Question 1

Under the Federal income tax formula for individuals,a choice must be made between claiming deductions for AGI and itemized deductions.

Accepted Answer

A) True 
 B)False

Question 2

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 3

During 2017,Esther had the following transactions:
Esther's AGI is:

Accepted Answer

A) $62,000. 
B) $64,000. 
C) $67,000. 
D) $102,000. 
E) $104,000. 
A) $62,000. 
B) $64,000. 
C) $67,000. 
D) $102,000. 
E) $104,000.

Question 4

When separate income tax returns are filed by married taxpayers,one spouse cannot claim the other spouse as an exemption.

Accepted Answer

A) True 
 B)False

Question 5

The Deweys are expecting to save on their taxes for 2017.Not only have both incurred large medical expenses,but both reached age 65.During the year,they also recognized a $30,000 loss on some land they sold which was purchased as an investment several years ago.Are the Deweys under a mistaken understanding regarding their tax position? Explain.

Accepted Answer

The Deweys are expecting to qualify for

Question 6

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 7

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 AGI, a taxpayer must elect between claiming deductions for AGI and deductions from AGI. 
B) In arriving at taxable income, a taxpayer must elect between claiming deductions for AGI and deductions from AGI. 
C) If a taxpayer has deductions for AGI, the standard deduction is not available. 
D) In arriving at taxable income, a taxpayer must elect between deductions for AGI and the standard deduction. 
E) None of these. 
A) In arriving at AGI, a taxpayer must elect between claiming deductions for AGI and deductions from AGI. 
B) In arriving at taxable income, a taxpayer must elect between claiming deductions for AGI and deductions from AGI. 
C) If a taxpayer has deductions for AGI, the standard deduction is not available. 
D) In arriving at taxable income, a taxpayer must elect between deductions for AGI and the standard deduction. 
E) None of these.

Question 8

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 9

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 10

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

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

The answer of Match the statements that relate to each...

Question 12

In 2017,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 2016.Hal may claim the father-in-law and the ex-wife as dependents.

Accepted Answer

A) True 
 B)False

Question 13

Mel is not quite sure whether an expenditure he made is a deduction for AGI or a deduction from AGI.Since he plans to choose the standard deduction option for the year,does the distinction matter? Explain.

Accepted Answer

It makes a great deal of difference if t

Question 14

Tony,age 15,is claimed as a dependent by his grandmother.During 2017,Tony had interest income from Boeing Corporation bonds of $1,000 and earnings from a part-time job of $800.Tony's taxable income is:

Accepted Answer

A) $1,800. 
B) $1,800 - $800 - $1,050 = ($50). 
C) $1,800 - $1,150 = $650. 
D) $1,800 - $1,050 = $750. 
E) None of these. 
A) $1,800. 
B) $1,800 - $800 - $1,050 = ($50). 
C) $1,800 - $1,150 = $650. 
D) $1,800 - $1,050 = $750. 
E) None of these.

Question 15

For the current year,David has wages of $80,000 and the following property transactions:
What is David's AGI for the current year?

Accepted Answer

A) $76,000. 
B) $77,000. 
C) $78,000. 
D) $89,000. 
E) None of these. 
A) $76,000. 
B) $77,000. 
C) $78,000. 
D) $89,000. 
E) None of these.

Question 16

Which of the following items,if any,is deductible?

Accepted Answer

A) Parking expenses incurred in connection with jury duty-taxpayer is a dentist. 
B) Substantiated gambling losses (not in excess of gambling winnings) from state lottery. 
C) Contributions to mayor's reelection campaign. 
D) Speeding ticket incurred while on business. 
E) Premiums paid on personal life insurance policy. 
A) Parking expenses incurred in connection with jury duty-taxpayer is a dentist. 
B) Substantiated gambling losses (not in excess of gambling winnings) from state lottery. 
C) Contributions to mayor's reelection campaign. 
D) Speeding ticket incurred while on business. 
E) Premiums paid on personal life insurance policy.

Question 17

During the year,Kim sold the following assets: business auto for a $1,000 loss,stock investment for a $1,000 loss,and pleasure yacht for a $1,000 loss.Presuming adequate income,how much of these losses may Kim claim?

Accepted Answer

A) $0. 
B) $1,000. 
C) $2,000. 
D) $3,000. 
E) None of these. 
A) $0. 
B) $1,000. 
C) $2,000. 
D) $3,000. 
E) None of these.

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

Match the statements that relate to each other. Note: Some choices may be used more than once.
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.
-Resident of Canada or Mexico

Accepted Answer

The answer of Match the statements that relate to each...

Question 20

Katrina,age 16,is claimed as a dependent by her parents.During 2017,she earned $5,600 as a checker at a grocery store.Her standard deduction is $5,950 ($5,600 earned income + $350).

Accepted Answer

A) True 
 B)False

Exam 3: Computing the Tax

Under the Federal income tax formula for individuals,a choice must be made between claiming deductions for AGI and itemized deductions.

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.

During 2017,Esther had the following transactions: Esther's AGI is:

When separate income tax returns are filed by married taxpayers,one spouse cannot claim the other spouse as an exemption.

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.

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

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

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

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

In 2017,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 2016.Hal may claim the father-in-law and the ex-wife as dependents.

Mel is not quite sure whether an expenditure he made is a deduction for AGI or a deduction from AGI.Since he plans to choose the standard deduction option for the year,does the distinction matter? Explain.

Tony,age 15,is claimed as a dependent by his grandmother.During 2017,Tony had interest income from Boeing Corporation bonds of $1,000 and earnings from a part-time job of $800.Tony's taxable income is:

For the current year,David has wages of $80,000 and the following property transactions: What is David's AGI for the current year?

Which of the following items,if any,is deductible?

During the year,Kim sold the following assets: business auto for a $1,000 loss,stock investment for a $1,000 loss,and pleasure yacht for a $1,000 loss.Presuming adequate income,how much of these losses may Kim claim?

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

Katrina,age 16,is claimed as a dependent by her parents.During 2017,she earned $5,600 as a checker at a grocery store.Her standard deduction is $5,950 ($5,600 earned income + $350).

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

Tax Credits and Payments

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

Property Transactions, capital Gains and Losses, sec1231, and Recapture Provisions

Alternative Minimum Tax

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 Reorganization

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

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