Question 1

Short-term capital gains in excess of capital losses are treated just like other income.

Accepted Answer

A) True 
 B)False

Question 2

After his great performance for the U.S.soccer team in the World Cup, Alex, a U.S.citizen, signed a contract to play with the Italian team, Parma, earning over $500,000 per year.While there, he met the great English star, David.Which of the following statements is correct?

Accepted Answer

A) Assuming that Alex lives in Italy during all of the next year, his Italian income (salary and interest from his Italian bank account) would probably be subject to Italian taxes but he would not be required to report any of his Italian income for U.S.income tax purposes since he lived in Italy. 
B) Assuming that Alex lives in Italy only for a few months during all of next year, his income earned in Italy would effectively be taxed twice, i.e., he would pay taxes to the Italian government and taxes to the U.S.government, unless a treaty provided otherwise. 
C) Assume David, the English star, comes to the U.S.in the next to play in the U.S.professional soccer league.David would not be required to file a regular income tax return on income earned in the U.S.if he is considered a resident alien. 
D) None of the above is correct. 
A) Assuming that Alex lives in Italy during all of the next year, his Italian income (salary and interest from his Italian bank account) would probably be subject to Italian taxes but he would not be required to report any of his Italian income for U.S.income tax purposes since he lived in Italy. 
B) Assuming that Alex lives in Italy only for a few months during all of next year, his income earned in Italy would effectively be taxed twice, i.e., he would pay taxes to the Italian government and taxes to the U.S.government, unless a treaty provided otherwise. 
C) Assume David, the English star, comes to the U.S.in the next to play in the U.S.professional soccer league.David would not be required to file a regular income tax return on income earned in the U.S.if he is considered a resident alien. 
D) None of the above is correct.

Question 3

A trust established for the benefit of A, age 23, and B, age 13, generated $8,000 of dividend income.The trustee distributed $2,000 to A and $1,500 to B.The taxable income of the trust (before the exemption deduction) is

Accepted Answer

A) $8,000 
B) $6,000 
C) $4,500 
D) $0 
A) $8,000 
B) $6,000 
C) $4,500 
D) $0

Question 4

F's share of income from various sources is as follows for the current year:   F's A.G.I, (ignoring the deduction for one-half of any self-employment tax) is how much?

Accepted Answer

A) $89,000 
B) $156,000 
C) $86,000 
D) $56,000 
A) $89,000 
B) $156,000 
C) $86,000 
D) $56,000

Question 5

The partnership entity does not pay a Federal income tax on its taxable income.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is true of the standard deduction amounts?

Accepted Answer

A) The amount is standard for all individual tax returns; that is, the amount deducted on all individual tax returns is the same. 
B) The standard deduction does not affect adjusted gross income. 
C) The standard deduction for all taxpayers who file a joint return provides the same tax benefit. 
D) All of the above are true. 
A) The amount is standard for all individual tax returns; that is, the amount deducted on all individual tax returns is the same. 
B) The standard deduction does not affect adjusted gross income. 
C) The standard deduction for all taxpayers who file a joint return provides the same tax benefit. 
D) All of the above are true.

Question 7

Which one of the following is not true of itemized deductions of an individual taxpayer?

Accepted Answer

A) Any deductions other than personal and dependency exemptions and those for adjusted gross income are itemized deductions. 
B) Itemized deductions are deductible only if they exceed a taxpayer's standard deduction. 
C) Residential interest is a common example of an itemized deduction. 
D) All employee trade or business expenses are itemized deductions. 
A) Any deductions other than personal and dependency exemptions and those for adjusted gross income are itemized deductions. 
B) Itemized deductions are deductible only if they exceed a taxpayer's standard deduction. 
C) Residential interest is a common example of an itemized deduction. 
D) All employee trade or business expenses are itemized deductions.

Question 8

Which one of the following taxes does not have to be reported and paid with the Federal income tax?

Accepted Answer

A) Alternative minimum tax 
B) Federal excise tax 
C) Self-employment tax 
D) More than one of the above 
A) Alternative minimum tax 
B) Federal excise tax 
C) Self-employment tax 
D) More than one of the above

Question 9

Assuming the selling price remains constant, the gain realized on the sale of a property decreases if the adjusted basis of the property sold increases.

Accepted Answer

A) True 
 B)False

Question 10

Which one of the following individuals likely would not have to make quarterly estimated payments?

Accepted Answer

A) A child with $10,000 trust income 
B) An individual whose only income is salaries and wages 
C) A self-employed individual with net income of $15,000 
D) An individual with a large stock and bond portfolio 
A) A child with $10,000 trust income 
B) An individual whose only income is salaries and wages 
C) A self-employed individual with net income of $15,000 
D) An individual with a large stock and bond portfolio

Question 11

The following represent elements of the tax formula for individual taxpayers: 
A.Income from any source
B.Personal and dependency exemptions
C.Itemized deductions
D.Deductions for A.G.I.
E.Exclusions from gross income
F.Standard deduction amount
Which of the above are not included in the formula for corporate taxpayers?

Accepted Answer

A) B, D, and E 
B) B, C, and F 
C) B, C, and E 
D) B, D, and F 
A) B, D, and E 
B) B, C, and F 
C) B, C, and E 
D) B, D, and F

Question 12

In 20X2, T, an individual taxpayer, had a net short-term capital loss of $3,000 and a net long-term capital loss of $3,000.The capital loss carryover is

Accepted Answer

A) $3,000 net short-term capital loss 
B) $3,000 net long-term capital loss 
C) $1,500 net short-term and $1,500 net long-term capital loss 
D) $0; losses cannot be carried over 
A) $3,000 net short-term capital loss 
B) $3,000 net long-term capital loss 
C) $1,500 net short-term and $1,500 net long-term capital loss 
D) $0; losses cannot be carried over

Question 13

Sandy and Dave formed a law partnership, agreeing to split the income 50:50.The partnership had net income of $100,000.Dave withdrew $35,000 throughout the year, and Sandy withdrew $30,000.Dave and Sandy had no other income.Because of the partnership activities, Sandy's A.G.I, increased by

Accepted Answer

A) $100,000 
B) $80,000 
C) $50,000 
D) $30,000 
A) $100,000 
B) $80,000 
C) $50,000 
D) $30,000

Question 14

For 2012, the highest income tax rate for corporations with the highest incomes is the same as the highest marginal individual income tax rate.

Accepted Answer

A) True 
 B)False

Question 15

Which one of the following losses is not at least partially deductible?

Accepted Answer

A) Earthquake damage to a vacation home 
B) Loss on sale of 100 shares of A Corporation stock held for investment 
C) Theft of silver coin collection 
D) Loss on sale of personal residence 
A) Earthquake damage to a vacation home 
B) Loss on sale of 100 shares of A Corporation stock held for investment 
C) Theft of silver coin collection 
D) Loss on sale of personal residence

Question 16

Susan sold her car at a $5,000 loss and her stereo for a $500 loss.Susan is a factory worker.Susan will be able to deduct how much?

Accepted Answer

A) $5,500 loss 
B) $5,000 loss 
C) $3,000 loss 
D) $0 
A) $5,500 loss 
B) $5,000 loss 
C) $3,000 loss 
D) $0

Question 17

Jim Smith and Bob Jones recently decided to start their own car wash business.Jim's spouse and Bob's spouse both work for the same law firm each receives a salary exceeding $200,000 annually.Jim and Bob anticipate that the business will not be profitable for a few years but rather operate at a loss.Both Jim and Bob will both be working in the business.Based on these facts, the best form of business organization for the car wash would be:

Accepted Answer

A) A limited liability company 
B) AC corporation 
C) A partnership 
D) A sole proprietorship 
A) A limited liability company 
B) AC corporation 
C) A partnership 
D) A sole proprietorship

Question 18

Sandy and Dave formed a law partnership, agreeing to split the income 50:50.The partnership had net income of $100,000.Dave withdrew $55,000 throughout the year, and Sandy withdrew $50,000.Dave and Sandy had no other income.Because of the partnership activities, Dave's A.G.I, increased by

Accepted Answer

A) $100,000 
B) $55,000 
C) $50,000 
D) $35,000 
A) $100,000 
B) $55,000 
C) $50,000 
D) $35,000

Question 19

A corporation does not distinguish between deductions for adjusted gross income and itemized deductions.

Accepted Answer

A) True 
 B)False

Question 20

A taxpayer's motor home, which is used for personal enjoyment, is a capital asset.

Accepted Answer

A) True 
 B)False

Short-term capital gains in excess of capital losses are treated just like other income.

After his great performance for the U.S.soccer team in the World Cup, Alex, a U.S.citizen, signed a contract to play with the Italian team, Parma, earning over $500,000 per year.While there, he met the great English star, David.Which of the following statements is correct?

A trust established for the benefit of A, age 23, and B, age 13, generated $8,000 of dividend income.The trustee distributed $2,000 to A and $1,500 to B.The taxable income of the trust (before the exemption deduction) is

F's share of income from various sources is as follows for the current year: F's A.G.I, (ignoring the deduction for one-half of any self-employment tax) is how much?

The partnership entity does not pay a Federal income tax on its taxable income.

Which of the following is true of the standard deduction amounts?

Which one of the following is not true of itemized deductions of an individual taxpayer?

Which one of the following taxes does not have to be reported and paid with the Federal income tax?

Assuming the selling price remains constant, the gain realized on the sale of a property decreases if the adjusted basis of the property sold increases.

Which one of the following individuals likely would not have to make quarterly estimated payments?

In 20X2, T, an individual taxpayer, had a net short-term capital loss of $3,000 and a net long-term capital loss of $3,000.The capital loss carryover is

Sandy and Dave formed a law partnership, agreeing to split the income 50:50.The partnership had net income of $100,000.Dave withdrew $35,000 throughout the year, and Sandy withdrew $30,000.Dave and Sandy had no other income.Because of the partnership activities, Sandy's A.G.I, increased by

For 2012, the highest income tax rate for corporations with the highest incomes is the same as the highest marginal individual income tax rate.

Which one of the following losses is not at least partially deductible?

Susan sold her car at a $5,000 loss and her stereo for a $500 loss.Susan is a factory worker.Susan will be able to deduct how much?

Sandy and Dave formed a law partnership, agreeing to split the income 50:50.The partnership had net income of $100,000.Dave withdrew $55,000 throughout the year, and Sandy withdrew $50,000.Dave and Sandy had no other income.Because of the partnership activities, Dave's A.G.I, increased by

A corporation does not distinguish between deductions for adjusted gross income and itemized deductions.

A taxpayer's motor home, which is used for personal enjoyment, is a capital asset.

An Overview of Federal Taxation

Tax Practice and Research

Personal and Dependency Exemptions; Filing Status; Determination of Tax for an Individual; Filing Requirements

Gross Income

Gross Income: Inclusions and Exclusions

Overview of Deductions and Losses

Employee Business Expenses

Capital Recovery: Depreciation, Amortization, and Depletion

Certain Business Deductions and Losses

Itemized Deductions

Deductions for Certain Investment Expenses and Losses

The Alternative Minimum Tax and Tax Credits

Property Transactions: Basis Determination and Recognition of Gain or Loss

Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: Dispositions of Trade or Business Property

Employee Compensation and Retirement Plans

Taxation of Business Forms and Their Owners

Filters

Exam 3: Taxable Entities, Tax Formula, Introduction to Property Transactions

Short-term capital gains in excess of capital losses are treated just like other income.

After his great performance for the U.S.soccer team in the World Cup, Alex, a U.S.citizen, signed a contract to play with the Italian team, Parma, earning over $500,000 per year.While there, he met the great English star, David.Which of the following statements is correct?

A trust established for the benefit of A, age 23, and B, age 13, generated $8,000 of dividend income.The trustee distributed $2,000 to A and $1,500 to B.The taxable income of the trust (before the exemption deduction) is

F's share of income from various sources is as follows for the current year: F's A.G.I, (ignoring the deduction for one-half of any self-employment tax) is how much?

The partnership entity does not pay a Federal income tax on its taxable income.

Which of the following is true of the standard deduction amounts?

Which one of the following is not true of itemized deductions of an individual taxpayer?

Which one of the following taxes does not have to be reported and paid with the Federal income tax?

Assuming the selling price remains constant, the gain realized on the sale of a property decreases if the adjusted basis of the property sold increases.

Which one of the following individuals likely would not have to make quarterly estimated payments?

In 20X2, T, an individual taxpayer, had a net short-term capital loss of $3,000 and a net long-term capital loss of $3,000.The capital loss carryover is

Sandy and Dave formed a law partnership, agreeing to split the income 50:50.The partnership had net income of $100,000.Dave withdrew $35,000 throughout the year, and Sandy withdrew $30,000.Dave and Sandy had no other income.Because of the partnership activities, Sandy's A.G.I, increased by

For 2012, the highest income tax rate for corporations with the highest incomes is the same as the highest marginal individual income tax rate.

Which one of the following losses is not at least partially deductible?

Susan sold her car at a $5,000 loss and her stereo for a $500 loss.Susan is a factory worker.Susan will be able to deduct how much?

Sandy and Dave formed a law partnership, agreeing to split the income 50:50.The partnership had net income of $100,000.Dave withdrew $55,000 throughout the year, and Sandy withdrew $50,000.Dave and Sandy had no other income.Because of the partnership activities, Dave's A.G.I, increased by

A corporation does not distinguish between deductions for adjusted gross income and itemized deductions.

A taxpayer's motor home, which is used for personal enjoyment, is a capital asset.

An Overview of Federal Taxation

Tax Practice and Research

Personal and Dependency Exemptions; Filing Status; Determination of Tax for an Individual; Filing Requirements

Gross Income

Gross Income: Inclusions and Exclusions

Overview of Deductions and Losses

Employee Business Expenses

Capital Recovery: Depreciation, Amortization, and Depletion

Certain Business Deductions and Losses

Itemized Deductions

Deductions for Certain Investment Expenses and Losses

The Alternative Minimum Tax and Tax Credits

Property Transactions: Basis Determination and Recognition of Gain or Loss

Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: Dispositions of Trade or Business Property

Employee Compensation and Retirement Plans

Taxation of Business Forms and Their Owners

Filters