Question 1

The character of income is a factor in determining the rate at which the income is taxed.

Accepted Answer

A) True 
 B)False

Question 2

To determine filing status, a taxpayer's marital status is determined on January 1 of each tax year in question.

Accepted Answer

A) True 
 B)False

Question 3

A taxpayer may qualify for the head of household filing status if she has no dependent children but pays more than half of the cost of maintaining a separate household for her dependent mother and/or father.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is not a filing status?

Accepted Answer

A)  Head of household. 
B)  Unmarried. 
C)  Qualifying widow or widower. 
D)  Married filing jointly. 
A)  Head of household. 
B)  Unmarried. 
C)  Qualifying widow or widower. 
D)  Married filing jointly.

Question 5

Certain types of income are taxed at a lower rate than ordinary income.

Accepted Answer

A) True 
 B)False

Question 6

Catherine de Bourgh has one child, Anne, who is 18 years old at the end of the year. Anne lived at home for seven months during the year before leaving home to attend State University for the rest of the year. During the year, Anne earned $6,000 while working part time. Catherine provided 80 percent of Anne's support and Anne provided the rest. Which of the following statements regarding whether Anne is Catherine's qualifying child for the current year is correct?

Accepted Answer

A)  Anne is a qualifying child of Catherine. 
B)  Anne is not a qualifying child of Catherine because she fails the gross income test. 
C)  Anne is not a qualifying child of Catherine because she fails the residence test. 
D)  Anne is not a qualifying child of Catherine because she fails the support test. 
A)  Anne is a qualifying child of Catherine. 
B)  Anne is not a qualifying child of Catherine because she fails the gross income test. 
C)  Anne is not a qualifying child of Catherine because she fails the residence test. 
D)  Anne is not a qualifying child of Catherine because she fails the support test.

Question 7

From AGI deductions are commonly referred to as deductions "below the line."

Accepted Answer

A) True 
 B)False

Question 8

Taxpayers who file as qualifying widows/widowers are treated the same for tax purposes in all respects as taxpayers who are married filing jointly for tax purposes.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements regarding tax credits is true?

Accepted Answer

A)  Tax credits reduce taxable income dollar for dollar. 
B)  Tax credits provide a greater tax benefit the greater the taxpayer's marginal tax rate. 
C)  Tax credits reduce taxes payable dollar for dollar. 
D)  None of these statements is true. 
A)  Tax credits reduce taxable income dollar for dollar. 
B)  Tax credits provide a greater tax benefit the greater the taxpayer's marginal tax rate. 
C)  Tax credits reduce taxes payable dollar for dollar. 
D)  None of these statements is true.

Question 10

In June of year 1, Jake's wife Darla died. The couple did not have any children and Jake did not remarry in year 1 or year 2. Which is the most favorable filing status for Jake in year 2?

Accepted Answer

A)  Married filing separately. 
B)  Single. 
C)  Head of household. 
D)  Qualifying widower. 
A)  Married filing separately. 
B)  Single. 
C)  Head of household. 
D)  Qualifying widower.

Question 11

Which of the following statements regarding for AGI tax deductions is true?

Accepted Answer

A)  Taxpayers subtract for AGI deductions from gross income to determine AGI. 
B)  A taxpayer may deduct for AGI deductions only if the deductions exceed the taxpayer's standard deduction amount. 
C)  The deduction for qualified business income is a for AGI deduction. 
D)  A taxpayer may deduct for AGI deductions only if the deductions exceed the taxpayer's itemized deductions. 
A)  Taxpayers subtract for AGI deductions from gross income to determine AGI. 
B)  A taxpayer may deduct for AGI deductions only if the deductions exceed the taxpayer's standard deduction amount. 
C)  The deduction for qualified business income is a for AGI deduction. 
D)  A taxpayer may deduct for AGI deductions only if the deductions exceed the taxpayer's itemized deductions.

Question 12

If a taxpayer does not provide more than half the support of a child, that child cannot qualify as the taxpayer's qualifying child.

Accepted Answer

A) True 
 B)False

Question 13

Inventory is a capital asset.

Accepted Answer

A) True 
 B)False

Question 14

In June of year 1, Edgar's wife Cathy died and Edgar did not remarry during the year. What is his filing status for year 1 (assuming they did not have any dependents)?

Accepted Answer

A)  Married filing jointly. 
B)  Single. 
C)  Qualifying widower. 
D)  Head of household. 
A)  Married filing jointly. 
B)  Single. 
C)  Qualifying widower. 
D)  Head of household.

Question 15

Jane and Ed Rochester are married with a two-year-old child who lives with them and whom they support financially. In 2018, Ed and Jane realized the following items of income and expense:
   They also qualified for a $2,000 child tax credit. Their employers withheld $5,800 in federal income taxes from their paychecks (in the aggregate). Finally, the 2018 standard deduction amount for MFJ taxpayers is $24,000.
What are the couple's taxes due or tax refund (use the tax rate schedules not tax tables)?

Accepted Answer

$675 tax d

Question 16

Which of the following statements regarding exclusions and/or deferrals is false?

Accepted Answer

A)  Exclusions are favorable because taxpayers never pay tax on income that is excluded. 
B)  Interest income from municipal bonds is excluded from gross income. 
C)  Deferrals are income items taxpayers realize in one year but include in gross income in a subsequent year. 
D)  An income item need not be realized in order to qualify as an exclusion item. 
A)  Exclusions are favorable because taxpayers never pay tax on income that is excluded. 
B)  Interest income from municipal bonds is excluded from gross income. 
C)  Deferrals are income items taxpayers realize in one year but include in gross income in a subsequent year. 
D)  An income item need not be realized in order to qualify as an exclusion item.

Question 17

For AGI deductions are commonly referred to as deductions "below the line."

Accepted Answer

A) True 
 B)False

Question 18

Jeremy and Annie are married. During the year Jeremy dies. When Annie files her tax return for the year in which her husband dies, she may file under the married filing jointly filing status even if she does not remarry.

Accepted Answer

A) True 
 B)False

Question 19

Tom Suzuki's tax liability for the year is $2,450. He had $2,050 of federal income taxes withheld from his paycheck during the year by his employer and has $2,000 in tax credits. What are Tom's taxes due or tax refund for the year?

Accepted Answer

$1,600 tax

Question 20

In order to be a qualifying relative of another, an individual's gross income must be less than ________.

Accepted Answer

A)  the applicable standard deduction amount 
B)  a fixed amount, indexed for inflation 
C)  one-half of the individual's support 
D)  None of the choices are correct. 
A)  the applicable standard deduction amount 
B)  a fixed amount, indexed for inflation 
C)  one-half of the individual's support 
D)  None of the choices are correct.

Exam 4: Individual Income Tax Overview, Dependents, and Filing Status

The character of income is a factor in determining the rate at which the income is taxed.

To determine filing status, a taxpayer's marital status is determined on January 1 of each tax year in question.

A taxpayer may qualify for the head of household filing status if she has no dependent children but pays more than half of the cost of maintaining a separate household for her dependent mother and/or father.

Which of the following is not a filing status?

Certain types of income are taxed at a lower rate than ordinary income.

From AGI deductions are commonly referred to as deductions "below the line."

Taxpayers who file as qualifying widows/widowers are treated the same for tax purposes in all respects as taxpayers who are married filing jointly for tax purposes.

Which of the following statements regarding tax credits is true?

In June of year 1, Jake's wife Darla died. The couple did not have any children and Jake did not remarry in year 1 or year 2. Which is the most favorable filing status for Jake in year 2?

Which of the following statements regarding for AGI tax deductions is true?

If a taxpayer does not provide more than half the support of a child, that child cannot qualify as the taxpayer's qualifying child.

Inventory is a capital asset.

In June of year 1, Edgar's wife Cathy died and Edgar did not remarry during the year. What is his filing status for year 1 (assuming they did not have any dependents)?

Which of the following statements regarding exclusions and/or deferrals is false?

For AGI deductions are commonly referred to as deductions "below the line."

Jeremy and Annie are married. During the year Jeremy dies. When Annie files her tax return for the year in which her husband dies, she may file under the married filing jointly filing status even if she does not remarry.

Tom Suzuki's tax liability for the year is $2,450. He had $2,050 of federal income taxes withheld from his paycheck during the year by his employer and has $2,000 in tax credits. What are Tom's taxes due or tax refund for the year?

In order to be a qualifying relative of another, an individual's gross income must be less than ________.

An Introduction to Tax

Tax Compliance, the IRS, and Tax Authorities

Tax Planning Strategies and Related Limitations

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters