Question 1

Interest and dividends received by an individual taxpayer are generally taxable.

Accepted Answer

A) True 
 B)False

Question 2

If a stock was purchased for $5,000 in January 2015 and is sold in December 2015 for $3,000, a ________ of $2,000 results.

Accepted Answer

A)  long-term capital gain 
B)  short-term capital gain 
C)  long-term capital loss 
D)  short-term capital loss 
A)  long-term capital gain 
B)  short-term capital gain 
C)  long-term capital loss 
D)  short-term capital loss

Question 3

Taxable income equals

Accepted Answer

A)  gross income less standard deduction. 
B)  gross income plus interest less standard deduction. 
C)  gross income less capital gains less itemized deductions. 
D)  None of these are correct. 
A)  gross income less standard deduction. 
B)  gross income plus interest less standard deduction. 
C)  gross income less capital gains less itemized deductions. 
D)  None of these are correct.

Question 4

To qualify for "head of household" you must

Accepted Answer

A)  be single. 
B)  have at least one dependent in your household. 
C)  be a homeowner. 
D)  Both A and B are correct. 
A)  be single. 
B)  have at least one dependent in your household. 
C)  be a homeowner. 
D)  Both A and B are correct.

Question 5

A long-term capital gain results from profit on the sale of capital assets that were held 12 months or more.

Accepted Answer

A) True 
 B)False

Question 6

Legal methods of reducing your taxes include all of the following, except

Accepted Answer

A)  organizing your records to track appropriate expenses and contributions. 
B)  preparing your return early in the tax preparation season so you are not rushed. 
C)  seeking the advice of an accountant. 
D)  overstating cash contributions to Salvation Army Christmas kettles. 
A)  organizing your records to track appropriate expenses and contributions. 
B)  preparing your return early in the tax preparation season so you are not rushed. 
C)  seeking the advice of an accountant. 
D)  overstating cash contributions to Salvation Army Christmas kettles.

Question 7

Under the TCJA of 2017, there are only two filing statuses, single or married.

Accepted Answer

A) True 
 B)False

Question 8

Employee contributions to qualified Individual Retirement Accounts (IRAs) and interest paid on student loans are deducted from gross income to calculate a taxpayer's adjusted gross income.

Accepted Answer

A) True 
 B)False

Question 9

If a stock was purchased in January 2014 for $1,000 and sold in December 2015 for $3,000, a ________ of $2,000 results.

Accepted Answer

A)  long-term capital gain 
B)  short-term capital gain 
C)  long-term capital loss 
D)  short-term capital loss 
A)  long-term capital gain 
B)  short-term capital gain 
C)  long-term capital loss 
D)  short-term capital loss

Question 10

Employers have an option of whether or not to match an employee's Social Security and Medicare taxes.

Accepted Answer

A) True 
 B)False

Question 11

A(n) ________ offsets taxes by subtracting the full amount from the taxes owed.

Accepted Answer

The answer of A(n) ________ offsets taxes by subtracting the...

Question 12

________ are specific expenses instead of a standard amount that reduce adjusted gross income.

Accepted Answer

A)  Exemptions 
B)  Household expenses 
C)  Itemized deductions 
D)  Tax credits 
A)  Exemptions 
B)  Household expenses 
C)  Itemized deductions 
D)  Tax credits

Question 13

Prudent tax planning considers ways to

Accepted Answer

A)  reduce your taxes by not recognizing some of your income. 
B)  reduce income by deferring recognition via 401k and IRA accounts. 
C)  maximize long-term capital gains. 
D)  Both B and C are correct. 
A)  reduce your taxes by not recognizing some of your income. 
B)  reduce income by deferring recognition via 401k and IRA accounts. 
C)  maximize long-term capital gains. 
D)  Both B and C are correct.

Question 14

Tax brackets are exactly the same for joint filers as for single filers.

Accepted Answer

A) True 
 B)False

Question 15

The Tax Cuts and Jobs Act of 2017 changed the standard deduction for single taxpayers to $14,000.

Accepted Answer

A) True 
 B)False

Question 16

Gross income consists of all reportable income from any source.

Accepted Answer

A) True 
 B)False

Question 17

The key tax planning decisions in building your financial plan are knowing what tax savings are currently available to you and how you can increase your tax savings in the future.

Accepted Answer

A) True 
 B)False

Question 18

The timing on the sale of an investment asset generating a capital gain makes little or no difference in the amount of taxes that are owed.

Accepted Answer

A) True 
 B)False

Question 19

Maximum personal income tax rates are

Accepted Answer

A)  25% 
B)  31% 
C)  35% 
D)  37% 
A)  25% 
B)  31% 
C)  35% 
D)  37%

Question 20

Each year, taxpayers can choose whether to take the standard deduction or itemize their deductions.

Accepted Answer

A) True 
 B)False

Exam 4: Using Tax Concepts for Planning

Interest and dividends received by an individual taxpayer are generally taxable.

If a stock was purchased for $5,000 in January 2015 and is sold in December 2015 for $3,000, a ________ of $2,000 results.

Taxable income equals

To qualify for "head of household" you must

A long-term capital gain results from profit on the sale of capital assets that were held 12 months or more.

Legal methods of reducing your taxes include all of the following, except

Under the TCJA of 2017, there are only two filing statuses, single or married.

Employee contributions to qualified Individual Retirement Accounts (IRAs) and interest paid on student loans are deducted from gross income to calculate a taxpayer's adjusted gross income.

If a stock was purchased in January 2014 for $1,000 and sold in December 2015 for $3,000, a ________ of $2,000 results.

Employers have an option of whether or not to match an employee's Social Security and Medicare taxes.

A(n) ________ offsets taxes by subtracting the full amount from the taxes owed.

________ are specific expenses instead of a standard amount that reduce adjusted gross income.

Prudent tax planning considers ways to

Tax brackets are exactly the same for joint filers as for single filers.

The Tax Cuts and Jobs Act of 2017 changed the standard deduction for single taxpayers to $14,000.

Gross income consists of all reportable income from any source.

The key tax planning decisions in building your financial plan are knowing what tax savings are currently available to you and how you can increase your tax savings in the future.

The timing on the sale of an investment asset generating a capital gain makes little or no difference in the amount of taxes that are owed.

Maximum personal income tax rates are

Each year, taxpayers can choose whether to take the standard deduction or itemize their deductions.

Overview of a Financial Plan

Planning With Personal Financial Statements

Applying Time Value Concepts

Banking and Interest Rates

Managing Your Money

Assessing and Securing Your Credit

Managing Your Credit

Personal Loans

Purchasing and Financing a Home

Auto and Homeowners Insurance

Health and Disability Insurance

Life Insurance

Investing Fundamentals

Investing in Stocks

Investing in Bonds

Investing in Mutual Funds

Asset Allocation

Retirement Planning

Estate Planning

Integrating the Components of a Financial Plan

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