Question 1

Under what circumstances,if any,may an ex-spouse be claimed as a dependent?

Accepted Answer

As an ex­spouse does not meet the relationship test,he or she must be a member of the taxpayer's household.The association cannot be in violation of local law and the year involved cannot be the year of the divorce.

Question 2

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  True

Question 3

In determining whether the gross income test is met for dependency exemption purposes,only the taxable portion of a scholarship is considered.

Accepted Answer

A) True 
 B)False  True

Question 4

When can a taxpayer not use Form 1040EZ? Form 1040A?

Accepted Answer

Form 1040EZ cannot be used when the taxp

Question 5

Match the statements that relate to each other.Note: Choice L may be used more than once.
-Scholarship funds for tuition

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. 
D) Considered for dependency exemption 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. 
D) Considered for dependency exemption 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 6

Ellen,age 39 and single,furnishes more than 50% of the support of her parents,who do not live with her.Ellen practices as a self-employed interior decorator and has gross income in 2014 of $120,000.Her deductions are as follows: $30,000 business and $8,100 itemized.
a.What is Ellen's taxable income for 2014?
b.Can Ellen qualify for head of household filing status? Explain.

Accepted Answer

a.$69,050.$120,000 (gross income)- $30,0

Question 7

During 2014,Sarah had the following transactions:

Accepted Answer

A) $\$185,000$ 
B) $\$ 187,000$ 
C) $\$ 285,000$ 
D) $\$ 287,000 .$ 
E) $\text { \$87,000. }$ 
A) $\$185,000$ 
B) $\$ 187,000$ 
C) $\$ 285,000$ 
D) $\$ 287,000 .$ 
E) $\text { \$87,000. }$

Question 8

Match the statements that relate to each other.Note: Choice L 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. 
D) Considered for dependency exemption 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. 
D) Considered for dependency exemption 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

Match the statements that relate to each other.Note: Choice L may be used more than once.
-Long-term capital gains

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 ex­husband does not qualify.
G)A dependent child (age 18)who has only unearned income.
H)Highest applicable rate is 39.6%.
I)Applicable rate could be as low as 0%.
J)Maximum rate is 28%.
K)Income from foreign sources is not subject to tax.
L)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 ex­husband does not qualify.
G)A dependent child (age 18)who has only unearned income.
H)Highest applicable rate is 39.6%.
I)Applicable rate could be as low as 0%.
J)Maximum rate is 28%.
K)Income from foreign sources is not subject to tax.
L)No correct match provided.

Question 10

Match the statements that relate to each other.Note: Choice L 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. 
D) Considered for dependency exemption 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. 
D) Considered for dependency exemption 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 11

Regarding dependency exemptions,classify each statement in one of the four categories:
-A cousin who does not live with taxpayer.

Accepted Answer

A) Could be a qualifying child. 
B) Could be a qualifying relative. 
C) Could be either a qualifying child or a qualifying relative. 
D) Could be neither a qualifying child nor a qualifying relative. 
A) Could be a qualifying child. 
B) Could be a qualifying relative. 
C) Could be either a qualifying child or a qualifying relative. 
D) Could be neither a qualifying child nor a qualifying relative.

Question 12

Match the statements that relate to each other.Note: Choice L may be used more than once.
-Abandoned spouse

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. 
D) Considered for dependency exemption 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. 
D) Considered for dependency exemption 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 13

As opposed to itemizing deductions from AGI,the majority of individual taxpayers choose the standard deduction.

Accepted Answer

A) True 
 B)False

Question 14

After her divorce,Hope continues to support her ex­husband's sister,Cindy,who does not live with her.Hope can claim Cindy as a dependent.

Accepted Answer

A) True 
 B)False

Question 15

Regarding the tax formula and its relationship to Form 1040,which,if any,of the following statements is correct?

Accepted Answer

A) Most exclusions from gross income are reported on page 2 of Form 1040. 
B) An "above the line deduction" refers to a deduction from AGI. 
C) A "page 1 deduction" refers to a deduction for AGI. 
D) The taxable income (TI)amount appears both at the bottom of page 1 and at the top of page 2 of Form 1040. 
E) None of these. 
A) Most exclusions from gross income are reported on page 2 of Form 1040. 
B) An "above the line deduction" refers to a deduction from AGI. 
C) A "page 1 deduction" refers to a deduction for AGI. 
D) The taxable income (TI)amount appears both at the bottom of page 1 and at the top of page 2 of Form 1040. 
E) None of these.

Question 16

A dependent cannot claim a personal exemption on his or her own return.

Accepted Answer

A) True 
 B)False

Question 17

During 2014,Esther had the following transactions: 
$\begin{array}{lr}
\text { Salary } & \$ 70,000 \
\text { Interest income on Xerox bonds } & 2,000 \
\text { Inheritance from uncle } & 40,000 \
\text { Contribution to traditional IRA } & 5,500 \
\text { Capital losses } & 2,500\\text { Esther's } A G I \text { is: }
\end{array}$

Accepted Answer

A) $\$ 62,000 .$ 
B) $\text { \$64.000. }$ 
C) $\$ 67,000 .$ 
D) $\$ 102,000$ 
E) $\text {\$104.000. }$ 
A) $\$ 62,000 .$ 
B) $\text { \$64.000. }$ 
C) $\$ 67,000 .$ 
D) $\$ 102,000$ 
E) $\text {\$104.000. }$

Question 18

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 19

For 2014,Stuart has a short-term capital loss,a collectible long-term capital gain,and a long-term capital gain from land held as investment.The short-term loss is first applied to the collectible capital gain.

Accepted Answer

A) True 
 B)False

Question 20

Regarding dependency exemptions,classify each statement in one of the four categories:
-A half-brother who lives with taxpayer.

Accepted Answer

A) Could be a qualifying child. 
B) Could be a qualifying relative. 
C) Could be either a qualifying child or a qualifying relative. 
D) Could be neither a qualifying child nor a qualifying relative. 
A) Could be a qualifying child. 
B) Could be a qualifying relative. 
C) Could be either a qualifying child or a qualifying relative. 
D) Could be neither a qualifying child nor a qualifying relative.

Under what circumstances,if any,may an ex-spouse be claimed as a dependent?

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

In determining whether the gross income test is met for dependency exemption purposes,only the taxable portion of a scholarship is considered.

When can a taxpayer not use Form 1040EZ? Form 1040A?

Match the statements that relate to each other.Note: Choice L may be used more than once. -Scholarship funds for tuition

During 2014,Sarah had the following transactions:

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

Match the statements that relate to each other.Note: Choice L may be used more than once. -Long-term capital gains

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

Regarding dependency exemptions,classify each statement in one of the four categories: -A cousin who does not live with taxpayer.

Match the statements that relate to each other.Note: Choice L may be used more than once. -Abandoned spouse

As opposed to itemizing deductions from AGI,the majority of individual taxpayers choose the standard deduction.

After her divorce,Hope continues to support her exhusband's sister,Cindy,who does not live with her.Hope can claim Cindy as a dependent.

Regarding the tax formula and its relationship to Form 1040,which,if any,of the following statements is correct?

A dependent cannot claim a personal exemption on his or her own return.

During 2014,Esther had the following transactions: Salary \ 70,000 Interest income on Xerox bonds 2,000 Inheritance from uncle 40,000 Contribution to traditional IRA 5,500 Capital losses 2,500 Esther's AGI is:

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

For 2014,Stuart has a short-term capital loss,a collectible long-term capital gain,and a long-term capital gain from land held as investment.The short-term loss is first applied to the collectible capital gain.

Regarding dependency exemptions,classify each statement in one of the four categories: -A half-brother who lives with taxpayer.

An Introduction to Taxation and Understanding 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

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Exam 3: Tax Formula and Tax Determination;an Overview of Property Transactions

Under what circumstances,if any,may an ex-spouse be claimed as a dependent?

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

In determining whether the gross income test is met for dependency exemption purposes,only the taxable portion of a scholarship is considered.

When can a taxpayer not use Form 1040EZ? Form 1040A?

Match the statements that relate to each other.Note: Choice L may be used more than once. -Scholarship funds for tuition

During 2014,Sarah had the following transactions:

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

Match the statements that relate to each other.Note: Choice L may be used more than once. -Long-term capital gains

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

Regarding dependency exemptions,classify each statement in one of the four categories: -A cousin who does not live with taxpayer.

Match the statements that relate to each other.Note: Choice L may be used more than once. -Abandoned spouse

As opposed to itemizing deductions from AGI,the majority of individual taxpayers choose the standard deduction.

After her divorce,Hope continues to support her ex­husband's sister,Cindy,who does not live with her.Hope can claim Cindy as a dependent.

Regarding the tax formula and its relationship to Form 1040,which,if any,of the following statements is correct?

A dependent cannot claim a personal exemption on his or her own return.

During 2014,Esther had the following transactions: Salary \ 70,000 Interest income on Xerox bonds 2,000 Inheritance from uncle 40,000 Contribution to traditional IRA 5,500 Capital losses 2,500 Esther's AGI is:

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

For 2014,Stuart has a short-term capital loss,a collectible long-term capital gain,and a long-term capital gain from land held as investment.The short-term loss is first applied to the collectible capital gain.

Regarding dependency exemptions,classify each statement in one of the four categories: -A half-brother who lives with taxpayer.

An Introduction to Taxation and Understanding 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

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

After her divorce,Hope continues to support her exhusband's sister,Cindy,who does not live with her.Hope can claim Cindy as a dependent.