Question 1

What is Matt's income tax savings (rounded to the nearest dollar) for the first year if they organize the business as an S corporation?

Accepted Answer

A) $6,916 
B) $5,320 
C) $4,634 
D) $1,872 
E) $0 
A) $6,916 
B) $5,320 
C) $4,634 
D) $1,872 
E) $0

Question 2

Which of the following types of taxes is not levied by the U.S.government?

Accepted Answer

A) Sales tax 
B) Income tax 
C) Gift tax 
D) Estate tax 
A) Sales tax 
B) Income tax 
C) Gift tax 
D) Estate tax

Question 3

Emily is a 20% shareholder in an S corporation.Emily acquired her interest on January 1 of the current year by investing $10,000 for 20% of the corporation's stock.In March, the corporation took out a bank loan for $100,000.The corporation reported a net loss for the current year of $200,000.If Emily is in the 22% tax bracket, what is her tax savings by deducting this loss on her current year's tax return?

Accepted Answer

A) $8,800 
B) $6,600 
C) $4,400 
D) $2,200 
A) $8,800 
B) $6,600 
C) $4,400 
D) $2,200

Question 4

Alexander received $80,000 in salary in 2019.What is his FICA tax if the Medicare rate is 1.45% and the Social Security rate is 6.2% on the 2019 maximum of $132,900?

Accepted Answer

A) $4,960 
B) $6,120 
C) $6,540 
D) $10,920 
A) $4,960 
B) $6,120 
C) $6,540 
D) $10,920

Question 5

Which of the following statements is false?

Accepted Answer

A) Use taxes are assessed on out-of-state purchases used in the purchaser's state. 
B) The estate tax is based on the fair market value of property transferred at the owner's death. 
C) Tariffs are taxes levied on goods and materials brought into a country. 
D) Gift taxes are imposed on the recipient of the gift. 
A) Use taxes are assessed on out-of-state purchases used in the purchaser's state. 
B) The estate tax is based on the fair market value of property transferred at the owner's death. 
C) Tariffs are taxes levied on goods and materials brought into a country. 
D) Gift taxes are imposed on the recipient of the gift.

Question 6

Which of the following is not a tax credit allowed a corporation?

Accepted Answer

A) Foreign tax credit 
B) Education credit 
C) Investment tax credit 
D) Alternative minimum tax credit 
A) Foreign tax credit 
B) Education credit 
C) Investment tax credit 
D) Alternative minimum tax credit

Question 7

Which of these entities is taxed directly on its income?

Accepted Answer

A) Limited Liability Company 
B) C Corporation 
C) Partnership 
D) Sole Proprietorship 
A) Limited Liability Company 
B) C Corporation 
C) Partnership 
D) Sole Proprietorship

Question 8

John earns $25,000 and pays $2,000 in taxes.Marcy earns $60,000 and pays $4,000 in taxes.How would you characterize this tax system?

Accepted Answer

A) A flat tax system 
B) A proportional system 
C) A regressive system 
D) A progressive system 
A) A flat tax system 
B) A proportional system 
C) A regressive system 
D) A progressive system

Question 9

What is included in Matt's gross income as a deductible loss in the first year if they organize the business as a partnership?

Accepted Answer

A) $7,800 
B) $16,250 
C) $19,000 
D) $24,050 
E) $24,700 
A) $7,800 
B) $16,250 
C) $19,000 
D) $24,050 
E) $24,700

Question 10

Sophia owns 20% of a partnership that reported net income of $130,000 for the year.During the year $18,000 was distributed to Sophia from the partnership.How much should Sophia include in her gross income for the year?

Accepted Answer

A) $44,000. 
B) $29,000 
C) $26,000 
D) $44,000 
A) $44,000. 
B) $29,000 
C) $26,000 
D) $44,000

Question 11

What is an individual's maximum annual deduction for capital losses?

Accepted Answer

A) $3,000 
B) An amount equal to capital gains only 
C) An amount equal to capital gains plus $3,000 
D) Individuals cannot deduct capital losses 
A) $3,000 
B) An amount equal to capital gains only 
C) An amount equal to capital gains plus $3,000 
D) Individuals cannot deduct capital losses

Question 12

The person receiving the gift pays the gift tax.

Accepted Answer

A) True 
 B)False

Question 13

Terri owns a 50 percent interest in the TT Partnership.At the beginning of the year, her basis in her partnership interest was $75,000.The partnership reports a $40,000 loss for the year and distributes $4,000 cash to Terri.What is her basis in her partnership interest at the end of the year?

Accepted Answer

A) $111,000 
B) $75,000 
C) $51,000 
D) $31,000 
A) $111,000 
B) $75,000 
C) $51,000 
D) $31,000

Question 14

What is included in Jerry's gross income as a deductible loss for the first year if they organize the business as an S Corporation?

Accepted Answer

A) $0 
B) $4,200 
C) $8,750 
D) $12,950 
E) $13,300 
A) $0 
B) $4,200 
C) $8,750 
D) $12,950 
E) $13,300

Question 15

Abigail is married filing separately with taxable income of $175,000.What is her marginal tax rate?

Accepted Answer

A) 37% 
B) 35% 
C) 32% 
D) 24% 
A) 37% 
B) 35% 
C) 32% 
D) 24%

Question 16

What is Matt's basis at the end of the second year if they organize the business as a partnership?

Accepted Answer

A) $0 
B) $11,700 
C) $27,950 
D) $28,600 
E) $33,800 
A) $0 
B) $11,700 
C) $27,950 
D) $28,600 
E) $33,800

Question 17

Which of the following statements describes the correct relationship between marginal and average tax rates in a progressive tax system?

Accepted Answer

A) The marginal tax rate is higher than the average tax rate. 
B) The average tax rate is higher than the marginal tax rate. 
C) The marginal and average tax rates are the same. 
D) The average tax rate will always be half of the marginal tax rate. 
A) The marginal tax rate is higher than the average tax rate. 
B) The average tax rate is higher than the marginal tax rate. 
C) The marginal and average tax rates are the same. 
D) The average tax rate will always be half of the marginal tax rate.

Question 18

By what right does the U.S.levy an income tax on individuals?

Accepted Answer

A) A law proposed by the President and approved by the Senate 
B) Public Law 1913 
C) The 16th Amendment to the Constitution 
D) An Act of Congress ratified by the states 
A) A law proposed by the President and approved by the Senate 
B) Public Law 1913 
C) The 16th Amendment to the Constitution 
D) An Act of Congress ratified by the states

Question 19

Charlotte is a head of household with taxable income of $40,000 in 2019.What is her marginal tax rate?

Accepted Answer

A) 10% 
B) 12% 
C) 22% 
D) 24% 
A) 10% 
B) 12% 
C) 22% 
D) 24%

Question 20

Which of the following types of taxes is levied by almost all states on some or all goods purchased?

Accepted Answer

A) Sales tax 
B) Income tax 
C) Property tax 
D) Wealth transfer tax 
A) Sales tax 
B) Income tax 
C) Property tax 
D) Wealth transfer tax

What is Matt's income tax savings (rounded to the nearest dollar) for the first year if they organize the business as an S corporation?

Which of the following types of taxes is not levied by the U.S.government?

Alexander received $80,000 in salary in 2019.What is his FICA tax if the Medicare rate is 1.45% and the Social Security rate is 6.2% on the 2019 maximum of $132,900?

Which of the following statements is false?

Which of the following is not a tax credit allowed a corporation?

Which of these entities is taxed directly on its income?

John earns $25,000 and pays $2,000 in taxes.Marcy earns $60,000 and pays $4,000 in taxes.How would you characterize this tax system?

What is included in Matt's gross income as a deductible loss in the first year if they organize the business as a partnership?

Sophia owns 20% of a partnership that reported net income of $130,000 for the year.During the year $18,000 was distributed to Sophia from the partnership.How much should Sophia include in her gross income for the year?

What is an individual's maximum annual deduction for capital losses?

The person receiving the gift pays the gift tax.

Terri owns a 50 percent interest in the TT Partnership.At the beginning of the year, her basis in her partnership interest was $75,000.The partnership reports a $40,000 loss for the year and distributes $4,000 cash to Terri.What is her basis in her partnership interest at the end of the year?

What is included in Jerry's gross income as a deductible loss for the first year if they organize the business as an S Corporation?

Abigail is married filing separately with taxable income of $175,000.What is her marginal tax rate?

What is Matt's basis at the end of the second year if they organize the business as a partnership?

Which of the following statements describes the correct relationship between marginal and average tax rates in a progressive tax system?

By what right does the U.S.levy an income tax on individuals?

Charlotte is a head of household with taxable income of $40,000 in 2019.What is her marginal tax rate?

Which of the following types of taxes is levied by almost all states on some or all goods purchased?

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters

Exam 1: Introduction to Taxation

What is Matt's income tax savings (rounded to the nearest dollar) for the first year if they organize the business as an S corporation?

Which of the following types of taxes is not levied by the U.S.government?

Alexander received $80,000 in salary in 2019.What is his FICA tax if the Medicare rate is 1.45% and the Social Security rate is 6.2% on the 2019 maximum of $132,900?

Which of the following statements is false?

Which of the following is not a tax credit allowed a corporation?

Which of these entities is taxed directly on its income?

John earns $25,000 and pays $2,000 in taxes.Marcy earns $60,000 and pays $4,000 in taxes.How would you characterize this tax system?

What is included in Matt's gross income as a deductible loss in the first year if they organize the business as a partnership?

Sophia owns 20% of a partnership that reported net income of $130,000 for the year.During the year $18,000 was distributed to Sophia from the partnership.How much should Sophia include in her gross income for the year?

What is an individual's maximum annual deduction for capital losses?

The person receiving the gift pays the gift tax.

Terri owns a 50 percent interest in the TT Partnership.At the beginning of the year, her basis in her partnership interest was $75,000.The partnership reports a $40,000 loss for the year and distributes $4,000 cash to Terri.What is her basis in her partnership interest at the end of the year?

What is included in Jerry's gross income as a deductible loss for the first year if they organize the business as an S Corporation?

Abigail is married filing separately with taxable income of $175,000.What is her marginal tax rate?

What is Matt's basis at the end of the second year if they organize the business as a partnership?

Which of the following statements describes the correct relationship between marginal and average tax rates in a progressive tax system?

By what right does the U.S.levy an income tax on individuals?

Charlotte is a head of household with taxable income of $40,000 in 2019.What is her marginal tax rate?

Which of the following types of taxes is levied by almost all states on some or all goods purchased?

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Estates, Gifts, and Trusts

Filters