ACC 341 Final
Linda is self-employed and spends $600 for business meals and $900 for business entertainment in the current year. What is Linda allowed to deduct in the current year for these expenses? a. $300 b. $600 c. $750 d. $1,500 e. None of these
b. $600
Mary sells to her father, Robert, her shares in AA Corp for $55,000. The shares cost Mary $80,000. How much loss may Mary deduct from the sale? a. $0 b. $25,000 c. $55,000 d. $80,000 e. None of these
a. $0
Monica contributed $15,000 to a Roth IRA when she opened the account 10 years ago. The IRA has a current value of $37,500. She is 64 years old and takes a distribution of $25,00. How much of the distribution will be taxable to Monica? a. $0 b. $10,000 c. $15,000 d. $25,000 e. $37,500
a. $0
Tim, a single taxpayer, receives $500 of qualified dividends from Exxon in the current year. His taxable income before the dividends is $26,000. Tim's tax on the dividends will be: a. $0 b. $25 c. $50 d. $75 e. $100
a. $0
Toni and Beyonze are married and file jointly. During 2021, they paid tuition for their daughter's college in the amount of $23,000. If their AGI was $142,000, what is the amount of tuition deduction they are eligible for? a. $0 b. $2,000 c. $4,000 d. $23,000 e. None of these
a. $0
Eugene and Velma are married. For 2021, Eugene earned $25,000 and Velma earned $30,000. They have decided to file separate returns. They have no deductions for adjusted gross income. Eugene's itemized deductions are $14,200 and Velma's are $4,000. Assuming Eugene and Velma do not live in a community property state and Eugene deducts the greater of the standard deduction or itemized deductions, what is Eugene's taxable income? a. $10,800 b. $18,000 c. $12,600 d. $21,000 e. None of these
a. $10,800
Hal is enrolled for one class at a local community college; tuition cost him $190. Hal's AGI is $20,000. Hal can take a lifetime learning credit of: a. $0 b. $38 c. $100 d. $190 e. $250
a. $0 b. $38
Seymore named his wife, Penelope, the beneficiary of a $100,000 insurance policy on his life. The policy provided that, upon his death, the proceeds would be paid at a rate of $4,000 per year plus interest over a 25-year period. Seymore died June 25 of last year, and in the current year Penelope received a payment of $5,200 from the insurance company. What amount should she include in her gross income for the current year? a. $200 b. $1,200 c. $4,000 d. $5,200 e. None of these
b. $1,200
An unmarried taxpayer who maintains a household for a dependent child and whose spouse died four years ago should file as: a. Single b. Head of Household c. Qualifying widow(er) d. Married, filing separately e. None of these
b. Head of Household
Christine saw a television advertisement asking for donations of used vehicles to a charitable foundation and decided to donate her old car. Which of the following statements is correct? a. She can take a tax deduction large enough on an after-tax basis to equal the amount she would have received if she sold the car directly b. She an take a deduction greater than the amount for which the charity actually sells the vehicle c. She can claim an estimated value for the auto if the charity uses it rather than selling it d. The charity is not required to provide her with any information about what they do with the auto
c. She can claim an estimated value for the auto if the charity uses it rather than selling it
Internet users can go to http://www.irs.gov/ and a. Download tax forms and publications b. Find links to other useful IRS pages c. Use a search function to find forms and publications d. All of these
d. All of these
Which of the following may be excluded from income? a. Payment for the loss of an arm b. Premiums for health insurance paid by the employer c. Reimbursement from the insurance company for a physical examination d. All of these are excluded from gross income
d. All of these are excluded from gross income
Select the incorrect answer. Estimated income tax payments: a. should be paid if the estimated tax, after subtracting withholding can reasonably be expected to be more than $1,000 b. If inadequate, may result in nondeductible penalties c. May be based on the amount of the tax liability for the prior year d. Are made in four installments on April 15, June 15, September 15, and December 15 of the tax year
d. Are made in four installments on April 15, June 15, September 15, and December 15 of the tax year
Which of the following statements is true about health savings account? a. There is no restriction on the kind of health insurance taxpayers must carry in order to qualify for an HSA b. Contributions to HSAs are not deductible for AGI, but are treated as an itemized deduction c. Individuals taking distributions from HSAs which are not for medical expenses are subject to a 50 percent penalty d. Distributions from HSAs are tax and penalty free when used for qualified expenses e. Taxpayers may take tax and penalty free distributions from HSAs to purchase automobiles after age 65
d. Distributions from HSAs are tax and penalty free when used for qualified expenses
John, 45-years old and unmarried, contributed $1,000 monthly in 2021 to the support of his parents' household. The parents lived alone and their income for 2021 consisted of $500 from dividends and interest. What is John's filing status and how many dependents should he claim on his 2021 tax return? a. Single and no dependents b. Head of household and no dependents c. Single and 2 dependents d. Head of household and 2 dependents e. None of these
d. Head of household and 2 dependents
In the case of the adoption of a child who is not a U.S. citizen or resident of the U.S., the credit for qualified adoption expenses is available: a. In the first year the expenses are paid b. Each year expenses are paid c. In the last year expenses are paid d. In the year the adoption becomes final
d. In the year the adoption becomes final
The American tax credit: a. Is 50% of the first $1,200 of tuition fees paid and 100 percent of the next $1,200 b. Is available for 2 years of post-secondary education c. Is fully refundable even if the credit exceeds the tax liability d. Is available for qualifying expenses paid on behalf of the taxpayer and his or her spouse, in addition to those paid for dependents
d. Is available for qualifying expenses paid on behalf of the taxpayer and his or her spouse, in addition to those paid for dependents
Robert is a single taxpayer who has AGI of $145,000 in 2021; his taxable income is $122,000. What is his federal tax liability for 2021 a. $18,719.00 b. $8,754.00 c. $23,359.50 d. $24,369.75 e. $29,280.00
d. $24,369.75
Which of the following statements is true? a. A distribution rollover from a retirement plan can only be done as a direct transfer from one account to another account b. The trustee must withhold 10 percent of the amount distributed whenever assets are transferred from one retirement plan to another retirement plan c. If a taxpayer decides to rollover an IRA to a new account, then the whole IRA must be rolled over d. A taxpayer is allowed only one direct transfer each year from one retirement account to another retirement account e. There are no current-year tax consequences for a direct transfer
e. There are no current-year tax consequences for a direct transfer
Clay purchased Elm Corporation stock 20 years ago for $10,000. In the current year, he sells the stock for $29,000. What is Clay's gain or loss? a. $19,000 long-term b. $19,000 short-term c. $19,000 ordinary d. $3,000 with the excess carried forward e. No gain or loss is recognized on this transaction
a. $19,000 long-term
Taxpayer Q has net taxable income of $30,000 from Country Y which imposes a 40 percent income tax. In addition to the income from Country Y, taxpayer Q has net taxable income from U.S. sources of $120,000, and U.S. tax liability, before the foreign tax credit, of $30,290. What is the amount of Q's foreign tax credit? a. $6,058 b. $8,350 c. $12,000 d. $30,290 e. None of these
a. $6,058
Amy paid the following interest expense during the current year: Qualified home mortgage interest $5,000 Credit card interest $1,000 Personal bank loan interest $3,000 What is the amount of Amy's interest deduction for the current year? a. $8,000 b. $3,000 c. $4,000 d. $5,000 e. $6,000
a. $8,000
Which of the following items may be subject to the self-employment tax? a. A partner's distributive share of partnership income b. Dividend income c. Capital gains d. Interest income e. None of these
a. A partner's distributive share of partnership income
Self-employment taxes: a. Consist of Medicare tax and Social Security tax. b. Are not affected by wages the taxpayer earns as an employee c. Apply to taxpayers with less than $400 in self-employment earnings d. Are calculated based on unearned income such as interest and dividends as well as net earnings from self-employment
a. Consist of Medicare tax and Social Security tax.
The .09 percent Medicare tax applies to: a. Earned income b. tax exempt income c. Gain on the sale of a principal residence d. IRA distributions
a. Earned income
The earned income credit: a. Must be calculated on earned income as well as AGI in some cases b. Cannot exceed the amount of the tax liability c. Is available only if the taxpayer has qualifying children d. Is available to taxpayers with no Social Security number
a. Must be calculated on earned income as well as AGI in some cases
Which of the following interest expense amounts is not deductible in 2021? a. Education loan interest of $2,000 assuming the taxpayer is single and has income of $150,000 b. Home equity loan interest of $9,000 on a loan of $100,000, the proceeds of which were used to purchase an addition to the taxpayer's primary residence. c. Private mortgage insurance premiums paid of $2,300 d. Points of $2,000 paid on a mortgage loan for the purchase of a new principal residence.
a. Education loan interest of $2,000 assuming the taxpayer is single and has income of $150,000
Which of the following forms may be filed by individual taxpayers? a. Form 1040 b. Form 1041 c. Form 1065 d. Form 1120 e. None of these
a. Form 1040
Which of the following forms is used by an employer to report quarterly wages and federal payroll tax withholdings and deposits a. Form 940 b. Form 941 c. Form 1099 d. Form W-2 e. None of these
a. Form 940
William is a divorced taxpayer who provides a home for his dependent child, Edward. What filing status should William indicate on his tax return? a. Head of Household b. Married, filing separately c. Single d. Qualifying widow(er) e. None of these
a. Head of Household
Which of the following is true about the MARCS depreciation system? a. No salvage value is used before depreciation percentages are applied to depreciable real estate b. Residential rental buildings are depreciated straight-line over 20 years c. Commercial real estate buildings are depreciated over 39 years using accelerated depreciation d. No matter when equipment is purchased during the month, it is considered to have been purchased mid-month for MARCS depreciation purposes
a. No salvage value is used before depreciation percentages are applied to depreciable real estate
Which of the following is not a capital asset? a. Inventory b. Stocks c. A personal automobile d. Gold e. Land
a. Inventory
Which of the following taxpayers qualifies for the maximum traditional individual retirement account deduction for 2021? a. Married taxpayers, neither of whom is covered by a qualified retirement plan, with total AGI, all earned, $85,000. b. A single taxpayer, who is covered by a qualified retirement plan, with AGI of $90,000 c. A single taxpayer, who is not covered by a qualified retirement plan, with no earned income but with unearned income of $12,000 d. Married taxpayers, only one of whom is covered by a qualified retirement plan, with total AGI income of $204,000 e. None of these
a. Married taxpayers, neither of whom is covered by a qualified retirement plan, with total AGI, all earned, $85,000.
Shellie, a single individual, received her Bachelor's degree in 2020, and took a job with a salary of $45,000 per year. In 2021, she began paying interest on qualified education loans. She was able to pay $1,500 in 2013. Which of the following statements is not correct? a. The full $1,500 is deductible in arriving at AGI b. If her payment had been $3,000, only $2,000 would have been deductible in arriving at AGi and the $1,000 excess would have been treated as nondeductible consumer interest. c. If her income had been $65,000, the deductible amount would have been phased out d. Taxpayers are not allowed a deduction for education loan interest in 2021.
a. The full $1,500 is deductible in arriving at AGI
During the current year, Mary paid the following expenses: Prescription drugs: $490 Aspirin and over the counter capsules: $130 Hospital and doctors: $700 Life insurance: $260 What is the total amount of medical expenses (before considering the limitation based on AGI) that would enter into the calculation of itemized deductions on Mary's current year income tax return? a. $700 b. $1,190 c. $1,450 d. $1,580 e. None of these
b. $1,190
In 2021, Carlos drives from his home in Los Angles to Oregon to consult with a client. He works for 1 day and spends 3 days enjoying Oregon since the consultation was right before a 3-day weekend. His expenses were $175 to drive to Oregon and back, $600 for lodging, $50 for food from convenience store on the day he worked, and $125 for restaurant food on the other 3 days. How much of his travel expenses are deductible? a. $0 b. $175 c. $200 d. $350 e. $800
b. $175
Keith, has a 2021 tax liability of $2,250 before taking into account his America Opportunity tax credit. He paid $2,600 in qualifying expenses, was a full-time student, was not claimed as a dependent on his parents' return, and his America Opportunity tax credit was not subject to phase-out. What is the amount of his American Opportunity tax credit allowed? a. $0 b. $2,150 c. $2,250 d. $2,600 e. $4,000
b. $2,150
Margo has $2,200 withheld from her wages for state income taxes during 2021. In March of 2021, she paid $400 in additional taxes for her 2014 state tax return. Her state income tax liability for 2015 is $2,700 and she pays the additional $500 when she files her 2021 state tax return in April of 2022. What amount should Margo deduct as an itemized deduction for state income taxes on her 2021 federal income tax return, assuming she elects to deduct state and local income taxes? a. $2,200 b. $2,500 c. $2,600 d. $2,700 e. None of these
b. $2,500
Clark, a widower, maintains a household for himself and his two dependent preschool children. For the year ended December 31, 2021, Clark earned a salary of $32,000. He paid $3,600 to a housekeeper to care for his children in his home, and also paid $1,500 to a kiddie play camp for child care. He had no other income or expenses during 2021. How much can Clark claim as a child and dependent care credit in 2021? a. $910 b. $2,550 c. $1,326 d. $5,100 e. None of these
b. $2,550
Gail is a single elementary school teacher. She buys the following items for use in her classroom in 2021: Construction paper and tissues: $45 Material for decorating the classroom bulletin board: $200 Artist's smock used for in-class finger painting: $30 12 dozen erasers: $15 What amount can Gail deduct either as a for or from AGI deduction in 2021? a. $250 as a for AGI deduction and $30 as a from AGI deduction b. $250 as a for AGI deduction and $0 as a from AGI deduction c. $290 as a for AGI deduction and $0 as a from AGI deduction d. $250 as a for AGI deduction and $40 as a from AGI deduction
b. $250 as a for AGI deduction and $0 as a from AGI deduction
Gwendolyn, a single taxpayer, donates $500 cash to the America Red Cross in 2021. If Gwendolyn has AGI of $46,000 in 2021 but does not itemize deductions, how much can she deduct for her charitable contribution in 2021? a. $0 b. $300 c. $500 d. $46,000
b. $300
A taxpayer places a $50,000 5-year recovery period asset (not an auto) in service in 2021. This is the only asset placed in service in 2021. Assuming half-year convention and an election to expense under section 179 (no bonus depreciation), and taxable income after all deductions except 179 of $5,000, what is the amount of Section 179 immediate expensing? a. $0 b. $5,000 c. $25,000 d. $30,000 e. $50,000
b. $5,000
Robert and Mary file a joint tax return for 2021, with adjusted gross income of $104,000. Robert and Mary earned income of $30,000 and $74,000 respectively, during 2021. In order for Mary to be gainfully employed, they pay the following child care expenses for their 4-year-old son, John: Union Day Care Center $6,700 Wilma, baby sitter (Robert's mother) $4,000 What is the amount of the child and dependent care credit they should report on their tax return for 2021? a. $2,140 b. $5,350 c. $10,700 d. $3,000 e. None of these
b. $5,350
Dividends paid to a shareholder by a corporation should be reported on which of the following forms? a. 1099-INT b. 1099-DIV c. 1099-MISC d. 1099-R e. None of these
b. 1099-DIV
What is the minimum number of years over which computers may be depreciated under MARCS? a. 3 years b. 5 years c. 7 years d. 10 years e. 15 years
b. 5 years
A taxpayer would be required to pay Social Security and Medicare taxes for a domestic employee in all but one of the following situations. In which situation would this not be required? a. A nanny who earns $22,000 a year b. A baby-sitter who earns $1,300 a year c. A cook who is paid $35,000 d. A cleaning lady who is paid $8,000 a year e. The taxpayer would not have to pay Social Security and Medicare taxes in any of the above situations
b. A baby-sitter who earns $1,300 a year
A tax credit is allowed for qualified adoption expenses paid by taxpayers: a. And an additional credit is allowed for qualified adoption expenses paid for by taxpayers' employers b. And an income exclusion is allowed for qualified adoption expenses paid for by the taxpayer's' employers c. And is available each year qualifying expenses are incurred d. And is not subject to a phase-out based on AGI
b. And an income exclusion is allowed for qualified adoption expenses paid for by the taxpayer's' employers
Which of the following is not a requirement to claim an earned income credit? a. Social Security number b. At least one child claimed as a dependent c. At least $1 of earned income d. US citizenship or resident alien status
b. At least one child claimed as a dependent
In which of the following situations may the taxpayer take an education expense on Schedule C? a. John, a plumber by trade, is taking classes to qualify as an electrician so he may take on more complex contractor jobs b. Henry, a self-employed administrative assistant, is taking an advanced Word computer program class through an adult school program c. Barbie, a salesperson, is flying on numerous commercial airplanes in order to observe the flight attendants so that she may improve her public relations skills d. Ann Marie, a hostess at a restaurant, is taking a review course on order to pass the certified financial planner examination
b. Henry, a self-employed administrative assistant, is taking an advanced Word computer program class through an adult school program
Choose the incorrect answer. In completing a 2021 Form W-4, employees may claim additional deductions in Step 4: a. If they are paying a deductible alimony b. If they have deductible IRA contributions c. If they expect to have large amounts of itemized deductions d. If they have high levels of interest and dividend income
b. If they have deductible IRA contributions
Jon, age 45, had AGI of $26,000 in 2021. During the year, he incurred and paid the following medical expenses: Drugs and medicines prescribed by doctors: $300 Health insurance premiums: $750 Doctors fees: $2,650 Eyeglasses: $75 Jon received $900 in 2021 as a reimbursement for a portion of the doctors fees. If Jon were to itemize his deductions, what would be his allowable medical expense deduction after the AGI limitation is taken into account? a. $0 b. $272 c. $925 d. $2,875 e. None of these
c. $925
Which of the following is excluded from gross income a. Prizes b. Scholarships for tuition c. Hobby income d. Rental Income e. All of these are included in gross income
b. Scholarships for tuition
Which of the following forms must an employer provide to an employee by January 31 of the following year? a. W-3 b. W-2 c. W-4 d. 941 e. 1040
b. W-2
During the current year, George, a salaried taxpayer, paid the following taxes which were not incurred in connection with a trade or business: Federal income tax: $1,500 State Income tax: $1,100 FICA tax: $700 Real property taxes: $300 Federal auto gasoline taxes: $200 Federal excise tax on telephone bills: $50 What amount can George claim for the current year as an itemized deduction for the taxes paid, assuming he deducts state and local income taxes? a. $1,100 b. $1,150 c. $1,400 d. $2,000 e. None of these
c. $1,400
Elmer received the following distributions from Virginiana Mutual Fund for the calendar year 2021: Ordinary dividends $250 Capital gain distributions $170 Nontaxable distributions $ 80 Elsie, Elmer's wife, did not own any of the Virginiana Mutual Fund shares, but she did receive $1,475 in interest on a savings account at the Moss National Bank and $175 in interest on California Municipal Bonds. Elmer and Elsie filed a joint income tax return for 2021. What amount is reportable as taxable interest income? a. $0 b. $175 c. $1,475 d. $1,650 e. None of these
c. $1,475
Sam died on January 15,2013 and left his wife, Terry, an insurance policy with a face value of $100,000. Terry elected to receive the proceeds over a 10-year period. This year Terry receives $11,500 ($10,000 plus $1,500 interest) from the insurance company. How much income must Terry report from this payment? a. $0 b. $500 c. $1,500 d. $11,500 e. None of these
c. $1,500
For 2021, Eugene and Linda had AGI of $30,000. Additional information for 2021 is as follows. Cash contribution to church: $1,300 Tuition paid to a parochial school: $1,200 Cash contribution to a qualified charity: $400 Cash contribution to a need family: $100 What is the maximum amount they can deduct for charitable contributions in 2021? a. $500 b. $1,600 c. $1,700 d. $2,000 e. None of these
c. $1,700
In 2021, David, age 66, had AGI of $32,000. During the year he paid the following medical expenses: Prescription medicines: $200 Doctors: $2,500 Medical car insurance: $1,400 Over the counter hair growth tonic: $250 What amount can David deduct as medical expenses (after the AGI limitation) in calculating his itemized deductions for 2021? a. $0 b. $900 c. $1,700 d. $1,400 e. None of these
c. $1,700
Jody is a physician with a salary of $140,000 from the hospital where she is employed. She supports her husband, Andre, who sells art work and has no earned income. They have no other sources of income. Both are in their twenties. What is the maximum total amount that Jody and Andre may contribute to their traditional IRA's and deduct for the 2021 tax year? a. $5,500 b. $6,000 c. $12,000 d. $11,000 e. None of these
c. $12,000
Jody is a physician's assistant with a salary of $40,000 from the hospital where she is employed. She supports her husband, Andre, who sells art work and has no earned income. They have no other sources of income. Both are in their twenties. What is the maximum total amount that Jody and Andre may contribute to their traditional IRA's and deduct for the 2021 tax year? a. $5,500 b. $6,000 c. $12,000 d. $11,000 e. None of these
c. $12,000
William, a cash-basis sole proprietor, had the following receipts and disbursements for the current year: Gross receipts: $50,000 Cost of Sales: $30,000 Other operating expenses: $5,000 Personal medical expenses: $600 For the current year, what amount should William report as net profits from his business? a. $13,400 b. $14,00 c. $15,000 d. $20,000 e. None of these
c. $15,000
An individual is a head of household. What is her 2021 standard deduction? a. $12,550 b. $25,100 c. $18,800 d. $18,650 e. None of these
c. $18,800
Randy is advised by his physician to install an elevator in his residence, since he is afflicted with heart disease. The cost of installing the elevator is $10,000 and it has an estimated useful life of 10 years. He installs the elevator in January of the current year, and it increases the value of his residence by $8,000. Disregarding the limitation based on adjusted gross income, how much of the cost of the elevator may Randy take into account in determining his medical expense deduction for the current year? a. $0 b. $1,000 c. $2,000 d. $10,000 e. None of these
c. $2,000
Carla and Bob finalized an adoption in 2021. Their adoption fees totaled $10,000. They have AGI of $246,660 for 2021. What is their adoption credit? a. $10,000 b. $7,263 c. $2,500 d. $14,440
c. $2,500
Cork Oak Corporation purchased a heavy-duty truck (not considered a passenger automobile for purposes of the listed property and luxury automobile limitations) on May 1, 2021 for use in its business. The truck, with a cost basis of $24,000, has a 5-year recovery property. How much depreciation should be taken on the truck for the 2021 calendar tax year using the conventional (for financial accounting purposes) straight-line depreciation method? a. $400 b. $2,400 c. $3,200 d. $4,800 e. None of the above
c. $3,200
In 2021, Alex has income from wages of $16,000, AGI of $18,000, and tax liability of $300 before the earned income credit. What is the amount of Alex's earned income credit for 2021, assuming he is single and his 5 year old son lives with him for the full year. a. $0 b. $2,000 c. $3,618 d. $3,584 e. None of these
c. $3,618
Kate is an accrual basis, calendar-year taxpayer. November 1, 2021, Kate leased out a building for a $4,500 a month. On that day Kate received 7 months rental income on the building, a total of 31,500 ($4,500 x 7 months). How much income must Kate include on her 2021 tax return as a result of this transaction? a. $4,500 b. $9,000 c. $31,500 d. $54,000 e. None of these
c. $31,500
Nicole is a student at USB Law School; she receives a $52,000 scholarship. Of the $52,000, $40,000 is used for tuition, $5,000 is used for books, and $7,000 is used for room and board, How much of the scholarship is excluded from taxable income for Nicole? a. $5,000 b. $7,000 c. $45,000 d. $47,000 e. $52,000
c. $45,000
Bob and Carlo file their tax returns using the married filing jointly status. Their 2021 AGI is $162,500. They have two children ages 1 and 5. How much child tax credit can Bob and Carol claim for their two children in 2021? a. $2,000 b. $4,000 c. $5,950 d. $6,600 e. $5,400
c. $5,950
Jenny constructed a building for use as a residential rental property. The cost of the building was $164,976, and it was placed in service on August 1, 1999. The building has a 27.5-year MACRS life. What is the amount of depreciation on the building for 2021 for tax purposes? a. $2,2750 b. $3,000 c. $6,000 d. $6,547 e. None of the above
c. $6,000
In 2021, Jack is a lawyer who is member at Ocean Spray Country Club where he spends $7,200 in dues, $4,000 in business meals at the dining room and gold course bar, and $2,000 in green fees to entertain clients. He separate invoices for the meals. He is also a member of the local Rotary club where he meets potential clients. The dues for the Rotary club are $1,200 a year. How much of the above expenses can Jack deduct as business expenses? a. $4,200 b. $3,200 c. $6,200 d. $14,400 e. None of these
c. $6,200
In the tax law, the definition of gross income is: a. All cash payments received unless excluded by the tax code b. All cash payments received for services performed c. All income from whatever source derived d. All income of any kind unless the income is earned illegally
c. All income from whatever source derived
Which of the following taxpayers are not required to make estimated payments a. A car mechanic who is self-employed and earns $50,000 a year b. A wealthy individual whose earnings are from corporate dividends c. An employee who works at a local department store with appropriate withholding and no other income d. All of these must make estimated payments
c. An employee who works at a local department store with appropriate withholding and no other income
The child and dependent care provisions: a. Apply to only children under age 15 b. Are available only to single parents c. Are available for the care of spouses incapable of self-care d. Are allowed only for taxpayers earning less than $43,000
c. Are available for the care of spouses incapable of self-care
Which of the following is generally excluded from gross income? a. Dividends b. Rewards c. Life insurance proceeds paid to the beneficiary d. Partnership income e. None of these
c. Life insurance proceeds paid to the beneficiary
Select the correct answer. FICA taxes are: a. 7.65 percent of all earned income with no limitations b. 7.65 percent of earned income up to $150,000 c. Paid by the employee and by the employer d. Not subject to cost of living adjustments each year
c. Paid by the employee and by the employer
Which of the following types of income is not subject to the "kiddie tax"? a. Interest income b. Dividend income c. Salary income d. Capital gains on stock sales e. All of these are subject to "kiddie tax"
c. Salary income
In regards to Social Security benefits: a. The social security inclusion formula is the same amount for each filing status b. Social security benefits are always excluded because wages are subjected to social security tax when earned c. Tax-free interest income must be included in the formula used to determine if social security is included in taxable income d. Up to 100 percent of social security benefits received may be included in taxable income
c. Tax-free interest income must be included in the formula used to determine if social security is included in taxable income
If a loss from sale or exchange of property between related parties is disallowed and the property is subsequently sold to an unrelated party: a. An amended return may be filed to claim the loss previously disallowed b. The unrelated party may claim the loss previously disallowed c. The disallowed loss may be used to offset gain on the subsequent sale d. The disallowed loss may be used if there is a further loss on the subsequent sale e. The disallowed loss is lost forever
c. The disallowed loss may be used to offset gain on the subsequent sale
Matthew purchases a new principal residence in the current year and pays points of $2,000 to obtain a mortgage loan. What is the proper tax treatment for the points paid? a. The points are a nondeductible personal expense b. The points must be amortized over the life of the loan c. The points are fully deductible in the current year d. The points must be capitalized into the cost of the residence e. The points must be amortized over 5 years
c. The points are fully deductible in the current year
Stan, a single taxpayer, has $1,700 of state income taxes withheld from his wages in the current year. In the current year, he also received a $320 refund on his prior year state income tax. Stan did not itemize last year but he intends to do so this year. Stan used the sales tax tax estimate and determined his sales tax deduction amount is $1,600. What amount should stand deduct for state taxes? a. $0 b. $1,380 c. $1,600 d. $1,700 e. None of these
d. $1,700
Oscar and Mary have no dependents and file a joint income tax return for 2021. They have adjusted gross income of $140,000 and itemized deductions of $30,000. What is the amount of taxable income that Oscar and Mary must report on their 2021 income tax return? a. $115,200 b. $93,600 c. $102,000 d. $110,000 e. $140,000
d. $110,000
Becky is a cash basis taxpayer with the following transactions during her calendar tax year: Cash basis revenue $54,000 Cash basis expenses, except rent $25,000 Rent expense (paid on December 1) for use of a building for 24 months $24,000 What is the amount of Becky's taxable income from her business for this tax year? a. $5,000 b. $11,000 c. $27,500 d. $28,000 e. None of these
d. $28,000
Gary is a self-employed accountant who pays $2,000 for business meals. How much of a deduction can he claim for the meals, and where should the deduction be claimed? a. 50 percent, miscellaneous itemized deduction b. 50 percent, Schedule C deduction c. 100 percent, miscellaneous itemized deduction d. 100 percent, Schedule C deduction
d. 100 percent, Schedule C deduction
For the current year, the maximum percentage of Social Security benefits which might be included in a taxpayer's gross income is? a. 0% b. 50% c. 65% d. 85% e. 100%
d. 85%
Which of the following is true about the self-employed health insurance deduction? a. Dental insurance is not part of the allowable deduction b. Medical insurance is allowed as a deduction, subject to a dollar limitation c. Life insurance is allowed as a deduction d. Long-term care insurance is allowed as a deduction, subject to dollar limitation e. The cost of insurance for dependent children is not allowed.
d. Long-term care insurance is allowed as a deduction, subject to dollar limitation
In 2021, Schedule 1 of Form 1040 is used to report what? a. Salary income b. Capital gains and losses c. Withholding on wages d. Unemployment compensation
d. Unemployment compensation
Which of the following must be included in the gross income of the recipient in 2021? a. Child support payments b. Welfare payments c. Gifts d. Unemployment compensation e. All of these are included in gross income
d. Unemployment compensation
The 3.8 percent Medicare tax does not apply to: a. Interest b. Dividends c. Capital gains d. Wages
d. Wages
Denise is divorced and files a head of household tax return claiming her two children, ages 7 and 9, as dependents. Her AGI for 2021 is $81,500. Denise's child tax credit for 2021 is: a. $0 b. $2,000 c. $3,000 d. $4,000 e. $6,000
e. $6,000
Denise is divorced and files a single tax return claiming her two children, ages 7 and 9, as dependents. Her AGI for 2018 is $81,500. Denise's child tax credit for 2021 is: a. $0 b. $2,000 c. $3,000 d. $4,000 e. $6,000
e. $6,000
Donald, a 40-year-old married taxpayer, has a salary of $55,000 and interest income of $6,000. What is the maximum amount Donald can contribute to a Roth IRA? a. $550 b. $610 c. $1,220 d. $3,000 e. $6,000
e. $6,000
Which of the following tax credits is not available for the 2021 tax year? a. Foreign tax credit b. Earned income credit c. Adoption credit d. Child and dependent care credit e. All of these are available credits
e. All of these are available credits
Which of the following is not deductible as an itemized deduction? a. State income taxes b. Personal property taxes c. Charitable contributions d. Local income taxes e. All of these may be deductible
e. All of these may be deductible
Which of the following is not a test that must be met for a child to be considered a dependent? a. Age test b. Domicile test c. Citizenship test d. Relationship test e. Nexus test
e. Nexus test
