Federal Income Tax I Final Review
Individual proprietors reported their business income and deductions on: A) Form 1065. B) Form 1120S. C) Schedule C. D) Schedule A. E) Form 1041.
C) Schedule C
Which judicial doctrine means that a court will rule consistently with its previous ruling and the rulings of higher courts with appellate jurisdiction? A) Judicial hierarchy. B) The Goldman rule. C) Judicial consistency. D) Stare decisis. E) None of the choices are correct.
C) State decisis
Tamara and Jacob are married and they file a joint tax return. Tamara received nearly five times the salary that Jacob received. Which of the following statements is true? A) Tamra and Jacob likely pay no tax marriage penalty nor receive a tax marriage benefit. B) Tamra and Jacob likely pay a tax marriage penalty. C) Tamra and Jacob likely receive a tax marriage benefit. D) Tamra and Jacob likely will pay a tax marriage penalty and receive a tax marriage benefit.
C) Tamara and Jacob likely receive a tax marriage benefit.
Which of the following statements regarding tax credits 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.
C) Tax credits reduce taxes payable dollar for dollar.
Which of the following statements best describes the deductibility of real property taxes when a taxpayer sells real property during a year? A) The owner of the property at the time the property taxes are due is responsible for paying all of the real property taxes on the property for the year. Consequently, this person is allowed to deduct all of the property taxes for the year. B) Taxpayers are allowed to deduct the real property taxes they actually pay for the year. C) Taxpayers are allowed to deduct the property taxes allocated to the portion of the year that they owned the property. D) None of these statements are correct.
C) Taxpayers are allowed to deduct the property taxes allocated to the portion of the year that they owned the property.
Which of the following statements regarding the home mortgage interest expense deductions is correct? A) Taxpayers may deduct interest expense on a limited amount of home equity indebtedness but they may deduct interest expense on an unlimited amount of home acquisition indebtedness. B) Taxpayers may deduct interest expense on a limited amount of acquisition indebtedness but an unlimited amount of home equity indebtedness. C) Taxpayers may deduct interest expense on a limited amount of acquisition indebtedness but may not deduct interest on home equity indebtedness. D) None of these statements are correct.
C) Taxpayers may deduct interest expense on a limited amount of acquisition indebtedness but may deduct interest on home equity indebtedness.
The general rule regarding the exchange basis in the new property received in a like-kind exchange is: A) The basis is equal to the fair market value of the new property. B) The basis is equal to the fair market value of the old property. C) The basis is equal to the adjusted basis of the old property. D) The basis is equal to the cost basis of the old property. E) All of the choices are correct.
C) The basis is equal to the adjusted basis of the old property.
Which of the following statements is true? A) Meals are never deductible as a business expense. B) An employer can only deduct half of any meals provided to employees. C) The cost of business meals must be reasonable. D) A taxpayer can only deduct a meal for a client if business is discussed during the meal. E) None of the choices are true.
C) The cost of business meals must be reasonable.
How is the bargain element for a stock option calculated? A) The difference between the strike price and the market price on the date of grant. B) The difference between the market price on the exercise date and the market price on the date of grant. C) The difference between the market price on the exercise date and the strike price. D) The difference between the market price on the sale date and the strike price.
C) The difference between the market price on the exercise date and the strike price.
Assuming the kiddie tax applies, what amount of the child's income is subject to the kiddie tax? A) All of it. B) All of the unearned income. C) The net unearned income. D) Taxable income less the standard deduction.
C) The net unearned income.
Which of the following is a true statement about the limitation on business interest deductions? A) Interest disallowed by this limitation is carried back three years and then forward five years. B) The limitation is calculated as a percentage of the taxpayer's total taxable income. C) This limitation is not imposed on businesses with average annual gross receipts of $25 million or less for the prior three taxable years. D) All of the choices are false. E) All of the choices are true.
C) This limitation is not imposed on businesses with average annual gross receipts of $25 million or less for the prior three taxable years.
Which of the following statements regarding employer provided educational benefits is true? A) All undergraduate tuition expenses can be excluded. B) Only educational benefits from public universities can be excluded. C) Up to $5,250 in tuition benefits can be excluded. D) All graduate tuition expenses are included.
C) Up to $5,250 in tuition benefits can be excluded.
The maximum amount of net capital losses individual taxpayers may deduct against their ordinary income per year is: A) $3,000. B) $5,000. C) Zero, losses are not deductible. D) There is no maximum. All losses are allowed to be deducted. E) None of the choices are correct.
A) $3,000
Which of the following is a true statement? A) A casualty loss on personal-use assets is generally not deductible. B) A casualty loss on investment property is generally not deductible. C) All casualty losses are deductible. D) A casualty loss on personal-use asset is deductible for AGI. E) None of the choices are correct.
A) A casualty loss on personal-use assets is generally not deductible.
Which of the following is not an itemized deduction? A) Alimony paid. B) Medical expenses. C) Real estate taxes. D) Charitable contributions.
A) Alimony paid
Gross income includes: A) all income from whatever source derived unless excluded by law. B) excluded income. C) deferred income. D) all realized income. E) All of the choices are correct.
A) All income from whatever source derives unless excluded by law.
This year Amanda paid $749 in Federal gift taxes on a gratuitous transfer to her nephew. Amanda lives in Texas and does not pay any state or local income taxes. Which of the following is true? A) Amanda cannot deduct Federal gift taxes. B) Amanda can deduct Federal gift taxes for AGI. C) Amanda can deduct Federal gift taxes paid as an itemized deduction. D) Amanda must include Federal gift taxes with other miscellaneous itemized deductions. E) None of the choices are true.
A) Amanda cannot deduct Federal gift taxes.
Identify the rule that states that income has been realized when a taxpayer receive the income and there are no restriction on the taxpayer's use of the income (e.g., no obligation to repay the amount): A) Claim of right. B) Constructive receipt. C) Return of capital principle. D) Wherewithal to pay. E) None of the choices are correct.
A) Claim of right
Which of the following audits is the most common and typically less comprehensive? A) Correspondence. B) Random. C) Office. D) Field. E) None of the choices are correct.
A) Correspondence
Which types of penalties are only imposed after normal due process include a trial? A) Criminal penalties. B) Civil penalties. C) Criminal and civil penalties. D) Tax return. E) None of the choices are correct.
A) Criminal penalties
Which of the following best describes distributions from a defined benefit plan? A) Distributions from defined benefit plans are taxable as ordinary income. B) Distributions from defined benefit plans are partially taxable as ordinary income and partially nontaxable as a return of capital. C) Distributions from defined benefit plans are taxable as capital gains. D) Distributions from defined benefit plans are partially taxable as capital gains and partially nontaxable as a return of capital.
A) Distributions from defined benefit plans are taxable as ordinary income.
Which of the following benefits cannot be excluded as a no additional cost service fringe benefit? A) Free tax return preparation from a client. B) Complementary dry cleaning for employees at a laundry company. C) A car wash at an automobile dealership. D) Free local phone service for phone company employees.
A) Free tax return preparation from a client.
Which of the following is a deductible miscellaneous itemized deduction? A) gambling losses to the extent of gambling winnings. B) fees for investment advice. C) employee business expenses. D) tax preparation fees. E) All of the choices are correct.
A) Gambling losses to the extent of the gambling winnings.
Which of the following series of inequalities is generally most accurate? A) Gross income ≥ adjusted gross income ≥ taxable income B) Adjusted gross income ≥ gross income ≥ taxable income C) Adjusted gross income ≥ taxable income ≥ gross income D) Gross income ≥ taxable income ≥ adjusted gross income
A) Gross income ≥ adjusted gross income ≥ taxable income
The Olympians have three children. The kiddie tax applies to unearned income received by which of the following children? A) Poseidon is a 20-year-old full-time student who does not support himself. B) Demeter, a 23-year-old full-time student who supports herself with a job at a grocery store. C) Zeus is 20 years old and not a student. D) Two of the choices. E) None of the choices are correct.
A) Poseidon is a 20-year-old full-time student who does not support himself.
Which of the following statements regarding for AGI tax deductions is true? 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.
How long after the initial exchange does a taxpayer have to identify replacement property in a like-kind exchange? A) The like-kind property to be received must be identified within 45 days. B) The like-kind property to be received must be identified by the earlier of 45 days or the last day of the taxpayer's taxable year. C) The like-kind property to be received must be identified within 180 days. D) There is no deadline for the identification of replacement property. E) All of the choices are correct.
A) The like-kind property to be received must be identified within 45 days.
Han is a self-employed carpenter and his wife, Christine, works full-time as a grade school teacher. Han paid $525 for carpentry tools and supplies, and Christine paid $3,600 as her share of health insurance premiums (not with pre-tax dollars) for Han and herself in a qualified plan provided by the school district (not through an exchange). Which of the following is a true statement? A) The tools and supplies are deductible for AGI while the health insurance is an itemized deduction. B) Both expenditures are deductible for AGI. C) The tools and supplies are an itemized deduction but the health insurance is deductible for AGI. D) Both expenditures are itemized deductions. E) Neither of the expenditures is deductible.
A) The tools and supplies are deductible for AGI while the health insurance is an itemized deduction.
Investment interest expense does not include: A) interest expense from loans to purchase municipal bonds. B) interest expense from loans to purchase corporate bonds. C) interest expense from loans to purchase stocks. D) interest expense from loans to purchase U.S. savings bonds and interest expense from loans to purchase corporate bonds. E) interest expense from loans to purchase corporate bonds and interest expense from loans to purchase stocks.
A) interest expense from loans to purchase municipal bonds.
Riley participates in his employer's 401(k) plan. He retired in 2018 at age 75. When must Riley receive his distribution pertaining to 2018 to avoid minimum distribution penalties? A) April 1, 2018. B) April 1, 2019. C) December 31, 2018. D) December 31, 2019.
B) April 1, 2019
Which of the following describes a defined contribution plan? A) Provides guaranteed income on retirement to plan participants. B) Employers and employees generally may contribute to the plan. C) Generally set up to defer income for executives and highly compensated employees but not other employees. D) Retirement account set up to provide an individual a fixed amount of income on retirement.
B) Employers and employees generally may contribute to the plan.
Which of the following statements regarding Roth 401(k) accounts is false? A) Employees can make contributions to a Roth 401(k). B) Employers can make contributions to Roth accounts on behalf of their employees. C) Contributions to Roth 401(k) plans are not deductible. D) Qualified distributions from Roth 401(k) plans are not taxable.
B) Employers can make contributions to Roth accounts on behalf on their employees.
Which of the following is not an example of a nontaxable fringe benefit? A) Monthly employer provided transit benefit of $100. B) Group-term life insurance policy providing $100,000 of coverage. C) Employer provided parking of $100 per month. D) Qualified employee discounts.
B) Group-term life insurance policy providing $100,000 of coverage.
Which depreciation convention is the general rule for tangible personal property? A) Full-month. B) Half-year. C) Mid-month. D) Mid-quarter. E) None of the choices are conventions for tangible personal property.
B) Half-year
When does unrecaptured §1250 gains apply? A) When the taxpayer makes the election. B) It applies only when non-corporate taxpayers sell depreciable real property at a gain. C) It applies when §1245 recapture trumps §1250 recapture. D) It applies only when real property purchased before 1986 is sold at a gain. E) None of the choices are correct.
B) It applies only when non-corporate taxpayers sell depreciable real property at a gain.
According to the Internal Revenue Code §162, deductible trade or business expenses must be one of the following? A) Incurred for the production of investment income B) Ordinary and necessary C) Minimized D) Appropriate and measurable E) Personal and justifiable
B) Ordinary and necessary
Which of the following is not considered a secondary authority? A) Text book. B) Private Letter Ruling. C) Tax article. D) Tax service. E) None of the choices are correct.
B) Private Letter Ruling
Why does §1250 recapture no longer apply? A) Congress repealed the code section. B) Real property is depreciated using the straight-line method after 1986. C) §1245 recapture trumps §1250 recapture. D) Because unrecaptured §1250 gains now apply to all taxpayers instead. E) None of the choices are correct.
B) Real property is depreciated using the straight-line method after 1986.
Shauna received a distribution from her 401(k) account this year. In which of the following situations will Shauna be subject to an early distribution penalty? A) Shauna is 60 years of age but not yet retired when she receives the distribution. B) Shauna is 58 years of age but not yet retired when she receives the distribution. C) Shauna is 56 years of age and retired when she receives the distribution. D) Shauna is 69 years of age but not yet retired when she receives the distribution.
B) Shauna is 58 years of age but not yet retired when she receives a distribution.
Stephanie and Mitch are married and they file a joint tax return. Mitch received a slightly higher salary than Stephanie did during the year. Which of the following statements is true? A) Stephanie and Mitch likely pay no tax marriage penalty nor receive a tax marriage benefit. B) Stephanie and Mitch likely pay a tax marriage penalty. C) Stephanie and Mitch likely receive a tax marriage benefit. D) Stephanie and Mitch likely will pay a tax marriage penalty and receive a tax marriage benefit.
B) Stephanie and Mitch likely received a tax marriage penalty.
Which of the following statements regarding deductions for real property tax is correct? A) Real property taxes paid on an individual's personal residence are deductible as for AGI deduction. B) Taxpayers may deduct as an itemized deduction up to $10,000 (unless married filing separately) all taxes combined (including state income taxes and real property taxes). C) Taxpayers are not allowed to deduct real property taxes. D) None of these statements are correct.
B) Taxpayers may deduct as an itemized deduction up to $10,000 (unless married filing separately) all taxes combined (including state income taxes and real property taxes).
Which of the following statements regarding the IRS and/or Tax Court approaches to allocating home-relate expenses between rental use and personal use is correct? A) The Tax Court approach allocates more property tax and interest expense to rental use than does the IRS approach. B) The Tax Court and the IRS approaches allocate the same amount of expenses other than interest expense and property taxes to rental use. C) The IRS approach allocates interest expense and property taxes to rental use based on the ratio of the number of days of rental use to the total days of the year. D) None of these statements are correct.
B) The Tax Court and the IRS approaches allocate the same amount of expenses other than interest expense and property taxes to rental use.
Which one of the following is not a requirement of a deferred like-kind exchange? A) The like-kind property to be received must be identified within 45 days. B) The exchange must be completed within the taxable year. C) The like-kind property must be received within 180 days. D) The exchanged property must be like-kind. E) All of the choices are correct.
B) The exchange must be completed within the taxable year.
Which of the following is true regarding stock options? A) A loss is realized when stock options lapse. B) There is typically no tax effect on the grant date. C) Income recognized on the exercise date is greater for incentive stock options than nonqualified options. D) The bargain element on a nonqualified option is taxed to employees at capital gain rates.
B) There is typically no tax effect on the grant date.
Which of the following statements regarding dependents is false? A) A taxpayer may be allowed to claim another as a dependent even if the taxpayer has no family relationship with the other person. B) To qualify as a dependent of another, an individual must be a resident of the United States. C) An individual who qualifies as a dependent of another taxpayer may not claim any dependents. D) An individual cannot qualify as a dependent of another as a qualifying relative taxpayer if the individual's gross income exceeds a certain amount.
B) To qualify as a dependent of another, an individual must be a resident of the United States.
When employees contribute to a traditional 401(k) plan, they ____ allowed to deduct the contributions and they ____ taxed on distributions from the plan. A) are; are not B) are; are C) are not; are D) are not; are not
B) are; are
The taxable income levels in the married filing jointly tax schedule are _____ those in the married filing separately schedule. A) the same as B) double C) half the amount of D) None of the choices are correct.
B) double
A tax practitioner can avoid IRS penalty relating to a tax return position: A) if the position is frivolous and disclosed on the tax return. B) if the position has a realistic possibility of being sustained by the IRS or courts. C) if there is substantial authority to support the position. D) if the position has a reasonable basis and is not disclosed on the tax return. E) None of the choices are correct.
C) if there is substantial authority to support the position.
Which of the following statements is true regarding distributions from Roth 401(k) accounts? A) There are no minimum distribution requirements for distributions from Roth 401(k) accounts. B) Qualified distributions are subject to taxation. C) A taxpayer receiving a nonqualified distribution from a Roth 401(k) account may be taxed on a portion but not all of the distribution. D) None of the choices is a true statement.
C) A taxpayer receiving a nonqualified distribution from a Roth 401(k) account may be taxed on a portion but not all of the distribution.
Riley participates in his employer's 401(k) plan. He turns 69 years of age on February 15, 2018, and he plans on retiring on July 1, 2018. When must Riley receive his first distribution from the plan to avoid minimum distribution penalties? A) By April 1, 2018. B) By April 1, 2019. C) By April 1, 2020. D) By April 1, 2021.
C) By April 1, 2020.
Which of the following statements regarding tax deductions is false? A) Taxpayers are not entitled to any deductions unless specific provisions in the tax code allow the deductions. B) Deductions can be labeled as deductions above the line or deductions below the line. C) From AGI deductions tend to be associated with business activities while for AGI deductions tend to be associated with personal activities. D) The standard deduction is a from AGI deduction.
C) From AGI deductions tend to be associated with business activities while for AGI deductions tend to be associated with personal activities.
Which of the following shows the correct relationship amount standard deduction amounts for the respective filing statuses? A) Single > Head of Household > Married Filing Jointly B) Married Filing Jointly > Married Filing Separately > Head of Household C) Married Filing Jointly > Head of Household > Single D) Head of Household > Married Filing Separately > Married Filing Jointly
C) Married filing jointly > head of household > single
Jamison is self-employed and he works out of an office in his home. After allocating the home-related expenses between the business office and the rest of the home, which of the following statements regarding the sequence of deductibility of the expenses allocated to the home office business use is correct (Jamison does not use the simplified method for determining the home office expense deductions)? A) Depreciation expense, other expenses, property taxes and interest expense. B) Other expenses, depreciation expense, property taxes and interest expense. C) Property taxes and interest expense, other expenses, depreciation expense. D) Other expenses, property taxes and interest expense, depreciation expense. E) None of these statements are correct.
C) Property taxes and interest expense, other expenses, depreciation expense.
The regulation with the lowest authoritative weight is the: A) Procedural regulation. B) Interpretative regulation. C) Proposed regulation. D) Legislative regulation. E) None of the choices are correct.
C) Proposed regulation
Which of the following statements is true? A) Income character determines the tax year in which the income is taxed. B) Income character depends on the taxpayer's filing status. C) Qualified dividend income is taxed at a lower rate than an equal amount of ordinary income. D) A taxpayer selling a capital asset at a gain recognizes ordinary income.
C) Qualified dividend income is taxed at a lower rate than an equal amount of ordinary income.
Sally is a cash basis taxpayer and a member of the Valley Barter club. This year, Sally provided 100 hours of sewing services to the barter club in exchange for two football playoff tickets. Which of the following is a true statement? A) Sally need not recognize any gross income unless she sells the football tickets. B) Sally's exchange does not result in taxable income. C) Sally is taxed on the value of the football tickets even if she cannot attend the game. D) Sally is taxed on the value of her sewing services only if she is a professional seamstress.
C) Sally is taxed on the value of the football tickets even if she cannot attend the game.
A taxpayer can avoid a substantial understatement of tax penalty: A) if the position is frivolous and disclosed on the tax return. B) if the position has a realistic possibility of being sustained by the IRS or courts. C) if there is substantial authority to support the position. D) if the position has a reasonable basis and is not disclosed on the tax return. E) None of the choices are correct.
C) if there is substantial authority to support the position.
Which is not an allowable method under MACRS? A) 150 percent declining balance. B) 200 percent declining balance. C) Straight-line. D) Sum-of-the-years-digits. E) All of the choices are allowable methods under MACRS.
D) Sum-of-the-years-digits.
Assume that Joe has a marginal tax rate of 35% and decided to make the election to include long-term capital gains and qualified dividends as investment income. What rate must Joe use when calculating the tax on these two items? A) 20% B) 25% C) 28% D) 35% E) None of the choices are correct.
D) 35%
John is a self-employed computer consultant who lives and works in Dallas. Jon paid for the following activities in conjunction with his business. Which is not deductible in any amount? 1. Dinner with a potential client where the client's business was discussed. 2. A trip to Houston to negotiate a contract. 3. A seminar in Houston on new developments in the software industry. 4. A trip to New York to visit a school chum who is also interested in computers. A) 1 only. B) 2 only. C) 3 only. D) 4 only. E) None of the choices are correct.
D) 4 only.
Which of the following is a true statement? A) Taxpayers may only deduct interest on up to $1,500,000 of acquisition indebtedness. B) Taxpayers may deduct interest on up to $1,000,000 of home-equity debt. C) The deduction for investment interest expense is not subject to limitation. D) A taxpayer who incurs acquisition indebtedness in 2018 may only deduct interest on up to $750,000 of acquisition indebtedness. E) None of the choices are correct.
D) A taxpayer who incurs acquisition indebtedness in 2018 may only deduct interest on up to $750,000 of acquisition indebtedness.
Which of the following business expense deductions is most likely to be unreasonable in amount? A) Compensation paid to the taxpayer's spouse in excess of salary payments to other employees. B) Amounts paid to a subsidiary corporation for services where the amount is in excess of the cost of comparable services by competing corporations. C) Cost of a meal with a former client when there is no possibility of any future benefits from a relation with that client. D) All of the choices are likely to be unreasonable in amount. All three situations involve suspicious payments to a related taxpayer or with personal benefits. E) None of the choices are likely to be unreasonable in amount.
D) All of the choices are likely to be unreasonable in amount. All three situations involve suspicious payments to a related taxpayer of with personal benefits.
All of the following are for AGI deductions except: A) Contributions to qualified retirement accounts B) Rental and royalty expenses. C) Business expenses for a self-employed taxpayer. D) Charitable contributions.
D) Charitable contributions
Which of the following audits is the least common, broadest in scope, and typically most complex? A) Correspondence. B) Targeted. C) Office. D) Field. E) None of the choices are correct.
D) Field
Circular 230 was issued by: A) AICPA. B) State Boards of Accountancy. C) American Bar Association. D) IRS. E) None of the choices are correct.
D) IRS.
Which of the following is NOT a from AGI deduction? A) Standard deduction. B) Itemized deduction. C) Deduction for qualified business income. D) None of these. All of these are from AGI deductions.
D) None of these. All of these are from AGI dedutions.
All of the following represents a type or character of income except: A) Tax exempt. B) Capital. C) Qualified dividend. D) Normal.
D) Normal
Identify the rule that determines whether a taxpayer must include in income a refund of an amount deducted in a previous year: A) Tax refund rule. B) Constructive receipt. C) Return of capital principle. D) Tax benefit rule. E) None of the choices are correct.
D) Tax benefit rule
Which of the following is a true statement about travel that has both business and personal aspects? A) Transportation costs are always fully deductible. B) Meals are not deductible for this type of travel. C) Only half of the cost of meals and transportation is deductible. D) The cost of lodging and incidental expenditures is limited to those incurred during the business portion of the travel. E) None of the choices are correct.
D) The cost of lodging and incidental expenditures is limited to those incurred during the business portion of the travel.
Which of the following statements is true regarding the $1,000,000 limit on covered employees for publicly traded companies? A) The limitation applies to all employees. B) The limitation applies to all officers. C) The limitation applies only to the CEO and three other highest compensated officers. D) The limitation applies only to the CEO, CFO, and three other highest compensated officers and all covered employees from previous years.
D) The limitation applies only to the CEO, CFO, and three other highest compensated officers and all covered employees from previous years.
When employees contribute to a Roth 401(k) account, they ____ allowed to deduct the contributions and they ____ taxed on distributions from the plan. A) are; are not B) are; are C) are not; are D) are not; are not
D) are not; are not
Unused investment interest expense: A) expires after the current year. B) is carried back two years. C) is carried forward twenty years. D) is carried forward indefinitely. E) None of the choices are correct.
D) is carried forward indefinitely.
When the wash sale rules apply, the realized loss is: A) recognized at time of sale. B) not recognized at time of sale and does not affect basis of newly acquired stock. C) recognized at time of sale and added to basis of the newly acquired stock. D) not recognized at time of sale and added to basis of the newly acquired stock. E) not recognized at time of sale and subtracted from the basis of the newly acquired stock.
D) not recognized at the time of the sale and added to basis of the newly acquired stock.
The sale of machinery for more than the original cost basis (before deprecation), used in a trade or business, and held for more than one-year results in which types of gain or loss? A) Capital and Ordinary. B) Ordinary only. C) Capital and §1231. D) §1245 and §1231. E) None of the choices are correct.
D) §1245 and §1231.
When calculating net investment income, gross investment income includes: A) interest income. B) net short-term capital gains. C) non-qualified dividends. D) royalty income. E) All of the choices are correct.
E) All of the choices are correct
Which of the following costs are NOT deductible as an itemized medical expense? A) The cost of eyeglasses. B) Payments to a hospital. C) Transportation for medical purposes. D) The cost of insurance for long-term care services. E) All of the choices are deductible as medical expenses.
E) All of the choices are deductible as medical expenses.
Which of the following is not a taxpayer filing status for purposes of determining the appropriate tax rate schedule? A) Head of Household B) Qualifying Widow or Widower C) Married Filing Separately D) Single E) All of the choices are taxpayer filing statuses
E) All of the choices are taxpayer filing statuses.
Kevin provided services to several clients this year who paid with different types of property. Which of the following payments is not included in Kevin's gross income? A) Cash. B) Shares of stock listed on the New York Stock Exchange. C) A used car. D) Gold coins. E) All of these are included in gross income.
E) All of these are included in gross income.
For which of the following tax violations is a civil penalty not imposed on taxpayers? A) Failure to file a tax return. B) Failure to pay tax owed. C) Fraud. D) Failure to make estimated tax payments. E) None of the choices are correct.
E) None of the choices are correct.
Martin has never filed a 2017 tax return despite earning approximately $20,000 providing landscaping work in the community. In what tax year will the statute of limitation expire for Martin's 2017 tax return? A) 2020. B) 2021. C) 2024. D) 2025. E) None of the choices are correct.
E) None of the choices are correct.
Nontax factor(s) investors should consider when choosing between investments include: A) before-tax rates of return. B) after-tax rates of return. C) liquidity needs. D) before-tax rates of return and after-tax rates of return. E) before-tax rates of return and liquidity needs.
E) before-tax rates of return and liquidity needs
