Tax - Chapter 1-3 Exam

Anissa, who is 28 and single, has adjusted gross income of $55,000 and itemized deductions of $5,000. In 2016, Anissa will have taxable income of___________ A. $44,700 B. $49,200 C. $50,000 D. $51,300

$44,700 (55000 - 6300 - 4000) = 44700

All of the following items are included in gross income except? A. alimony received. B. rent income. C. interest earned on a bank account. D. child support payments received.

Child support payments received

Which of the following steps related to a tax bill, occurs first_______? A. signature or veto by the President of the United States B. consideration by the Senate C. consideration by the House Ways and Means Committee D. consideration by the Joint Conference Committee

Consideration by the House Ways and means Committee

Which of the following dependent relatives does not have to live in the same household as the taxpayer who is claiming head of household filing status? A. uncle B. brother C. father D. nephew

Father

Charlotte pays $16,000 in tax deductible property taxes. Charlotte's marginal tax rate is 28%, effective tax rate is 22% and average rate is 25%. Charlotte's tax savings from paying the property tax is ______?

$4,480 16000 * .28

Mr. & Mrs. Bronson are both over 65 years of age and are filing a joint return. Their income this year consisted of the following: Taxable interest $ 6,000 Taxable dividends 9,000 Social Security payments (combined) 20,000 Tax-exempt interest 5,000 Taxable pension 11,000 They did not have any adjustments to income. What amount of Mr. & Mrs. Bronson's social security benefits is taxable this year?

$4,500 (6000 + 9000 + 10000 + 5000 + 11000) = 41000 41000 - 32000 = 9000 9000 * .5 = 4500

Thomas and Sally were divorced last year. As a result, Thomas must pay Sally alimony of $100,000 per year starting this year and relinquish the house and car with a combined value of $170,000 and a combined cost basis of $155,000. The house and car are given as a property settlement. As a result of these transactions Thomas has a deduction of ________? A. 100,000 B. 155,000 C. 170,000

$100,000

In 2015 the standard deduction for a married taxpayer filing a joint return and who is 67 years old with a spouse who is 65 years old is____?

$15,100

Gwen's marginal tax bracket is 25%. Gwen pays alimony of $24,000 per year. Gwen's after tax cost for the $24,000 payment is__________?

$18,000 (100% - 5%) * 24000

Cheryl is claimed as a dependent on her parents' tax return. She had a part-time job during 2015 and earned $4,900 during the year, in addition to $600 of interest income. What is her standard deduction?

$5,250 (4900+350)

Ms. Marple's books and records for 2015 reflect the following information: Salary earned this year $65,000 Interest on savings account (credited to her account in 2015, withdrawn in 2016) 1,000 Interest on county bonds earned and collected in 2015 2,000 What is the amount Ms. Marple should include in her gross income in 2015?

$66,000 65000 + 1000

David, age 62, retires and receives $1,000 per month annuity from his employer's qualified pension plan. David made $65,000 of after-tax contributions to the plan prior to his retirement. Under the simplified method, David's number of anticipated payments is 260. What is the amount includible in income in the first year of withdrawals assuming 12 monthly payments?

$9,000 (65000 / (260 * 1000)) = .25 .25 * 12000 = 3000 12000 - 3000 = 9000

If an individual with a marginal tax rate of 15% has a long-term capital gain, it is taxed at_________?

0%

Examples of income which are constructively received include all of the following except ________? A. interest credited to a savings account. B. a check received after banking hours. C. a paycheck received from employer, when employer does not have funds in the bank to cover the check. D. dividends available on December 31; unclaimed dividends will be mailed out.

A paycheck received from employer, when employer does not have funds in the bank to cover the check

Taxable Income for an Individual is defined as____?) A. AGI reduced by itemized deductions. B. AGI reduced by personal and dependency exemptions. C. total income reduced by the standard deduction. D. AGI reduced by deductions from AGI and personal and dependency exemptions.

AGI reduced by deductions from AGI and personal and dependency exemptions

Which one of the following items is not considered gross income for tax purposes? A. gambling winnings B. illegal income C. face amount of life insurance received due to the death of the insured D. cash dividends

Face amount of life insurance received due to the death of the insured.

Lester, a widower qualifying as a surviving spouse, has $209,000 of salary, five personal and dependency exemptions and itemizes deductions. Lester must use which form to report his taxable income? A. Form 1040ES B. Form 1040EZ C. Form 1040A D. Form 1040

Form 1040

The largest source of revenues for the federal government comes from_____?

Individual Income Taxes

Jan purchased an antique desk at auction. For two years, the desk sat in Jan's garage until she decided to restore it. This year, while cleaning and restoring the desk, Jan discovered $1,500 in a hidden compartment inside one drawer. With respect to the $1,500, Jan must _______________? A. report nothing. B. amend her previous tax return and report the $1,500. C. report only $750 due to the statute of limitations. D. report $1,500 on this year's tax return

Report $1,500 on this year's tax return.

All of the following items are deductions for adjusted gross income except __________? A. alimony paid. B. trade or business expenses. C. rent and royalty expenses. D. state and local income taxes.

State and local taxes

Tom and Alice were married on December 31st of last year, what is their filing status for last year? A. They file as single. B. They file as married joint or married separate. C. They file as single for half the year and married for the other half. D. They file as single for 364 days and married for one day.

They file as married joint or married separate.