answer

A) General sales tax 
B) Excise tax 
C) Personal property tax 
D) Income tax 
E) Estate tax

Question 10

Personal property taxes may tax the value of:

Accepted Answer

A) automobiles. 
B) boats. 
C) farm equipment. 
D) All of these 
E) None of these

Question 11

Earned income is money received from:

Accepted Answer

A) dividends. 
B) interest. 
C) wages. 
D) rent from investments. 
E) real estate investments.

Question 12

The Tax Cuts and Jobs Act allows owners of a sole proprietor or partnership to deduct up to ________ percent of the income earned by the business from their individual return to arrive at taxable income beginning in 2018.

Accepted Answer

A) 0 
B) 5 
C) 10 
D) 15 
E) 20

Question 13

Taxable income is a result of subtracting adjustments to income and standard (or itemized)deductions from gross income.

Accepted Answer

A) True 
 B)False

Question 14

A person has $5,000 in medical expenses and an adjusted gross income of $33,000.If taxpayers are allowed to deduct the amount of medical expenses that exceed 7.5 percent of adjusted gross income,what would be the amount of the deduction in this situation?

Accepted Answer

A) $375 
B) $2,525 
C) $2,475 
D) $5,000 
E) $3,000

Question 15

What type of tax is imposed on the value of an individual's property at the time of his or her death?

Accepted Answer

A) Inheritance 
B) Excise 
C) Gift 
D) Personal property 
E) Estate

Question 16

Capital gains refer to:

Accepted Answer

A) tax-exempt investments. 
B) portfolio income 
C) profits from the sale of a capital asset. 
D) earnings from investments such as dividends or interest. 
E) earnings from passive activities.

Question 17

Which one of the following is included in gross income?

Accepted Answer

A) Tax credit 
B) Exemption 
C) Exclusion 
D) Earned income 
E) Tax deduction

Question 18

Elaine's Embroidery Emporium which is run out of Elaine's home is visited by an IRS agent who wants to verify the office expenses Elaine claims are valid.What type of IRS audit is this?

Accepted Answer

A) Correspondence audit 
B) Office audit 
C) Field audit 
D) Detailed audit 
E) Research audit

Question 19

A tax credit of $100 for a person in a 24 percent tax bracket would reduce a person's taxes owed by:

Accepted Answer

A) $10 
B) $28 
C) $76 
D) $100 
E) $24

Question 20

Real estate property taxes are the major source of revenue for local government.

Accepted Answer

A) True 
 B)False

Exam 4: Planning Your Tax Strategy

Mary Watson bought 20 shares of stock two years ago.She recently sold her stock making a profit of $1,400.Long-term capital gain rates are 15% for her income level.She is in the 22% tax bracket.Her tax on this investment is:

For tax years prior to 2018,a deduction from adjusted gross income for yourself,your spouse,and qualified dependents was termed:

Ms.Nelson is a single mom with three children who live at home.She earned less than $40,000 in 2018.What is the maximum amount of earned income tax credit that she may qualify for?

Which of the following would not be included in gross income?

Taxpayers with high incomes and high amounts of certain deductions may be subject to an additional tax referred to as the ________ tax.

The principal purpose of taxes is to control economic conditions.

State and local governments may impose a personal property tax on the value of automobiles.

Tax-deferred retirement plans are a type of:

Drew Davis earns $4,500 per month from his job at Cisco Systems; $900 is withheld from this amount each month for taxes.What type of tax is this most likely to be?

Personal property taxes may tax the value of:

Earned income is money received from:

The Tax Cuts and Jobs Act allows owners of a sole proprietor or partnership to deduct up to ________ percent of the income earned by the business from their individual return to arrive at taxable income beginning in 2018.

Taxable income is a result of subtracting adjustments to income and standard (or itemized)deductions from gross income.

A person has $5,000 in medical expenses and an adjusted gross income of $33,000.If taxpayers are allowed to deduct the amount of medical expenses that exceed 7.5 percent of adjusted gross income,what would be the amount of the deduction in this situation?

What type of tax is imposed on the value of an individual's property at the time of his or her death?

Capital gains refer to:

Which one of the following is included in gross income?

Elaine's Embroidery Emporium which is run out of Elaine's home is visited by an IRS agent who wants to verify the office expenses Elaine claims are valid.What type of IRS audit is this?

A tax credit of $100 for a person in a 24 percent tax bracket would reduce a person's taxes owed by:

Real estate property taxes are the major source of revenue for local government.