Ch 4 Quiz
A tax credit of $50 for a person in a 28 percent tax bracket would reduce a person's taxes by $50.
true
Money received in the form of dividends or interest is classified as investment income.
true
Money received by an individual for personal effort is classified as adjusted gross income.
False
For a dependent to qualify as an exemption, he or she must receive more than two thirds of his or her support from the taxpayer.
false
Mike Hansen has adjusted gross income of $28,000. During the year, Mike decided he needed a larger home. He purchased a home on a golf course in the same town as his first home. Mike incurred $7,500 in moving expenses. He can deduct $7,500 from adjusted gross income.
false
The "head of household" filing status is for people who are married and have dependent children.
false
The principal purpose of taxes is to control economic conditions.
false
A traditional IRA, Keogh plan, and 401(k) plan are examples of tax-deferred retirement plans.
true
An estate tax is imposed on the value of an individual's property at the time of his or her death.
true
Itemized deductions are expenses that a taxpayer is allowed to deduct from adjusted gross income.
true
Reductions from gross income for such items as individual retirement account contributions and alimony payments will result in adjusted gross income.
true
Several courses of appeal are available to taxpayers who disagree with an IRS ruling on their tax return audit.
true
Tax avoidance is defined as the use of legitimate methods to reduce one's taxes.
true
The main purpose of taxes is to generate revenue for funding government programs.
true
The real estate property tax is based on the value of land and buildings at some point in time.
true