Question 1

In terms of the tax formula applicable to individual taxpayers,which,if any,of the following statements is correct?

Accepted Answer

A) In arriving at taxable income,a taxpayer must choose between the standard deduction and deductions from AGI. 
B) In arriving at AGI,personal and dependency exemptions must be subtracted from gross income. 
C) In arriving at taxable income,a taxpayer must choose between the standard deduction and claiming personal and dependency exemptions. 
D) The formula does not apply if a taxpayer elects to claim the standard deduction. 
E) None of these. 
A) In arriving at taxable income,a taxpayer must choose between the standard deduction and deductions from AGI. 
B) In arriving at AGI,personal and dependency exemptions must be subtracted from gross income. 
C) In arriving at taxable income,a taxpayer must choose between the standard deduction and claiming personal and dependency exemptions. 
D) The formula does not apply if a taxpayer elects to claim the standard deduction. 
E) None of these.

Question 2

Kyle and Liza are married and under 65 years of age.During 2014,they furnish more than half of the support of their 19-year old daughter,May,who lives with them.She graduated from high school in May 2013.May earns $15,000 from a part-time job,most of which she sets aside for future college expenses.Kyle and Liza also provide more than half of the support of Kyle's cousin who lives with them.Liza's father,who died on January 3,2014,at age 90,has for many years qualified as their dependent.How many personal and dependency exemptions should Kyle and Liza claim?

Accepted Answer

A) Two 
B) Three 
C) Four 
D) Five 
E) None of these 
A) Two 
B) Three 
C) Four 
D) Five 
E) None of these

Question 3

Contrast the tax consequences resulting from the following filing status situations:
a.Married filing jointly versus married filing separately.
b.Married filing separately versus single filing separately.
c.Married filing separately versus abandoned spouse status.

Accepted Answer

a.Married persons filing jointly have a

Question 4

In meeting the criteria of a qualifying child for dependency exemption purposes,when if ever,might the child's income become relevant?

Accepted Answer

The amount of income earned by the quali

Question 5

Heloise,age 74 and a widow,is claimed as a dependent by her daughter.For 2014,she had income as follows: $2,500 interest on municipal bonds;$3,200 Social Security benefits;$3,000 income from a part-time job;and $2,800 dividends on stock investments.What is Heloise's taxable income for 2014?

Accepted Answer

$900.$3,000 (income from job)+ $2,800 (d

Question 6

An "above the line" deduction refers to a deduction for AGI.

Accepted Answer

A) True 
 B)False

Question 7

Tony,age 15,is claimed as a dependent by his grandmother.During 2014,Tony had interest income from Boeing Corporation bonds of $1,000 and earnings from a part­time job of $700.Tony's taxable income is:

Accepted Answer

A) $1,700. 
B) $1,700 - $700 - $1,000 = $0. 
C) $1,700 - $1,050 = $650. 
D) $1,700 - $1,000 = $700. 
E) None of these. 
A) $1,700. 
B) $1,700 - $700 - $1,000 = $0. 
C) $1,700 - $1,050 = $650. 
D) $1,700 - $1,000 = $700. 
E) None of these.

Question 8

Sylvia,age 17,is claimed by her parents as a dependent.During 2014,she had interest income from a bank savings account of $2,000 and income from a part­time job of $4,200.Sylvia's taxable income is:

Accepted Answer

A) $4,200 - $4,550 = $0. 
B) $6,200 - $5,700 = $500. 
C) $6,200 - $4,550 = $1,650. 
D) $6,200 - $1,000 = $5,200. 
E) None of these. 
A) $4,200 - $4,550 = $0. 
B) $6,200 - $5,700 = $500. 
C) $6,200 - $4,550 = $1,650. 
D) $6,200 - $1,000 = $5,200. 
E) None of these.

Question 9

For 2014,Tom has taxable income of $48,005.When he uses the Tax Tables,Tom finds that his tax liability is higher than under the Tax Rate Schedules.
a.Why is there a difference?
b.Can Tom use the Tax Rate Schedules?

Accepted Answer

a.Even though the Tax Tables are based o

Question 10

An increase in a taxpayer's AGI could decrease the amount of charitable contribution that can be claimed.

Accepted Answer

A) True 
 B)False

Question 11

After Ellie moves out of the apartment she had rented as her personal residence,she recovers her damage deposit of $1,000.The $1,000 is not income to Ellie.

Accepted Answer

A) True 
 B)False

Question 12

Which,if any,of the following is a deduction for AGI?

Accepted Answer

A) Contributions to a traditional Individual Retirement Account. 
B) Child support payments. 
C) Funeral expenses. 
D) Loss on the sale of a personal residence. 
E) Medical expenses. 
A) Contributions to a traditional Individual Retirement Account. 
B) Child support payments. 
C) Funeral expenses. 
D) Loss on the sale of a personal residence. 
E) Medical expenses.

Question 13

Which,if any,of the following statements relating to the standard deduction is correct?

Accepted Answer

A) If a taxpayer dies during the year,his (or her)standard deduction must be prorated. 
B) If a taxpayer is claimed as a dependent of another,his (or her)additional standard deduction is allowed in full (i.e. ,no adjustment is necessary). 
C) If spouses file separate returns,both spouses must claim the standard deduction (rather than itemize their deductions from AGI). 
D) If a taxpayer is claimed as a dependent of another,no basic standard deduction is allowed. 
E) None of these. 
A) If a taxpayer dies during the year,his (or her)standard deduction must be prorated. 
B) If a taxpayer is claimed as a dependent of another,his (or her)additional standard deduction is allowed in full (i.e. ,no adjustment is necessary). 
C) If spouses file separate returns,both spouses must claim the standard deduction (rather than itemize their deductions from AGI). 
D) If a taxpayer is claimed as a dependent of another,no basic standard deduction is allowed. 
E) None of these.

Question 14

Darren,age 20 and not disabled,earns $4,000 during 2014.Darren's parents cannot claim him as a dependent unless he is a full-time student.

Accepted Answer

A) True 
 B)False

Question 15

A decrease in a taxpayer's AGI could increase the amount of medical expenses that can be deducted.

Accepted Answer

A) True 
 B)False

Question 16

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

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 17

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 c

Question 18

Match the statements that relate to each other.Note: Choice L 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 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 19

In 2014,Ed is 66 and single.If he has itemized deductions of $7,400,he should not claim the standard deduction alternative.

Accepted Answer

A) True 
 B)False

Question 20

Under the income tax formula,a taxpayer must choose between deductions for AGI and the standard deduction.

Accepted Answer

A) True 
 B)False

In terms of the tax formula applicable to individual taxpayers,which,if any,of the following statements is correct?

Contrast the tax consequences resulting from the following filing status situations: a.Married filing jointly versus married filing separately. b.Married filing separately versus single filing separately. c.Married filing separately versus abandoned spouse status.

In meeting the criteria of a qualifying child for dependency exemption purposes,when if ever,might the child's income become relevant?

Heloise,age 74 and a widow,is claimed as a dependent by her daughter.For 2014,she had income as follows: $2,500 interest on municipal bonds;$3,200 Social Security benefits;$3,000 income from a part-time job;and $2,800 dividends on stock investments.What is Heloise's taxable income for 2014?

An "above the line" deduction refers to a deduction for AGI.

Tony,age 15,is claimed as a dependent by his grandmother.During 2014,Tony had interest income from Boeing Corporation bonds of $1,000 and earnings from a parttime job of $700.Tony's taxable income is:

Sylvia,age 17,is claimed by her parents as a dependent.During 2014,she had interest income from a bank savings account of $2,000 and income from a parttime job of $4,200.Sylvia's taxable income is:

For 2014,Tom has taxable income of $48,005.When he uses the Tax Tables,Tom finds that his tax liability is higher than under the Tax Rate Schedules. a.Why is there a difference? b.Can Tom use the Tax Rate Schedules?

An increase in a taxpayer's AGI could decrease the amount of charitable contribution that can be claimed.

After Ellie moves out of the apartment she had rented as her personal residence,she recovers her damage deposit of $1,000.The $1,000 is not income to Ellie.

Which,if any,of the following is a deduction for AGI?

Which,if any,of the following statements relating to the standard deduction is correct?

Darren,age 20 and not disabled,earns $4,000 during 2014.Darren's parents cannot claim him as a dependent unless he is a full-time student.

A decrease in a taxpayer's AGI could increase the amount of medical expenses that can be deducted.

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

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?

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

In 2014,Ed is 66 and single.If he has itemized deductions of $7,400,he should not claim the standard deduction alternative.

Under the income tax formula,a taxpayer must choose between deductions for AGI and the standard deduction.

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

In terms of the tax formula applicable to individual taxpayers,which,if any,of the following statements is correct?

Contrast the tax consequences resulting from the following filing status situations: a.Married filing jointly versus married filing separately. b.Married filing separately versus single filing separately. c.Married filing separately versus abandoned spouse status.

In meeting the criteria of a qualifying child for dependency exemption purposes,when if ever,might the child's income become relevant?

Heloise,age 74 and a widow,is claimed as a dependent by her daughter.For 2014,she had income as follows: $2,500 interest on municipal bonds;$3,200 Social Security benefits;$3,000 income from a part-time job;and $2,800 dividends on stock investments.What is Heloise's taxable income for 2014?

An "above the line" deduction refers to a deduction for AGI.

Tony,age 15,is claimed as a dependent by his grandmother.During 2014,Tony had interest income from Boeing Corporation bonds of $1,000 and earnings from a part­time job of $700.Tony's taxable income is:

Sylvia,age 17,is claimed by her parents as a dependent.During 2014,she had interest income from a bank savings account of $2,000 and income from a part­time job of $4,200.Sylvia's taxable income is:

For 2014,Tom has taxable income of $48,005.When he uses the Tax Tables,Tom finds that his tax liability is higher than under the Tax Rate Schedules. a.Why is there a difference? b.Can Tom use the Tax Rate Schedules?

An increase in a taxpayer's AGI could decrease the amount of charitable contribution that can be claimed.

After Ellie moves out of the apartment she had rented as her personal residence,she recovers her damage deposit of $1,000.The $1,000 is not income to Ellie.

Which,if any,of the following is a deduction for AGI?

Which,if any,of the following statements relating to the standard deduction is correct?

Darren,age 20 and not disabled,earns $4,000 during 2014.Darren's parents cannot claim him as a dependent unless he is a full-time student.

A decrease in a taxpayer's AGI could increase the amount of medical expenses that can be deducted.

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

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?

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

In 2014,Ed is 66 and single.If he has itemized deductions of $7,400,he should not claim the standard deduction alternative.

Under the income tax formula,a taxpayer must choose between deductions for AGI and the standard deduction.

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

Tony,age 15,is claimed as a dependent by his grandmother.During 2014,Tony had interest income from Boeing Corporation bonds of $1,000 and earnings from a parttime job of $700.Tony's taxable income is:

Sylvia,age 17,is claimed by her parents as a dependent.During 2014,she had interest income from a bank savings account of $2,000 and income from a parttime job of $4,200.Sylvia's taxable income is: