Question 1

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 2

In determining the filing requirement based on gross income received, both additional standard deductions (i.e., age and blindness) are taken into account.

Accepted Answer

A) True 
 B)False

Question 3

Match the statements that relate to each other. Note: Choice k. may be used more than once.
-Kiddie tax may be imposed

Accepted Answer

A) Available to a 70-year-old father claimed as a dependent by his son. 
B) Equal to tax liability divided by taxable income. 
C) The highest income tax rate applicable to a taxpayer. 
D) Not eligible for the standard deduction. 
E) No one qualified taxpayer meets the support test.
F)Taxpayer's ex-husband does not qualify.
G)A dependent child (age 18) who has only unearned income.
H)Highest applicable rate is 37%.
I)Applicable rate could be as low as 0%.
J)Maximum rate is 28%.
K)No correct match provided. 
A) Available to a 70-year-old father claimed as a dependent by his son. 
B) Equal to tax liability divided by taxable income. 
C) The highest income tax rate applicable to a taxpayer. 
D) Not eligible for the standard deduction. 
E) No one qualified taxpayer meets the support test.
F)Taxpayer's ex-husband does not qualify.
G)A dependent child (age 18) who has only unearned income.
H)Highest applicable rate is 37%.
I)Applicable rate could be as low as 0%.
J)Maximum rate is 28%.
K)No correct match provided.

Question 4

Match the statements that relate to each other. Note: Choice k. may be used more than once.
-Marginal income tax rate

Accepted Answer

A) Available to a 70-year-old father claimed as a dependent by his son. 
B) Equal to tax liability divided by taxable income. 
C) The highest income tax rate applicable to a taxpayer. 
D) Not eligible for the standard deduction. 
E) No one qualified taxpayer meets the support test.
F)Taxpayer's ex-husband does not qualify.
G)A dependent child (age 18) who has only unearned income.
H)Highest applicable rate is 37%.
I)Applicable rate could be as low as 0%.
J)Maximum rate is 28%.
K)No correct match provided. 
A) Available to a 70-year-old father claimed as a dependent by his son. 
B) Equal to tax liability divided by taxable income. 
C) The highest income tax rate applicable to a taxpayer. 
D) Not eligible for the standard deduction. 
E) No one qualified taxpayer meets the support test.
F)Taxpayer's ex-husband does not qualify.
G)A dependent child (age 18) who has only unearned income.
H)Highest applicable rate is 37%.
I)Applicable rate could be as low as 0%.
J)Maximum rate is 28%.
K)No correct match provided.

Question 5

During 2019, Jackson, a single taxpayer, had the following capital gains and losses: $\begin{array}{lr}
\text { Gain from the sale of coin collection (held three years) } & \$ 12,000 \
\text { Gain from the sale of land held as an investment for six years } & 9,000 \
\text { Gain from the sale of stock held as an investment (held for } 10 \text { months) } & 3,000
\end{array}$ 
a. How much is Jackson's tax liability if his taxable income is $32,000 and he is in the 12% tax bracket?
b. How much is his tax liability if his taxable income is $171,000 and his tax bracket is 32% (not
12%)?

Accepted Answer

a. $1,800. Gain of $12,000 on the sale o

Question 6

Married taxpayers who file separately cannot later (i.e., after the due date for filing) change to a joint return.

Accepted Answer

A) True 
 B)False

Question 7

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 8

Match the statements that relate to each other. Note: Some choices may be used more than once.
-Kiddie tax applies

Accepted Answer

A) Not available to 65-year old taxpayer who itemizes. 
B) Exception for U.S. citizenship or residency test (for dependency exemption purposes). 
C) Largest basic standard deduction available to a dependent who has no earned income in 2019. 
D) Considered for dependency purposes. 
E) Qualifies for head of household filing status.
F)A child (age 15) who is a dependent and has only earned income.
G)Considered in applying gross income test (for dependency exemption purposes).
H)Not considered in applying the gross income test (for dependency exemption purposes).
I)Unmarried taxpayer who can use the same tax rates as married persons filing jointly.
J)Exception to the support test (for dependency exemption purposes).
K)A child (age 16) who is a dependent and has only unearned income of $4,500.
L)No correct match provided. 
A) Not available to 65-year old taxpayer who itemizes. 
B) Exception for U.S. citizenship or residency test (for dependency exemption purposes). 
C) Largest basic standard deduction available to a dependent who has no earned income in 2019. 
D) Considered for dependency purposes. 
E) Qualifies for head of household filing status.
F)A child (age 15) who is a dependent and has only earned income.
G)Considered in applying gross income test (for dependency exemption purposes).
H)Not considered in applying the gross income test (for dependency exemption purposes).
I)Unmarried taxpayer who can use the same tax rates as married persons filing jointly.
J)Exception to the support test (for dependency exemption purposes).
K)A child (age 16) who is a dependent and has only unearned income of $4,500.
L)No correct match provided.

Question 9

The deduction for personal and dependency exemptions has been suspended from 2018 through 2025.

Accepted Answer

A) True 
 B)False

Question 10

Match the statements that relate to each other. Note: Choice k. may be used more than once.
-Average income tax rate

Accepted Answer

A) Available to a 70-year-old father claimed as a dependent by his son. 
B) Equal to tax liability divided by taxable income. 
C) The highest income tax rate applicable to a taxpayer. 
D) Not eligible for the standard deduction. 
E) No one qualified taxpayer meets the support test.
F)Taxpayer's ex-husband does not qualify.
G)A dependent child (age 18) who has only unearned income.
H)Highest applicable rate is 37%.
I)Applicable rate could be as low as 0%.
J)Maximum rate is 28%.
K)No correct match provided. 
A) Available to a 70-year-old father claimed as a dependent by his son. 
B) Equal to tax liability divided by taxable income. 
C) The highest income tax rate applicable to a taxpayer. 
D) Not eligible for the standard deduction. 
E) No one qualified taxpayer meets the support test.
F)Taxpayer's ex-husband does not qualify.
G)A dependent child (age 18) who has only unearned income.
H)Highest applicable rate is 37%.
I)Applicable rate could be as low as 0%.
J)Maximum rate is 28%.
K)No correct match provided.

Question 11

Match the statements that relate to each other. Note: Choice k. may be used more than once.
-Gain on collectibles (held more than one year)

Accepted Answer

A) Available to a 70-year-old father claimed as a dependent by his son. 
B) Equal to tax liability divided by taxable income. 
C) The highest income tax rate applicable to a taxpayer. 
D) Not eligible for the standard deduction. 
E) No one qualified taxpayer meets the support test.
F)Taxpayer's ex-husband does not qualify.
G)A dependent child (age 18) who has only unearned income.
H)Highest applicable rate is 37%.
I)Applicable rate could be as low as 0%.
J)Maximum rate is 28%.
K)No correct match provided. 
A) Available to a 70-year-old father claimed as a dependent by his son. 
B) Equal to tax liability divided by taxable income. 
C) The highest income tax rate applicable to a taxpayer. 
D) Not eligible for the standard deduction. 
E) No one qualified taxpayer meets the support test.
F)Taxpayer's ex-husband does not qualify.
G)A dependent child (age 18) who has only unearned income.
H)Highest applicable rate is 37%.
I)Applicable rate could be as low as 0%.
J)Maximum rate is 28%.
K)No correct match provided.

Question 12

In 2019, Hal furnishes more than half of the support of his ex-wife and her father, both of whom live with him. The divorce occurred in 2018. Hal may claim the father-in-law and the ex-wife as dependents.

Accepted Answer

A) True 
 B)False

Question 13

During 2019, Addison, a single taxpayer, has the following gains and losses: $$\begin{array} { l r } 
\text { LTCG } & \$ 10,000 \
\text { LTCL } & 3,000 \
\text { STCG } & 2,000 \
\text { STCL } & 7,000
\end{array}$$ 
a. How much is Addison's tax liability if she has taxable income of $24,000 and is in the 12% tax bracket?
b. How much is her tax liability if her taxable income is $188,000 and her tax bracket is 32% (not 12%)?

Accepted Answer

a. $0. After the initial netting process

Question 14

The Dargers have itemized deductions that exceed the standard deduction. However, when they file their joint return, they choose the standard deduction option.
a. Is this proper procedure?
b. Aside from a possible misunderstanding as to the tax law, what might be the reason for the
Darger's choice?

Accepted Answer

a. Yes. The choice between itemizing and

Question 15

Currently, the top income tax rate in effect is not the highest it has ever been.

Accepted Answer

A) True 
 B)False

Question 16

Match the statements that relate to each other. Note: Some choices may be used more than once.
-Scholarship funds for room and board

Accepted Answer

A) Not available to 65-year old taxpayer who itemizes. 
B) Exception for U.S. citizenship or residency test (for dependency exemption purposes). 
C) Largest basic standard deduction available to a dependent who has no earned income in 2019. 
D) Considered for dependency purposes. 
E) Qualifies for head of household filing status.
F)A child (age 15) who is a dependent and has only earned income.
G)Considered in applying gross income test (for dependency exemption purposes).
H)Not considered in applying the gross income test (for dependency exemption purposes).
I)Unmarried taxpayer who can use the same tax rates as married persons filing jointly.
J)Exception to the support test (for dependency exemption purposes).
K)A child (age 16) who is a dependent and has only unearned income of $4,500.
L)No correct match provided. 
A) Not available to 65-year old taxpayer who itemizes. 
B) Exception for U.S. citizenship or residency test (for dependency exemption purposes). 
C) Largest basic standard deduction available to a dependent who has no earned income in 2019. 
D) Considered for dependency purposes. 
E) Qualifies for head of household filing status.
F)A child (age 15) who is a dependent and has only earned income.
G)Considered in applying gross income test (for dependency exemption purposes).
H)Not considered in applying the gross income test (for dependency exemption purposes).
I)Unmarried taxpayer who can use the same tax rates as married persons filing jointly.
J)Exception to the support test (for dependency exemption purposes).
K)A child (age 16) who is a dependent and has only unearned income of $4,500.
L)No correct match provided.

Question 17

An individual taxpayer uses a fiscal year of March 1 to February 28. The due date of this taxpayer's Federal income tax return is May 15 of each tax year.

Accepted Answer

A) True 
 B)False

Question 18

When married persons file a joint return, joint and several liability results. What does this mean?

Accepted Answer

Joint and several liability me

Question 19

During the current year, Doris received a large gift from her parents and a sizeable inheritance from an uncle. She also paid premiums on an insurance policy on her life. Doris is confused because she cannot find any place on Form
1040 to report these items. Explain.

Accepted Answer

Gifts and inheritances are exclusions fr

Question 20

Benjamin, age 16, is claimed as a dependent by his parents. During 2019, he earned $850 at a car wash. Benjamin's standard deduction is $1,450 ($1,100 + $350).

Accepted Answer

A) True 
 B)False

Exam 3: Computing the Tax

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

In determining the filing requirement based on gross income received, both additional standard deductions (i.e., age and blindness) are taken into account.

Match the statements that relate to each other. Note: Choice k. may be used more than once. -Kiddie tax may be imposed

Match the statements that relate to each other. Note: Choice k. may be used more than once. -Marginal income tax rate

Married taxpayers who file separately cannot later (i.e., after the due date for filing) change to a joint return.

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

Match the statements that relate to each other. Note: Some choices may be used more than once. -Kiddie tax applies

The deduction for personal and dependency exemptions has been suspended from 2018 through 2025.

Match the statements that relate to each other. Note: Choice k. may be used more than once. -Average income tax rate

Match the statements that relate to each other. Note: Choice k. may be used more than once. -Gain on collectibles (held more than one year)

In 2019, Hal furnishes more than half of the support of his ex-wife and her father, both of whom live with him. The divorce occurred in 2018. Hal may claim the father-in-law and the ex-wife as dependents.

The Dargers have itemized deductions that exceed the standard deduction. However, when they file their joint return, they choose the standard deduction option. a. Is this proper procedure? b. Aside from a possible misunderstanding as to the tax law, what might be the reason for the Darger's choice?

Currently, the top income tax rate in effect is not the highest it has ever been.

Match the statements that relate to each other. Note: Some choices may be used more than once. -Scholarship funds for room and board

An individual taxpayer uses a fiscal year of March 1 to February 28. The due date of this taxpayer's Federal income tax return is May 15 of each tax year.

When married persons file a joint return, joint and several liability results. What does this mean?

During the current year, Doris received a large gift from her parents and a sizeable inheritance from an uncle. She also paid premiums on an insurance policy on her life. Doris is confused because she cannot find any place on Form 1040 to report these items. Explain.

Benjamin, age 16, is claimed as a dependent by his parents. During 2019, he earned $850 at a car wash. Benjamin's standard deduction is $1,450 ($1,100 + $350).

Understanding and Working With the Federal Tax Law

Working With the Tax Law

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges

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

Taxing Business Income

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters