Taxes

In 2023, Ben Lane and his wife, Ann, received dividends of $500 and $25, respectively, from taxable domestic corporations. What amount of these dividends could be excluded from the Lanes' taxable income on their 2023 joint return?

$0.

Some or all of the interest incurred on a qualified education loan may be:

Deductible in computing AGI.

Which one of the following statements describes the child tax credit?

The amount of the tax credit is phased out at certain levels of adjusted gross income.

Jim purchased one share of X42 Utility Company stock for $100. He received a dividend of $5. It was reported to him on Form 1099-DIV, included in Box 3: Nondividend distributions. Which of the following statements is CORRECT?

The dividend is not taxable as dividend income, and the basis of his stock is now $95.

Which one of the following statements describes the time for filing the tax return?

The due date is extended to the next business day when it otherwise falls on a Saturday, Sunday, or holiday.

Which one of the following statements describes the child-care and dependent-care credit?

The expenses with respect to child care or dependent care that qualify for the credit are limited.

Which one of the following is a required test for determining the status of a person as a qualifying relative dependent?

The gross income test.

Which one of the following statements describes the standard deduction?

The standard deduction applicable to the year depends on the taxpayer's filing status.

Which one of the following describes income that might NOT be determined by use of the Tax Rate Tables or Tax Schedules?

The taxable portion of Social Security income.

Barbie and Ken Doll are married and will file a joint 2023 income tax return. They feel their business 'goodwill' will improve if they improve their appearance. Therefore, during 2023, they had the following discretionary costs incurred for the purpose of improving their physical appearance and self-esteem: (i) a face lift for Barbie, performed by a licensed surgeon, $5,000; (ii) a cosmetic nose job for Barbie, performed by an outpatient clinic, $2,500; and (ii) a hair transplant for Ken, performed by a licensed surgeon, $5,000. Disregarding the adjusted-gross-income percentage threshold, how much of the doctors' bills may they claim on their 2023 return as qualifying medical expenses?

$0.

What is the maximum Child Tax Credit for a fifteen-year-old child in 2023?

$2,000.

What is the maximum Child Tax Credit for a four-year-old child in 2023?

$2,000.

The standard deduction for married taxpayers filing jointly in 2023 is:

$27,700.

In 2023, John earned $50,000 working as an employee, and won $5,000 in a state lottery. Also in 2023, John spent $400 for the purchase of lottery tickets. John elected the standard deduction on his 2023 income tax return. The amount of lottery winnings that should be included in John's 2023 taxable income is:

$5,000.

On Monica Lu's 2023 income tax return, Monica validly claimed her dependent 17-year-old son, Brett. Since Brett earned $5,000 in 2023 selling novelties at the college he attended full time, Brett was also required to file a 2023 income tax return. How much should Brett claim as a standard deduction on his 2023 individual income tax return?

$5,400.

During 2023, Scotty charged $5,000 on his credit card for his dependent son's medical expenses. Payment to the credit-card company had not been made by the time Scotty filed his income tax return in April 2024. However, in February 2023, Scotty paid a physician $2,800 for the medical expenses of his wife, who died in November 2022. Disregarding the adjusted-gross-income percentage threshold, what amount could Scotty claim in his 2023 income tax return for medical expenses?

$7,800.

The lowest tax rate with respect to capital gains is afforded to which of the following?

.Sales subject to unrecaptured §1250 rules.

Capital gains from the sale of stock held for six years on July 1, 2023, by a taxpayer in the lowest individual tax bracket are taxed at a maximum capital-gains tax rate of:

0 percent.

For assets sold in 2023, the minimum holding period for determining long-term capital gains and losses is one day more than:

12 months.

Excluding net investment income tax, qualified dividend income received by a taxpayer may incur the highest tax bracket of what?

15 percent.

Which one of the following is considered being married for tax purposes?

A person whose spouse died during the year.

Which one of the following statements describes accounting methods?

Almost all individuals use the cash method of accounting.

Which one of the following is a miscellaneous itemized deduction?

Casual gambling losses to the extent of gambling winnings.

Which of the following items must Forms 1099-B include?

Cost-basis information for all covered security sales transactions.

Which one of the following statements describes dividend reporting?

Dividends are generally reported to the taxpayer on Form 1099-DIV.

Taxable interest received by the taxpayer is reported on which of the following forms?

Form 1040 and Schedule B.

Which of the following is a valid tax form for use by certain qualified taxpayers in lieu of Form 1040 for 2023?

Form 1040-S

Which one of the following statements describes interest payments made to the taxpayer?

Generally, such payments are reported to the taxpayer on Form 1099-INT.

To use the Tax Rate Schedules, the taxpayer generally must meet which one of the following criteria?

Have taxable income in excess of $100,000.

In 2023, Sam Dann provided more than half the support for his wife, his father's brother, and his second cousin. Sam's wife was the only relative who was a member of Sam's household. None of the relatives had any income, nor did any of them file an individual or a joint return. All of these relatives are U.S. citizens. Which of these relatives qualify for the credit for Other Dependents on Sam's 2023 return?

His father's brother.

Which one of the following statements describes the consequences of using the filing status 'married filing jointly'?

If it is elected on an original return, it may be changed on an amended return.

In 2023, Rex sold an auto for $10,000 that he had bought for his personal use in 2020 at a cost of $25,000. On his 2021 return, Rex should treat the sale of this personal asset as a transaction resulting in:

Long-term capital gain.

In 2023, Ruth sold a painting for $25,000 that she had bought for her personal use in 1979 at a cost of $10,000. On her 2023 return, Ruth should treat the sale of the painting as a transaction resulting in:

Long-term capital gain.

Which one of the following statements describes credits?

Most credits are nonrefundable.

Which one of the following statements describes dividends?

Nontaxable dividends reduce the basis in the insurance contract, stock, or mutual fund.

In January 2023, a taxpayer takes out a $500,000 mortgage to purchase a main home. The loan is secured by the main home. In February 2023, the taxpayer takes out a $250,000 loan to purchase a vacation home. The loan is secured by the vacation home. Which of the following statements is CORRECT?

Only the interest on the taxpayer's main residence is deductible

Several items included within Schedule A have recently changed from previous reporting. Which of the following items has NOT changed reporting requirements?

The AGI limitation for deducting charitable contributions.

Which of the following changes did the Inflation Reduction Act make to the excess business loss limitation?

The Inflation Reduction Act extended the excess business loss limitation for tax years beginning before January 1, 2029.

Which one of the following is considered income under the cash method of accounting?

The amount of debt canceled by a creditor not as a gift.

Which of the following statements is CORRECT in regard to parents of a 14-year-old qualifying child, where the child's only income is $5,000 in unearned interest and dividends in 2023?

The parents may claim up to a $2,000 'Child' credit for this child.

Which one of the following statements describes the limitations applicable to the calculation of individual income taxes?

The personal exemption deduction is $0 in 2023.

Which one of the following is not considered a self-employed person?

The president of a corporation solely owned by him.

Which one of the following is a condition that requires the filing of Form 1040?

The taxpayer itemizes deductions.

Which one of the following statements concerning the 'qualifying surviving spouse' filing status is CORRECT?

The taxpayer must be able to claim a dependent child.

Which one of the following statements concerning the 'head-of-household' filing status is CORRECT?

The taxpayer must generally have had a qualifying person live with him or her during the majority of the year.

Which one of the following statements concerning fringe benefits is CORRECT?

The value of fringe benefits must be included in income unless the benefits are specifically excluded by law or the employee pays fair market value for them.

Which of the following statements is CORRECT regarding federal estimated tax payments and withheld taxes for individual taxpayers?

To avoid underpayment penalties for 2024, taxpayers with adjusted gross income (AGI) over $150,000 in 2023 can be penalty-proof for 2024 by making federal tax payments (quarterly estimated or withheld) equal to 110 percent of the tax liability shown on the 2023 tax return.

A taxpayer received a Form 1099-B reporting proceeds and basis for a 2023 sale of stock. Which of the following statements is NOT CORRECT regarding the proper reporting of 1099-B information in 2023?

Transactions reported on Form 1099-B for which basis was reported to the IRS and for which the taxpayer has no adjustments must be reported on Form 8949.

The Lifetime Learning credit may be taken for the following expenses:

Tuition and most fees.

Ben and Doris Jones are married and filed a joint 2023 return. Ben is 72 and blind. Doris is 70 and has normal vision. How many personal credits may they claim on their 2023 return?

Two.