Chapter 1
Which of the following is true? a. Old age and/or blindness increases your standard deduction b. Old age and/or blindness increases your itemized deductions c. You must use the standard deduction if it is less than itemized deductions d. Only the standard deduction, your age, and your visual health determine whether you must file
a. Old age and/or blindness increases your standard deduction
Determine from the tax table provided the amount of the income tax for each of the following taxpayers for 2019: Taxpayer Filing Status Taxable Income Allen Single $21,000
$2,329
Diego, age 28, married Dolores, age 27, in 2019. Their salaries for the year amounted to $46,780 and they had interest income of $945. Diego and Dolores' deductions for adjusted gross income amounted to $1,300; their itemized deductions were $15,300, and they have no dependents. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 What is the amount of their taxable income?
$22,025
For each of the following cases, indicate the filing status for the taxpayer(s) for 2019: Frank is single and he has a dependent child living in his home.
Head of household
For each of the following cases, indicate the filing status for the taxpayer(s) for 2019: Linda is single and she supports her mother (who has no income), including paying all the costs of her housing in an apartment across town.
Head of household
Maggie is single and supports her 85-year-old parents who have no income and live in a home rented for them by Maggie. What is Maggie's filing status? Her filing status is ________________________ because a. she is a qualifying widow b. her parents qualify as her dependents and she is unmarried c. she qualifies as her parents' dependent d. her parents are not her dependents
Head of household b. her parents qualify as her dependents and she is unmarried
Marc's brother, Phillip, who is a 20-year-old French citizen, lives in France for the full year. Marc supports Phillip while he attends college. Can Marc claim Phillip as a dependent? ___________ because a. Philip meets the qualifying child test b. Philip meets the citizenship test c. Philip fails the member of household test d. Philip fails the citizenship test e. Philip meets the age test f. Philip meets the relationship test
No d. Philip fails the citizenship test
If Charles, a 16-year-old child model, earns $50,000 a year and is completely self-supporting even though he lives with his parents, can his parents claim him as a dependent? ___________ because a. Charles meets the gross income test b. Charles meets the self-support test c. Charles meets the domicile test d. Charles fails the gross income test e. Charles fails the self-support test f. Charles fails the domicile test
No e. Charles fails the self-support test
For each of the following cases, indicate the filing status for the taxpayer(s) for 2019: Arthur is single and he supports his 30-year-old brother, who lives in his own home.
Single
For each of the following cases, indicate the filing status for the taxpayer(s) for 2019: Leslie's final decree of divorce was granted on June 18, 2019. She has no dependents.
Single
Nicoula is a server at a La Jolla restaurant. Nicoula received $1,200 in unreported tips during 2019 and owes Social Security and Medicare taxes on these tips. Her total income for the year, including the tips, is $4,300. Is Nicoula required to file an income tax return for 2019? Because Nicoula owes _______________________ taxes but does not owe __________________ taxes she is ______________ to file a tax return.
Social Security & Medicare, Federal Income, required
For each of the following situations (none of the taxpayers claim dependents), select either "Yes" or "No" to indicate whether the taxpayer(s) is (are) required to file a tax return for 2019. Harry, a 19-year-old single taxpayer, had net earnings from self-employment of $1,500.
Yes
For each of the following situations (none of the taxpayers claim dependents), select either "Yes" or "No" to indicate whether the taxpayer(s) is (are) required to file a tax return for 2019. Joan is a single college student who is claimed as a dependent by her parents. She earned $1,550 from a part-time job and has $1,150 in interest income.
Yes
Mary is single and supports her 30-year-old son who has income of $2,000 and lives in his own apartment. Does her son qualify as her dependent as a "qualifying relative"?
Yes
Select "Yes" or "No" regarding whether the following taxpayers are required to file a return for 2019 in each of the following independent situations: Taxpayer has net earnings from self-employment of $4,000.
Yes
Select "Yes" or "No" regarding whether the following taxpayers are required to file a return for 2019 in each of the following independent situations: Taxpayer is a waiter and has unreported tips of $450.
Yes
Erin purchased stock in JKL Corporation several years ago for $8,750. In the current year, she sold the same stock for $12,800. She paid a $200 sales commission to her stockbroker. 5. How is the gain or loss treated for tax purposes (if any)? Because the stock has been held for more than a year, there is a _____________________________. It will be taxed at _________________, depending on the taxpayer's income.
a long-term capital gain 0, 15, or 20%
Which of the following tax forms are used by individuals in 2019? a. 1040-SR b. 1120 c. 1040A d. 1040-EZ
a. 1040-SR
Ramon, a single taxpayer with no dependents, has adjusted gross income for 2019 of $98,000 and his itemized deductions total $19,000. What taxable income will Ramon show in 2019? a. $74,950 b. $79,000 c. $85,800 d. $87,650 e. $74,850
b. $79,000
On Mother's Day, 2019, Lucille left town with a traveling salesman and hasn't been heard from since. She left her husband, Kenny, with three children ages 4 to 12. Kenny files his 2019 tax return as: a. Married, filing jointly b. Head of household c. Married, filing separately d. Qualified widow(er) with dependents
b. Head of household
George (70) and Martha (66) are married. They have gross income of $23,000 and do not itemize deductions. George and Martha: a. File Form 1040 b. File Form 1040-SR c. File Form 1040-EZ d. Are not required to file.
d. Are not required to file.
Access the Internet and go to www.irs.gov and select "Search Forms & Instructions." Enter "4868" into the search box. What is Line 6 of the Form 4868? a. Your name b. Your social security number c. Estimate of total tax liability d. Balance due e. Total payments
d. Balance due
Individual taxpayers may e-file using: a. Home computer b. Mobile phone app c. Libraries d. Professional preparer e. Any of these choices are correct
e. Any of these choices are correct
For each of the following independent situations determine the amount of the standard deduction that the taxpayers should claim on their 2019 income tax returns. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Elizabeth is 9 years old, and her only income is $3,600 of interest on a savings account. She is claimed as a dependent on her parents' tax return.
$1,100
For each of the following independent situations determine the amount of the standard deduction that the taxpayers should claim on their 2019 income tax returns. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Debbie qualifies for head of household filing status, is 35 years old, and is in good health.
$18,350
Diego, age 28, married Dolores, age 27, in 2019. Their salaries for the year amounted to $46,780 and they had interest income of $945. Diego and Dolores' deductions for adjusted gross income amounted to $1,300; their itemized deductions were $15,300, and they have no dependents. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 What is their tax liability for 2019?
$2,255
Alicia, age 27, is a single, full-time college student. She earns $13,200 from a part-time job and has taxable interest income of $1,450. Her itemized deductions are $845. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Calculate Alicia's taxable income for 2019.
$2,450
Determine from the tax table provided the amount of the income tax for each of the following taxpayers for 2019: Taxpayer Filing Status Taxable Income Boyd MFS $24,545
$2,749
For each of the following independent situations determine the amount of the standard deduction that the taxpayers should claim on their 2019 income tax returns. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Frank and Frieda are married with two dependent children. They file a joint return, are in good health, and both of them are under 65 years of age.
$24,400
Diego, age 28, married Dolores, age 27, in 2019. Their salaries for the year amounted to $46,780 and they had interest income of $945. Diego and Dolores' deductions for adjusted gross income amounted to $1,300; their itemized deductions were $15,300, and they have no dependents. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 What is the amount of their adjusted gross income?
$46,425
Determine from the tax table provided the amount of the income tax for each of the following taxpayers for 2019: Taxpayer Filing Status Taxable Income Evans Single $45,000
$5,764
In 2019, Lou has a salary of $53,300 from her job. She also has interest income of $1,600 and dividend income of $400. Lou is single and has no dependents. During the year, Lou sold silver coins held as an investment for a $7,000 loss. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Calculate the following amounts for Lou: Adjusted gross income
$52,300
For the taxpayer, e-filing: a. Reduces errors b. Offers faster refunds c. Saves paper and postage d. All of these choices are correct
d. All of these choices are correct
Tax information may be found at the following: a. www.irs.gov b. Twitter handle @irsnews c. iTunes podcast d. All of these choices are correct
d. All of these choices are correct
Which of the following is not a goal of the income tax system? a. Providing incentives for certain business and economic goals, such as higher employment rates, through business-favorable tax provisions. b. Providing incentives for certain social goals, such as charitable giving, by allowing tax deductions, exclusions, or credits for selected activities. c. Raising revenue to operate the government. d. All of these choices are goals of the income tax system.
d. All of these choices are goals of the income tax system.
Select which is the most appropriate form or schedule for each of the following items. Unless otherwise indicated in the problem, assume the taxpayer is an individual. Income of a corporation. a. Form 1040 b. Form 1041 c. Form 1065 d. Form 1120 e. Schedule C, Form 1040
d. Form 1120
Mark each statement below as either "True" or "False" regarding the standard deduction and itemized deductions. The standard deduction is an amount that varies with filing status.
True
Mark each statement below as either "True" or "False" regarding the standard deduction and itemized deductions. Total itemized deductions depend on the amount and type of items, with some items having limitations based on AGI.
True
Select from the dropdown the filing status in each of the following independent cases: The taxpayer's wife died last year. His 15-year old dependent son lives with him. a. Single b. Married, filing a joint return c. Married, filing separate returns d. Married, filing joint return or separate returns e. Head of Household f. Qualifying widow(er)
f. Qualifying widow(er)
Ulysses and Penelope are married and file separate returns for 2019. Penelope itemizes her deductions on her return. Ulysses' adjusted gross income was $17,400, his itemized deductions were $2,250 and he is entitled to one exemption. Neither have any dependents. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Calculate Ulysses' income tax liability assuming the couple does not live in a community property state.
$1,627
Bill is a single taxpayer, age 27. In 2019, his salary is $29,000 and he has interest income of $1,500. In addition, he has deductions for adjusted gross income of $2,200 and he has $6,500 of itemized deductions. Calculate the following amounts. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Standard Deduction or Itemized Deduction Amount
$12,200
For each of the following independent situations determine the amount of the standard deduction that the taxpayers should claim on their 2019 income tax returns. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Adam is 45 years old, in good health, and single.
$12,200
In 2019, Lou has a salary of $53,300 from her job. She also has interest income of $1,600 and dividend income of $400. Lou is single and has no dependents. During the year, Lou sold silver coins held as an investment for a $7,000 loss. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Calculate the following amounts for Lou: Standard Deduction
$12,200
Erin purchased stock in JKL Corporation several years ago for $8,750. In the current year, she sold the same stock for $12,800. She paid a $200 sales commission to her stockbroker. 1. What is Erin's amount realized?
$12,600
Melissa and Aaron are married taxpayers with taxable income of $105,000 and file a joint tax return. What is their 2019 tax liability?
$14,817
For each of the following independent situations determine the amount of the standard deduction that the taxpayers should claim on their 2019 income tax returns. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Charlie is 70, single, and blind.
$15,500 (12,200 + 1,300 + 2,000)
Bill is a single taxpayer, age 27. In 2019, his salary is $29,000 and he has interest income of $1,500. In addition, he has deductions for adjusted gross income of $2,200 and he has $6,500 of itemized deductions. Calculate the following amounts. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Taxable Income
$16,100
Jim, age 50, and Martha, age 49, are married with three dependent children. They file a joint return for 2019. Their income from salaries totals $49,500, and they received $10,125 in taxable interest, $5,000 in royalties, and $3,000 in other ordinary income. Jim and Martha's deductions for adjusted gross income amount to $3,200, and they have itemized deductions totaling $18,200. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Calculate the following amounts: Itemized deduction or standard deduction amount
$24,400
For each of the following independent situations determine the amount of the standard deduction that the taxpayers should claim on their 2019 income tax returns. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Bill and Betty are married and file a joint return. Bill is 66 years old, and Betty is 60.
$25,700 ($24,400 + 1,300)
Bill is a single taxpayer, age 27. In 2019, his salary is $29,000 and he has interest income of $1,500. In addition, he has deductions for adjusted gross income of $2,200 and he has $6,500 of itemized deductions. Calculate the following amounts. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Adjusted Gross Income
$28,300
Determine from the tax table provided the amount of the income tax for each of the following taxpayers for 2019: Taxpayer Filing Status Taxable Income Dell H of H $27,450
$3,020
Erin purchased stock in JKL Corporation several years ago for $8,750. In the current year, she sold the same stock for $12,800. She paid a $200 sales commission to her stockbroker. 3. What is Erin's realized gain or loss?
$3,850 gain
Erin purchased stock in JKL Corporation several years ago for $8,750. In the current year, she sold the same stock for $12,800. She paid a $200 sales commission to her stockbroker. 4. What is Erin's recognized gain or loss?
$3,850 gain
Determine from the tax table provided the amount of the income tax for each of the following taxpayers for 2019: Taxpayer Filing Status Taxable Income Caldwell MFJ $35,784
$3,905
Bill is a single taxpayer, age 27. In 2019, his salary is $29,000 and he has interest income of $1,500. In addition, he has deductions for adjusted gross income of $2,200 and he has $6,500 of itemized deductions. Calculate the following amounts. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Gross Income
$30,500
Jim, age 50, and Martha, age 49, are married with three dependent children. They file a joint return for 2019. Their income from salaries totals $49,500, and they received $10,125 in taxable interest, $5,000 in royalties, and $3,000 in other ordinary income. Jim and Martha's deductions for adjusted gross income amount to $3,200, and they have itemized deductions totaling $18,200. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Calculate the following amounts: Income tax liability (before any credits)
$4,415
Jim, age 50, and Martha, age 49, are married with three dependent children. They file a joint return for 2019. Their income from salaries totals $49,500, and they received $10,125 in taxable interest, $5,000 in royalties, and $3,000 in other ordinary income. Jim and Martha's deductions for adjusted gross income amount to $3,200, and they have itemized deductions totaling $18,200. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Calculate the following amounts: Taxable income
$40,025
In 2019, Lou has a salary of $53,300 from her job. She also has interest income of $1,600 and dividend income of $400. Lou is single and has no dependents. During the year, Lou sold silver coins held as an investment for a $7,000 loss. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Calculate the following amounts for Lou: Taxable Income
$40,100
Jim, age 50, and Martha, age 49, are married with three dependent children. They file a joint return for 2019. Their income from salaries totals $49,500, and they received $10,125 in taxable interest, $5,000 in royalties, and $3,000 in other ordinary income. Jim and Martha's deductions for adjusted gross income amount to $3,200, and they have itemized deductions totaling $18,200. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Calculate the following amounts: Adjusted Gross Income
$64,425
Jim, age 50, and Martha, age 49, are married with three dependent children. They file a joint return for 2019. Their income from salaries totals $49,500, and they received $10,125 in taxable interest, $5,000 in royalties, and $3,000 in other ordinary income. Jim and Martha's deductions for adjusted gross income amount to $3,200, and they have itemized deductions totaling $18,200. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 Calculate the following amounts: Gross Income
$67,625
Erin purchased stock in JKL Corporation several years ago for $8,750. In the current year, she sold the same stock for $12,800. She paid a $200 sales commission to her stockbroker. 2. What is Erin's adjusted basis?
$8,750
Mark each statement below as either "True" or "False" regarding the standard deduction and itemized deductions. A taxpayer should claim the smaller of the standard deduction or the total allowed itemized deductions.
False
Mark each statement below as either "True" or "False" regarding the standard deduction and itemized deductions. Taxpayers who are 65 years of age or older or blind are entitled to an additional itemized deduction amount.
False
For each of the following cases, indicate the filing status for the taxpayer(s) for 2019: Tom and Carry were married on December 31, 2019.
Married filing jointly or Married filing separately
For each of the following situations (none of the taxpayers claim dependents), select either "Yes" or "No" to indicate whether the taxpayer(s) is (are) required to file a tax return for 2019. Helen is a single taxpayer with interest income in 2019 of $8,750.
No
For each of the following situations (none of the taxpayers claim dependents), select either "Yes" or "No" to indicate whether the taxpayer(s) is (are) required to file a tax return for 2019. Leslie, age 64, and Mark, age 66, are married and file a joint return. They received $17,800 in interest income from a savings account.
No
For each of the following situations (none of the taxpayers claim dependents), select either "Yes" or "No" to indicate whether the taxpayer(s) is (are) required to file a tax return for 2019. Ray, age 60, and Jean, age 57, are married and file a joint tax return. Their only income is $14,700 in interest income.
No
Mary is single and supports her 30-year-old son who has income of $2,000 and lives in his own apartment. Does her son qualify as her dependent as a "qualifying child"?
No
Select "Yes" or "No" regarding whether the following taxpayers are required to file a return for 2019 in each of the following independent situations: Husband (age 67) and wife (age 64) have an income of $25,000 and file a joint return.
No
Select "Yes" or "No" regarding whether the following taxpayers are required to file a return for 2019 in each of the following independent situations: Taxpayer (age 45) is single with income of $10,000.
No
Select "Yes" or "No" regarding whether the following taxpayers are required to file a return for 2019 in each of the following independent situations: Taxpayer is a college student with a salary from a part-time job of $6,500. She is claimed as a dependent by her parents.
No
Select "Yes" or "No" regarding whether the following taxpayers are required to file a return for 2019 in each of the following independent situations: Taxpayer is a qualifying widow (age 48) with a dependent son (age 18) and income of $22,800.
No
Select "Yes" or "No" regarding whether the following taxpayers are required to file a return for 2019 in each of the following independent situations: Taxpayers are married with income of $15,900 and file a joint return. They expect a refund of $600 from excess withholding. Assume both taxpayers are under age 65.
No
Mary is single and supports her 30-year-old son who has income of $2,000 and lives in his own apartment. Can she claim head of household filing status? ___________ because a. her son earned over $1,000 b. her son must live in the same household c. her son is over 24 years old d. she is single
No b. her son must live in the same household
Melissa and Aaron are married taxpayers with taxable income of $105,000 and file a joint tax return. a. When you calculate their tax liability, are you required to use the tax tables or the tax rate schedules, or does it matter?
The tax rate schedules must be used.
Martina, a single taxpayer age 45, paid the full cost of maintaining her dependent father in a home for the aged for the entire year. What is the amount of Martina's standard deduction for 2019? a. $18,350 b. $0 c. $24,400 d. $12,200 e. None of these choices are correct.
a. $18,350
Janet is unmarried and provides 100 percent of the household expenses for herself and her dependent son. She has salary of $84,600, deductions for adjusted gross income of $5,000 and itemized deductions of $8,300. Janet's taxable income is: a. $61,250 b. $71,300 c. $61,600 d. $79,700
a. $61,250
All of the following are itemized deductions in 2019 except: a. Alimony payments b. State and local taxes c. Medical expenses d. Charitable contributions e. All of these choices are itemized deductions
a. Alimony payments
Taxpayers who are 65 or older get the benefit of: a. An additional amount added to their standard deduction b. An additional exemption c. An additional amount added to their itemized deductions d. None of these choices are correct
a. An additional amount added to their standard deduction
Taxpayers who are blind get the benefit of: a. An additional amount added to their standard deduction b. An additional amount added to their itemized deductions c. An additional exemption d. None of these choices are correct
a. An additional amount added to their standard deduction
Select which is the most appropriate form or schedule for each of the following items. Unless otherwise indicated in the problem, assume the taxpayer is an individual. Salary of $70,000 for a taxpayer under age 65 who itemizes deductions. a. Form 1040 b. Form 1041 c. Schedule C, Form 1040 d. Schedule 1, Form 1040 e. Schedule K-1, Form 1065
a. Form 1040
Select which is the most appropriate form or schedule for each of the following items. Unless otherwise indicated in the problem, assume the taxpayer is an individual. Single individual, age 67, with no dependents whose only income is $18,000 (all from Social Security) and who does not itemize deductions or have any credits. a. Form 1040-SR b. Form 1041 c. Schedule C, Form 1040 d. Schedule E, Form 1040 e. Schedule 1, Form 1040
a. Form 1040-SR
Select which is the most appropriate form or schedule for each of the following items. Unless otherwise indicated in the problem, assume the taxpayer is an individual. Estate income of $850. a. Form 1041 b. Form 1040 c. Schedule 1, Form 1040 d. Schedule C, Form 1040 e. Schedule E, Form 1040
a. Form 1041
Joan, who was divorced in 2019, had filed a joint tax return with her husband in 2018. During 2019, she did not remarry and continued to maintain her home in which her five dependent children lived. In the preparation of her tax return for 2019, Joan should file as: a. Head of household b. A single individual c. A qualifying widow(er) d. Married, filing separately e. None of these choices are correct
a. Head of household
Margaret and her sister support their mother and together provide 85 percent of their mother's support. If Margaret provides 40 percent of her mother's support: a. Margaret may claim her mother as a dependent if her sister agrees in a multiple support agreement b. Her sister is the only one who can claim their mother as a dependent c. Neither Margaret nor her sister may claim their mother as a dependent d. Margaret and her sister may split the dependent status of their mother e. Both Margaret and her sister may claim their mother as a dependent
a. Margaret may claim her mother as a dependent if her sister agrees in a multiple support agreement
A widow or widower: a. May benefit from the joint return rates for 2 years after the death of a spouse if there is a dependent child b. Can file a joint return in the year of the spouse's death, but in the next year and thereafter must file as head of household if he or she has a dependent child c. After the initial period of joint return rates, can use head of household rates after the death of a spouse even if the children are no longer dependents d. Can use joint return rates in the year after the spouse's death even though he or she is the only one remaining in the household e. May benefit from the joint return rates for 3 years after the death of a spouse if there is a dependent child
a. May benefit from the joint return rates for 2 years after the death of a spouse if there is a dependent child
Which of the following recent tax changes is not scheduled to expire after 2025? a. Reduction of corporate tax rates to 21 percent b. Suspension of personal exemptions c. Restrictions on the deduction of casualty and theft losses d. General lowering of individual tax rates
a. Reduction of corporate tax rates to 21 percent
Select from the dropdown the filing status in each of the following independent cases: The taxpayer is unmarried and is living with his girlfriend. a. Single b. Married, filing a joint return c. Married, filing separate returns d. Married, filing joint return or separate returns e. Head of Household f. Qualifying widow(er)
a. Single
Which of the following is a deduction for adjusted gross income in 2019? a. Student loan interest b. Medical expenses c. Charitable contributions d. Personal casualty losses e. None of these choices are correct
a. Student loan interest
Tracy and her sister support their father and together provide 90 percent of their father's support. If Tracy provides 40 percent of her father's support, which of the following is true? a. Tracy may claim her father as a dependent if her sister agrees in a multiple support agreement b. Tracy and her sister may split the dependency exemption c. Tracy's sister is the only one who can claim their father as a dependent d. Neither Tracy nor her sister may claim their father as a dependent e. Both Tracy and her sister may claim their father as a dependent
a. Tracy may claim her father as a dependent if her sister agrees in a multiple support agreement
Leonard lives with his girlfriend. They share the costs of the household equally. Leonard earns $30,000 working at the local supermarket. Leonard's standard deduction for 2019 is: a. $9,400 b. $12,200 c. $24,400 d. $4,200
b. $12,200
Jayne purchased General Motors stock 6 years ago for $20,000. In the current year, she sells the stock for $35,000. What is her gain or loss? a. $15,000 short-term gain b. $15,000 long-term gain c. $15,000 ordinary gain d. $15,000 extraordinary gain e. No gain or loss is recognized on this transaction
b. $15,000 long-term gain
Select which is the most appropriate form or schedule for each of the following items. Unless otherwise indicated in the problem, assume the taxpayer is an individual. Partnership's loss a. Form 1041 b. Form 1065 c. Form 1120 d. Schedule C, Form 1040 e. Schedule E, Form 1040
b. Form 1065
Which amendment to the Constitution established the U.S. income tax? a. 2nd b. 16th c. 13th d. 18th
b. 16th
What is reported on Schedule A of Form 1040? a. Sole proprietor income b. Itemized deductions c. Capital gains d. Interest and dividends income
b. Itemized deductions
Select which is the most appropriate form or schedule for each of the following items. Unless otherwise indicated in the problem, assume the taxpayer is an individual. Dividends of $2,000 received by a taxpayer who does not itemize deductions. a. Schedule 1, Form 1040 b. Schedule B, Forms 1040 and 1040-SR c. Schedule C, Form 1040 d. Schedule D, Form 1040 e. Schedule E, Form 1040
b. Schedule B, Forms 1040 and 1040-SR
Marian, age 60 and Jerry, age 61 are married with a 23-year-old son who lives in their home. They provide over half of their son's support, and their son earned $4,100 this year from a part-time job. Their son is not a full-time student. Can the son be claimed as a dependent? a. No, he cannot be claimed as a qualifying relative because he is over 19 and not a full-time student b. Yes, he can be claimed because he is a qualifying relative c. Yes, he can be claimed because he is a qualifying child d. No, he cannot be claimed because he fails the gross income test
b. Yes, he can be claimed because he is a qualifying relative
Ben, a single taxpayer with no dependents, is 32 years old. What is the minimum amount of income that he must have to be required to file a tax return for 2019 assuming he has no earnings from self-employment? a. $4,200 b. $12,000 c. $12,200 d. $12,700 e. None of these choices are correct
c. $12,200
Arthur is 65 years old and single. He supports his father, who is 90 years old, blind, and has no income. What is Arthur's standard deduction? a. $15,500 b. $12,200 c. $20,000 d. $18,350 e. $13,850
c. $20,000
Taxable income equals: a. Gross income less exemptions less payments b. Gross income less exemptions c. AGI less deductions (standard or itemized) d. Gross income less deductions less payments
c. AGI less deductions (standard or itemized)
The tax formula for individuals contains the following: a. Exemptions, credits, and deductions are subtracted from adjusted gross income to calculate taxable income. b. Gross income minus deductions and minus exemptions is equal to the amount of adjusted gross income. c. Adjusted gross income minus deductions and less the qualified business income deduction is equal to taxable income. d. Gross income minus adjusted gross income equals taxable income. e. The amount of the refund due is the gross tax liability added to credits.
c. Adjusted gross income minus deductions and less the qualified business income deduction is equal to taxable income.
Select which is the most appropriate form or schedule for each of the following items. Unless otherwise indicated in the problem, assume the taxpayer is an individual. Charitable contribution deduction for an individual who itemizes deductions. a. Schedule 1, Form 1040 b. Form 1041 c. Schedule A, Forms 1040 and 1040-SR d. Schedule B, Forms 1040 and 1040-SR e. Schedule E, Form 1040
c. Schedule A, Forms 1040 and 1040-SR
Glenda, a single taxpayer from Kansas, paid for more than one-half of the support for her mother, Dorothy. Dorothy did not live with Glenda in Kansas, but rather has lived in a nursing home in an adjacent state since Dorothy's husband died three years ago. Glenda's filing status should be: a. Married filing separately b. Qualifying widower c. Head of household d. Parental dependent e. Single
c. Head of household
Select which is the most appropriate form or schedule for each of the following items. Unless otherwise indicated in the problem, assume the taxpayer is an individual. Bank interest income of $1,600 received by a taxpayer who itemizes deductions. a. Schedule 1, Form 1040 b. Schedule A, Forms 1040 and 1040-SR c. Schedule B, Forms 1040 and 1040-SR d. Schedule 1, Schedule D, Form 1040 e. Schedule E, Form 1040
c. Schedule B, Forms 1040 and 1040-SR
Which of the following is not a capital asset to an individual taxpayer? a. Raw land held as an investment b. A 48-foot sailboat c. Inventory in the taxpayer's business d. Stocks e. All of these choices are capital assets
c. Inventory in the taxpayer's business
Select from the dropdown the filing status in each of the following independent cases: The taxpayer is married and his spouse left midyear and has disappeared. The taxpayer has no dependents. a. Single b. Married, filing a joint return c. Married, filing separate returns d. Married, filing joint return or separate returns e. Head of Household f. Qualifying widow(er)
c. Married, filing separate returns
Married taxpayers filing separate returns: a. Must have lived apart for at least part of the year b. Must each have income to allow both spouses to file separate returns c. Must both itemize deductions if one spouse decides to do so d. Must not live in a community property state e. Cannot claim head of household filing status
c. Must both itemize deductions if one spouse decides to do so
Jessica and Carl were married on July 1, 2019. What are their options for filing status for their 2019 taxes? a. They may file as single b. They may file as head of household c. They may file as married filing jointly or married filing separately d. They may file only as married filing jointly
c. They may file as married filing jointly or married filing separately
On January 1, 1998, Donna bought a single family house to use as a rental. She paid $300,000 for the property and has claimed depreciation of $60,000 over the intervening years. She sells the house on January 1, 2019, for $400,000 incurring selling expense of $24,000. What is Donna's gain or loss? a. $100,000 gain b. $16,000 loss c. $160,000 gain d. $136,000 gain
d. $136,000 gain
Robin and Howie file married filing jointly and have a 13-year-old daughter. They also provide all the support for Howie's 82-year-old mother, who lives in a nursing home nearby. The amount of the combined child tax credit and other dependent credit for Robin and Howie is: a. $1,500 b. $0 c. $1,000 d. $2,500 e. $2,000
d. $2,500
Alexis purchased a rental house 3 years ago for $372,600. Her depreciation to date is $44,712. Due to a decrease in real estate prices, she sells the house for only $353,970 in 2019. What is her gain or loss for tax purposes? a. $0 b. $18,630 gain c. $44,712 loss d. $26,082 gain e. $26,082 loss
d. $26,082 gain
Alan bought shares in Coca-Cola for $10,000 on November 15, 2018. On November 1, 2019, he sold the shares for $5,000. He has no other gains or losses in 2019. What does Alan report on his tax return? a. $5,000 long-term loss b. $3,000 ordinary loss and $2,000 long-term loss carry-forward c. $5,000 short-term loss d. $3,000 ordinary loss and $2,000 short-term loss carry-forward
d. $3,000 ordinary loss and $2,000 short-term loss carry-forward
Select from the dropdown the filing status in each of the following independent cases: The taxpayers are married on December 31 of the tax year. a. Single b. Married, filing a joint return c. Married, filing separate returns d. Married, filing joint return or separate returns e. Head of Household f. Qualifying widow(er)
d. Married, filing joint return or separate returns
Linda is a U.S. citizen. Linda's sister, Claire, is a 20-year old French citizen. Linda provides 85 percent of the support for Claire who has no gross income and is a full-time student. Can Linda claim Claire as dependent? a. Yes, Claire can be claimed as a dependent because she receives 85 percent of her support from Linda b. Yes, Claire can be claimed as a dependent because she is under the age of 24 and a full-time student c. No, Claire cannot be claimed as a dependent because siblings are not included in the definition of qualifying relative d. No, Claire cannot be claimed as a dependent because she is a citizen of France
d. No, Claire cannot be claimed as a dependent because she is a citizen of France
Select which is the most appropriate form or schedule for each of the following items. Unless otherwise indicated in the problem, assume the taxpayer is an individual. Income from a sole proprietorship business. a. Form 1040 b. Form 1041 c. Schedule 1 and Schedule A, Form 1040 d. Schedule 1 and Schedule C, Forms 1040 and 1040-SR e. Schedule D, Forms 1040 and 1040-SR
d. Schedule 1 and Schedule C, Forms 1040 and 1040-SR
Select which is the most appropriate form or schedule for each of the following items. Unless otherwise indicated in the problem, assume the taxpayer is an individual. Capital gain on the sale of AT&T stock. a. Schedule 1 and Schedule A, Form 1040 b. Schedule 1 and Schedule B, Form 1040 c. Schedule 1 and Schedule C, Forms 1040 and 1040-SR d. Schedule D, Forms 1040 and 1040-SR e. Schedule 1 and Schedule E, Forms 1040 and 1040-SR
d. Schedule D, Forms 1040 and 1040-SR
Which of the following statements is not correct with respect to the taxation of capital gains? a. Long-term capital gains are taxed at a lower rate than ordinary income b. In any year, only $3,000 of net capital losses can be deducted against ordinary income c. Long-term gains have preferential tax rates of 0 percent, 15 percent, and 20 percent for most taxpayers d. Short-term capital gains have preferential tax rates
d. Short-term capital gains have preferential tax rates
John and Mary are married and are both over 65. They have interest income from banks and bonds of $24,500 and no other income. Which form should they file? a. Form 1040SR b. Form 1040A c. Form 1040 d. They are not required to file a tax return
d. They are not required to file a tax return
Tax law is a tool used by government to: a. Further economic goals b. Raise revenue to run government c. Encourage social objectives d. Support research and development e. All of these choices are correct
e. All of these choices are correct
The IRS website, www.irs.gov provides: a. A search function b. IRS E-mail links c. Forms and publications d. YouTube videos e. All of these choices are correct
e. All of these choices are correct
Which of the following entities are required to report income to the IRS? a. Trusts b. Partnerships c. Corporations d. Estates e. All of these choices are correct
e. All of these choices are correct
Select from the dropdown the filing status in each of the following independent cases: The taxpayer is single, with a dependent child living in her home. a. Single b. Married, filing a joint return c. Married, filing separate returns d. Married, filing joint return or separate returns e. Head of Household f. Qualifying widow(er)
e. Head of Household
Select from the dropdown the filing status in each of the following independent cases: The unmarried taxpayer supports her dependent mother, who lives in her own home. a. Single b. Married, filing a joint return c. Married, filing separate returns d. Married, filing joint return or separate returns e. Head of Household f. Qualifying widow(er)
e. Head of Household
Select which is the most appropriate form or schedule for each of the following items. Unless otherwise indicated in the problem, assume the taxpayer is an individual. Income from rental property. a. Schedule 1 and Schedule A, Form 1040 b. Schedule 1 and Schedule B, Form 1040 c. Schedule 1 and Schedule C, Forms 1040 and 1040-SR d. Schedule D, Forms 1040 and 1040-SR e. Schedule 1 and Schedule E, Forms 1040 and 1040-SR
e. Schedule 1 and Schedule E, Forms 1040 and 1040-SR
Select which is the most appropriate form or schedule for each of the following items. Unless otherwise indicated in the problem, assume the taxpayer is an individual. Income from a farm. a. Schedule 1 and Schedule A, Form 1040 b. Schedule 1 and Schedule B, Form 1040 c. Schedule 1 and Schedule C, Forms 1040 and 1040-SR d. Schedule D, Forms 1040 and 1040-SR e. Schedule 1 and Schedule F, Forms 1040 and 1040-SR
e. Schedule 1 and Schedule F, Forms 1040 and 1040-SR
Select which is the most appropriate form or schedule for each of the following items. Unless otherwise indicated in the problem, assume the taxpayer is an individual. Partnership reporting of an individual partner's share of partnership income. a. Form 1040 b. Form 1041 c. Schedule 1, Form 1040 d. Schedule 1, Form 1065 e. Schedule K-1, Form 1065
e. Schedule K-1, Form 1065
Diego, age 28, married Dolores, age 27, in 2019. Their salaries for the year amounted to $46,780 and they had interest income of $945. Diego and Dolores' deductions for adjusted gross income amounted to $1,300; their itemized deductions were $15,300, and they have no dependents. Filing Status Standard Deduction Single $ 12,200 Married, filing jointly 24,400 Married, filing separately 12,200 Head of household 18,350 Qualifying widow(er) 24,400 In order to minimize taxable income, Diego and Dolores will take the _________________ in the amount of ______________________.
standard deduction $24,400
