Question 1

Under the Federal income tax formula for individuals,the determination of adjusted gross income (AGI)precedes that of taxable income (TI).

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is true regarding the education tax credits?

Accepted Answer

A) The lifetime learning credit is available for qualifying tuition and related expenses incurred by students pursuing only graduate degrees. 
B) The American Opportunity credit permits a maximum credit of 20% of qualified expenses up to $10,000 per year. 
C) The American Opportunity credit is calculated per taxpayer,while the lifetime learning credit is available per eligible student. 
D) Continuing education expenses do not qualify for either education credit. 
E) None of the above statements is true. 
A) The lifetime learning credit is available for qualifying tuition and related expenses incurred by students pursuing only graduate degrees. 
B) The American Opportunity credit permits a maximum credit of 20% of qualified expenses up to $10,000 per year. 
C) The American Opportunity credit is calculated per taxpayer,while the lifetime learning credit is available per eligible student. 
D) Continuing education expenses do not qualify for either education credit. 
E) None of the above statements is true.

Question 3

In 2013,Cindy had the following transactions:   Cindy's AGI is:

Accepted Answer

A) $114,000. 
B) $103,000. 
C) $98,000. 
D) $94,000. 
E) $83,000. 
A) $114,000. 
B) $103,000. 
C) $98,000. 
D) $94,000. 
E) $83,000.

Question 4

A scholarship recipient at State University may exclude from gross income the scholarship proceeds used to pay for:

Accepted Answer

A) Only tuition. 
B) Tuition,books,and supplies. 
C) Tuition,books,supplies,meals,and lodging. 
D) Meals and lodging. 
E) None of the above. 
A) Only tuition. 
B) Tuition,books,and supplies. 
C) Tuition,books,supplies,meals,and lodging. 
D) Meals and lodging. 
E) None of the above.

Question 5

Kim,a resident of Oregon,supports his parents who are residents of Canada but citizens of Korea.Kim can claim his parents as dependents.

Accepted Answer

A) True 
 B)False

Question 6

During 2013,Lisa (age 66)furnished more than 50% of the support of the following persons:   Presuming all other dependency tests are met,on a separate return how many personal and dependency exemptions may Lisa claim?

Accepted Answer

A) Two. 
B) Three. 
C) Four. 
D) Five. 
E) None of the above. 
A) Two. 
B) Three. 
C) Four. 
D) Five. 
E) None of the above.

Question 7

In 2012,Juan and Juanita incur $9,800 in legal and adoption fees directly related to the adoption of an infant son born in a nearby state.Over the next year,they incur another $4,500 of adoption expenses.The adoption becomes final in 2013.Which of the following choices properly reflects the amounts and years in which the adoption expenses credit is available. 2012 2013

Accepted Answer

A) $9,800 $ 4,500 
B) None $12,970 
C) None $14,300 
D) $9,800 $ 3,170 
E) None of the above. 
A) $9,800 $ 4,500 
B) None $12,970 
C) None $14,300 
D) $9,800 $ 3,170 
E) None of the above.

Question 8

If a lottery prize winner transfers the prize to a qualified government unit or nonprofit organization,then the prize is excluded from the winner's gross income if the amount of the prize does not exceed 30% of the winner's AGI.

Accepted Answer

A) True 
 B)False

Question 9

Which,if any,of the following statements relating to the standard deduction is correct?

Accepted Answer

A) If a taxpayer dies during the year,his (or her)standard deduction must be prorated. 
B) If a taxpayer is claimed as a dependent of another,his (or her)additional standard deduction is allowed in full (i.e.,no adjustment is necessary). 
C) If spouses file separate returns,both spouses must claim the standard deduction (rather than itemize their deductions from AGI). 
D) If a taxpayer is claimed as a dependent of another,no basic standard deduction is allowed. 
E) None of the above. 
A) If a taxpayer dies during the year,his (or her)standard deduction must be prorated. 
B) If a taxpayer is claimed as a dependent of another,his (or her)additional standard deduction is allowed in full (i.e.,no adjustment is necessary). 
C) If spouses file separate returns,both spouses must claim the standard deduction (rather than itemize their deductions from AGI). 
D) If a taxpayer is claimed as a dependent of another,no basic standard deduction is allowed. 
E) None of the above.

Question 10

Once a child reaches age 19,the kiddie tax no longer applies.

Accepted Answer

A) True 
 B)False

Question 11

The kiddie tax does not apply to a child whose earned income is more than one-half of his or her support.

Accepted Answer

A) True 
 B)False

Question 12

Ashley earns a salary of $55,000,has capital gains of $3,000,and interest income of $5,000 in 2013.Her husband died in 2012.Ashley has a dependent son,Tyrone,who is age 8.Her itemized deductions are $9,000.

Accepted Answer

The answer of Ashley earns a salary of $55,000,has capital...

Question 13

An "above the line" deduction refers to a deduction for AGI.

Accepted Answer

A) True 
 B)False

Question 14

Tim and Janet were divorced.Their only marital property was a personal residence with a value of $120,000 and cost of $50,000.Under the terms of the divorce agreement,Janet would receive the house and Janet would pay Tim $15,000 each year for 5 years,or until Tim's death,whichever should occur first.Tim and Janet lived apart when the payments were made to Tim.The divorce agreement did not contain the word "alimony."

Accepted Answer

A) Tim must recognize a $35,000 [$60,000 - 1/2($50,000)] gain on the sale of his interest in the house. 
B) Tim does not recognize any income from the above transactions. 
C) Janet is not allowed any alimony deductions. 
D) Janet is allowed to deduct $15,000 each year for alimony paid. 
E) None of the above. 
A) Tim must recognize a $35,000 [$60,000 - 1/2($50,000)] gain on the sale of his interest in the house. 
B) Tim does not recognize any income from the above transactions. 
C) Janet is not allowed any alimony deductions. 
D) Janet is allowed to deduct $15,000 each year for alimony paid. 
E) None of the above.

Question 15

For dependents who have income,special filing requirements apply.

Accepted Answer

A) True 
 B)False

Question 16

Excess charitable contributions that come under the 30%-of-AGI ceiling are always subject to the 30%-of-AGI ceiling in the carryover year.

Accepted Answer

A) True 
 B)False

Question 17

Early in the year,Marion was in an automobile accident during the course of his employment.As a result of the physical injuries he sustained,he received the following payments during the year:   What is the amount that Marion must include in gross income for the current year?

Accepted Answer

A) $25,000. 
B) $15,000. 
C) $12,500. 
D) $10,000. 
E) $0. 
A) $25,000. 
B) $15,000. 
C) $12,500. 
D) $10,000. 
E) $0.

Question 18

Under the Federal income tax formula for individuals,a choice must be made between claiming deductions for AGI and itemized deductions.

Accepted Answer

A) True 
 B)False

Question 19

Barbara was injured in an automobile accident.She has threatened to file a suit against the other party involved in the accident and has proposed the following settlement:
   The defendant's insurance company is reluctant to pay punitive damages.Also,the company disputes the amount of her loss of wages amount.Instead,the company offers to pay her $300,000 for damages to her arm and $30,000 medical expenses.Assuming Barbara is in the 35% marginal tax bracket,will her after-tax proceeds from accepting the offer be equal to what she considers to be her actual damages (listed above)?

Accepted Answer

Barbara's claim for punitive damages of

Question 20

Rick and Carol Ryan,married taxpayers,took out a mortgage of $160,000 when purchasing their home ten years ago.In October of the current year,when the home had a fair market value of $200,000 and they owed $125,000 on the mortgage,the Ryans took out a home equity loan for $110,000.They used the funds to purchase a sailboat to be used for recreational purposes.The sailboat does not qualify as a residence.What is the maximum amount of debt on which the Ryans can deduct home equity interest?

Accepted Answer

A) $75,000. 
B) $90,000. 
C) $110,000. 
D) $125,000. 
E) None of the above. 
A) $75,000. 
B) $90,000. 
C) $110,000. 
D) $125,000. 
E) None of the above.

Under the Federal income tax formula for individuals,the determination of adjusted gross income (AGI)precedes that of taxable income (TI).

Which of the following statements is true regarding the education tax credits?

In 2013,Cindy had the following transactions: Cindy's AGI is:

A scholarship recipient at State University may exclude from gross income the scholarship proceeds used to pay for:

Kim,a resident of Oregon,supports his parents who are residents of Canada but citizens of Korea.Kim can claim his parents as dependents.

During 2013,Lisa (age 66)furnished more than 50% of the support of the following persons: Presuming all other dependency tests are met,on a separate return how many personal and dependency exemptions may Lisa claim?

If a lottery prize winner transfers the prize to a qualified government unit or nonprofit organization,then the prize is excluded from the winner's gross income if the amount of the prize does not exceed 30% of the winner's AGI.

Which,if any,of the following statements relating to the standard deduction is correct?

Once a child reaches age 19,the kiddie tax no longer applies.

The kiddie tax does not apply to a child whose earned income is more than one-half of his or her support.

Ashley earns a salary of $55,000,has capital gains of $3,000,and interest income of $5,000 in 2013.Her husband died in 2012.Ashley has a dependent son,Tyrone,who is age 8.Her itemized deductions are $9,000.

An "above the line" deduction refers to a deduction for AGI.

For dependents who have income,special filing requirements apply.

Excess charitable contributions that come under the 30%-of-AGI ceiling are always subject to the 30%-of-AGI ceiling in the carryover year.

Early in the year,Marion was in an automobile accident during the course of his employment.As a result of the physical injuries he sustained,he received the following payments during the year: What is the amount that Marion must include in gross income for the current year?

Under the Federal income tax formula for individuals,a choice must be made between claiming deductions for AGI and itemized deductions.

Introduction to Taxation

Working With the Tax Law

Taxes on the Financial Statements

Gross Income

Business Deductions

Losses and Loss Limitations

Property Transactions: Basis, gain and Loss, and Nontaxable Exchange

Property Transactions: Capital Gains and Losses, section 1231, and Recapture Provisions

Corporations: Organization, capital Structure, and Operating Rules

Corporations: Earnings Profits and Distributions

Partnerships and Limited Liability Entities

S Corporations

Multijurisdictional Taxation

Business Tax Credits and Corporate Alternative Minimum Tax

Comparative Forms of Doing Business

Individuals As Employees and Proprietors

Filters

Exam 16: Introduction to the Taxation of Individuals

Under the Federal income tax formula for individuals,the determination of adjusted gross income (AGI)precedes that of taxable income (TI).

Which of the following statements is true regarding the education tax credits?

In 2013,Cindy had the following transactions: Cindy's AGI is:

A scholarship recipient at State University may exclude from gross income the scholarship proceeds used to pay for:

Kim,a resident of Oregon,supports his parents who are residents of Canada but citizens of Korea.Kim can claim his parents as dependents.

During 2013,Lisa (age 66)furnished more than 50% of the support of the following persons: Presuming all other dependency tests are met,on a separate return how many personal and dependency exemptions may Lisa claim?

If a lottery prize winner transfers the prize to a qualified government unit or nonprofit organization,then the prize is excluded from the winner's gross income if the amount of the prize does not exceed 30% of the winner's AGI.

Which,if any,of the following statements relating to the standard deduction is correct?

Once a child reaches age 19,the kiddie tax no longer applies.

The kiddie tax does not apply to a child whose earned income is more than one-half of his or her support.

Ashley earns a salary of $55,000,has capital gains of $3,000,and interest income of $5,000 in 2013.Her husband died in 2012.Ashley has a dependent son,Tyrone,who is age 8.Her itemized deductions are $9,000.

An "above the line" deduction refers to a deduction for AGI.

For dependents who have income,special filing requirements apply.

Excess charitable contributions that come under the 30%-of-AGI ceiling are always subject to the 30%-of-AGI ceiling in the carryover year.

Early in the year,Marion was in an automobile accident during the course of his employment.As a result of the physical injuries he sustained,he received the following payments during the year: What is the amount that Marion must include in gross income for the current year?

Under the Federal income tax formula for individuals,a choice must be made between claiming deductions for AGI and itemized deductions.

Introduction to Taxation

Working With the Tax Law

Taxes on the Financial Statements

Gross Income

Business Deductions

Losses and Loss Limitations

Property Transactions: Basis, gain and Loss, and Nontaxable Exchange

Property Transactions: Capital Gains and Losses, section 1231, and Recapture Provisions

Corporations: Organization, capital Structure, and Operating Rules

Corporations: Earnings Profits and Distributions

Partnerships and Limited Liability Entities

S Corporations

Multijurisdictional Taxation

Business Tax Credits and Corporate Alternative Minimum Tax

Comparative Forms of Doing Business

Individuals As Employees and Proprietors

Filters