Federal Income Taxation
Mock Exam
Course Introduction
Federal Income Taxation provides a comprehensive overview of the principles and regulations governing the federal income tax system in the United States. This course covers topics such as gross income determination, deductions, credits, capital gains and losses, tax accounting periods and methods, and the tax treatment of various types of entities and taxpayers. Through analysis of the Internal Revenue Code, Treasury Regulations, judicial decisions, and administrative rulings, students will develop a foundational understanding of how federal tax law impacts individuals, businesses, and other organizations. The course emphasizes practical applications and problem-solving to prepare students for tax compliance and planning.
Recommended Textbook Fundamentals of Taxation 2017 Edition 10th Edition by Ana Cruz
Available Study Resources on Quizplus
15 Chapters
1672 Verified Questions
1672 Flashcards
Source URL: https://quizplus.com/study-set/3748 Page 2
Chapter 1: Introduction to Taxation, the Income Tax
Formula,
and Form 1040ez
Available Study Resources on Quizplus for this Chatper
139 Verified Questions
139 Flashcards
Source URL: https://quizplus.com/quiz/74686
Sample Questions
Q1) On Form 1040EZ,the permitted deduction from income for a married filing jointly taxpayer is:
A)$20,700.
B)$1,500.
C)$10,350.
D)None of these.
Answer: A
Q2) A tax rate that increases as the tax base decreases is an example of what kind of tax rate structure?
A)Proportional.
B)Recessive.
C)Progressive.
D)Regressive.
Answer: D
Q3) At high levels of taxable income,the average tax rate and the marginal tax rate will be the same.
A)True
B)False
Answer: False
Page 3
To view all questions and flashcards with answers, click on the resource link above.
Chapter
2:
Expanded Tax Formula, forms 1040a and 1040, and Basic Concepts
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/74685
Sample Questions
Q1) What is the amount of the tax liability for a married person filing a separate return and having taxable income of $115,715? All answers should be rounded to the nearest dollar.
A)$26,435.
B)$25,950.
C)$25,893.
D)$32,400.
Answer: C
Q2) What does the withholding amount on a taxable payment made to the taxpayer represent?
Answer: The withheld amount represents an estimate of the amount of income tax that would be due for the year on the taxable payment.The IRS credits withholdings to the account of the appropriate taxpayer.Withholdings serve to reduce the amount otherwise due the IRS on the due date of the return.
Q3) The amount of tax liability for a taxpayer depends on many factors,including the filing status of the taxpayer.
A)True
B)False
Answer: True
Page 4
To view all questions and flashcards with answers, click on the resource link above.
Chapter 3: Gross Income: Inclusions and Exclusions
Available Study Resources on Quizplus for this Chatper
125 Verified Questions
125 Flashcards
Source URL: https://quizplus.com/quiz/74684
Sample Questions
Q1) What is the taxable amount of social security income reported on the tax return if a single taxpayer received $9,400 in social security benefits and $150 in interest income?
A)$4,775.
B)$0.
C)$4,700.
D)$7,990.
Answer: B
Q2) Receipt of property or services will trigger income recognition.
A)True
B)False
Answer: True
Q3) In general,an individual must recognize income on his or her tax return if the transaction has economic benefit,the transaction has reached a conclusion and the income from the transaction is tax-exempt income.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Adjustments for Adjusted Gross Income
Available Study Resources on Quizplus for this Chatper
116 Verified Questions
116 Flashcards
Source URL: https://quizplus.com/quiz/74683
Sample Questions
Q1) At the beginning of 2016,Chantel was permanently transferred from her office in New York City to New Jersey.Her office in NYC was 15 miles from her old NY home.For Chantel to meet the distance test for qualifying moving expense deductions,how many miles must the office in New Jersey be from her old home?
A)50.
B)40.
C)35.
D)65.
Q2) Which of the following items are considered alimony?
A)Payments made on a piece of property transferred to the ex-spouse under the settlement agreement.
B)Noncash property settlement.
C)Payments made to a third party on behalf of the former spouse for the former spouse's dental expenses.
D)Payments made for a six month period after the death of the recipient spouse.
Q3) Student loan interest is deductible only by the person who actually attended the educational institution.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 6
Chapter 5: Itemized Deductions
Available Study Resources on Quizplus for this Chatper
119 Verified Questions
119 Flashcards
Source URL: https://quizplus.com/quiz/74682
Sample Questions
Q1) To qualify for a medical expense deduction as taxpayer's dependent,a person must be a dependent either at the time the medical services were provided or at the time the expenses were paid.A person generally qualifies as a dependent for purposes of the medical expense deduction if the person:
A)Is an unmarried adult child of taxpayer's sibling.
B)Is the unrelated caregiver for taxpayer's elderly parents.
C)Would qualify as a dependent except for the amount of gross income.
D)Was a foreign student staying briefly at taxpayer's home.
Q2) If a taxpayer's personal property is completely destroyed,the casualty loss deduction is still reduced by a required floor amount.
A)True
B)False
Q3) For purposes of computing the deduction for qualified residence interest,a qualified residence includes the taxpayer's principal residence and one other residence of the taxpayer or spouse.
A)True
B)False
Q4) What are the general limits or floors placed on deductible personal casualty losses?
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Self-Employed Business Income Line 12 of Form
1040 and Schedule C
Available Study Resources on Quizplus for this Chatper
76 Verified Questions
76 Flashcards
Source URL: https://quizplus.com/quiz/74681
Sample Questions
Q1) Education expenses are deductible if the education maintains or improves existing skills or if the education helps the taxpayer qualify for a new trade or business.
A)True
B)False
Q2) Alice is a high school teacher who enjoys knitting.She knits scarves and sweaters and sells them in a local boutique.Alice spends 10 to 15 hours a week knitting the scarves and sweaters.Alice had sales of $6,000 and expenses of $10,000 related to knitting and selling the goods.Alice's $10,000 of expenses consisted of $800 of interest expense and $1,600 in property taxes for her building and tools,$3,000 in supplies,and $4,600 in depreciation charges.How would Alice's income and expenses be reported on her tax return if her knitting activity is characterized as a hobby?
Q3) List and define the criteria for an expenditure to be deductible on Schedule C.
Q4) Sole proprietors must pay self-employment tax on 100% of their self-employment income.
A)True
B)False
Q5) Describe each of the depreciation conventions and when each is applicable.
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Capital Gains and Other Sales of Property
Schedule D and Form 4797
Available Study Resources on Quizplus for this Chatper
118 Verified Questions
118 Flashcards
Source URL: https://quizplus.com/quiz/74680
Sample Questions
Q1) When the buyer assumes the seller's liability,the seller includes this amount in computing the amount realized from the sale.
A)True
B)False
Q2) Samson purchased some equipment for $86,749 on March 15,2015.He decided he did not need the equipment and sold it on March 10,2016 for $82,000.The equipment was subject to depreciation of $16,851 for 2015 and 2016.What gain or loss will Samson recognize on the sale of the equipment?
A)$4,749 capital loss.
B)$4,749 ordinary loss.
C)$12,102 ordinary gain.
D)$12,102 capital gain.
Q3) Any Section 1245 gain is recognized as "ordinary" to the extent of the depreciation taken.
A)True
B)False
Q4) A computer used exclusively in a sole proprietor's business is a capital asset.
A)True
B)False
Page 9
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: Rental Property, royalties, and Income From
Flow-Through Entities Line 17, form 1040, and Schedule E
Available Study Resources on Quizplus for this Chatper
119 Verified Questions
119 Flashcards
Source URL: https://quizplus.com/quiz/74679
Sample Questions
Q1) Georgia owns a home in Colorado that she rents for $1,200 per month she does not use the home personally).While she was in Europe in November,the roof in her rental home leaked and her tenant repaired it for $900.For the following month's rent December),her tenant paid her $300 for rent $1,200 - $900).What amounts should Georgia include for rental income and repair expense,respectively,for December?
A)$900; $300
B)$1,200; $900
C)$1,200; $300
D)$300; $900
Q2) Jeremiah is a full-time professor of psychology at the University of Washington and an author of a psychology textbook.The royalty income he receives from the publisher should be reported on:
A)Schedule E.
B)Schedule K-1.
C)Schedule C.
D)Form 1099-MISC.
Q3) What are the different types of income that may be reported on Schedule E?
Q4) When reporting the income and expenses of a rental property,what determines the use of the Schedule C versus the Schedule E?
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Tax Credits Form 1040, lines 46 Through 54 and Lines 66a Through 73
Available Study Resources on Quizplus for this Chatper
141 Verified Questions
141 Flashcards
Source URL: https://quizplus.com/quiz/74678
Sample Questions
Q1) All taxpayers must file Form 1116 to receive the foreign tax credit.
A)True
B)False
Q2) Sam and Edna are married with three dependents.They enrolled in a qualified plan through the Marketplace at a cost of $4,900 per year.Their household income was $64,500.Their SLCSP premium is $5,540.What is their premium tax credit?
A)$4,900.
B)$4,676.
C)$5,540.
D)$864.
Q3) Nick and Katelyn paid $1,600 and $2,100 in qualifying expenses for their two daughters,Nicole and Naomi,respectively,to attend the University of Nevada.Nicole is a sophomore and Naomi is a freshman.Nick and Katelyn's AGI is $202,000.What is their allowable American opportunity tax credit?
A)$2,000.
B)$3,700.
C)$3,060.
D)$0.
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Payroll Taxes
Available Study Resources on Quizplus for this Chatper
121 Verified Questions
121 Flashcards
Source URL: https://quizplus.com/quiz/74677
Sample Questions
Q1) Irene earned wages of $119,200 during 2016.How much will Irene's employer withhold in social security taxes for the year?
A)$7,316.00.
B)$7,347.00.
C)$7,390.40.
D)$7,254.00.
Q2) Ebony earned $86,760 during 2016.She is single,paid semimonthly,and claims one withholding allowance.How much will Ebony's employer withhold from her,in total for each pay period for FICA and federal withholding taxes? Round your answer to 2 decimal places.)
A)$956.97.
B)$938.40.
C)$992.40.
D)$1,002.82.
Q3) Employers are required to deposit FUTA taxes when their liability for a quarter exceeds:
A)$2,500.
B)$1,500.
C)$500.
D)$1,000.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Retirement and Other Tax-Deferred Plans and Annuities
Available Study Resources on Quizplus for this Chatper
124 Verified Questions
124 Flashcards
Source URL: https://quizplus.com/quiz/74676
Sample Questions
Q1) Maurice is age 44,single,and reported AGI of $69,000 in tax year 2016.He is an active participant in his employer's pension plan.What is the maximum deductible IRA contribution he can make in 2016?
A)$1,100.
B)$5,500.
C)$0.
D)$4,400.
Q2) Which of the following statements regarding a Coverdell Education Savings Account CESA)is incorrect?
A)In order to be tax-free,distributions must be used exclusively to pay the qualified education expenses of the beneficiary.
B)A person can contribute to only one CESA during each tax year.
C)Contributions to a CESA are not tax-deductible.
D)Any person can contribute to a CESA,even if he or she is not related to the beneficiary.
Q3) Under what circumstances might an individual want to establish an annuity contract in retirement?
Q4) What is an annuity contract? Who are the parties to an annuity contract?
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Special Property Transactions
Available Study Resources on Quizplus for this Chatper
75 Verified Questions
75 Flashcards
Source URL: https://quizplus.com/quiz/74675
Sample Questions
Q1) The exclusion of gain on the sale of a residence applies to only one sale every two years.The taxpayer is always ineligible for the exclusion if,during the two-year period ending on the date of sale of the present home,the taxpayer sold another home at a gain and excluded all or part of that gain no matter the reason for the sale.
A)True
B)False
Q2) Julia exchanges a machine used in her business with Elvira for another machine.The basis of Julia's old machine is $100,000,FMV is $132,000,and she gives Elvira cash of $28,000.Elvira's basis in her machine is $140,000 and the FMV is $160,000.What,if any,gain is recognized on the transaction and what is the adjusted basis of the property received by Julia and by Elvira?
Q3) On an involuntary conversion,gain is recognized to the extent of the lower of gain realized or the proceeds not used for replacement.
A)True
B)False
Q4) A dealer of equipment can recognize gains using the installment method.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 13: At-Riskpassive Activity Loss Rules and the
Individual Alternative Minimum Tax
Available Study Resources on Quizplus for this Chatper
73 Verified Questions
73 Flashcards
Source URL: https://quizplus.com/quiz/74674
Sample Questions
Q1) The general rule concerning passive losses is that passive activity losses can only be deducted to the extent of passive and portfolio income.
A)True
B)False
Q2) "Active participation" is a much more difficult standard to meet than "material participation."
A)True
B)False
Q3) There is no difference between regular tax depreciation and AMT depreciation on real property placed in service after 1998.
A)True
B)False
Q4) When determining whether a limited partnership loss is deductible,a taxpayer must first:
A)Apply only the at-risk rules.
B)Apply the passive activity loss rules and then the at-risk rules.
C)Apply only the passive activity loss rules.
D)Apply the at-risk rules and then the passive activity loss rules.
Q5) Identify factors that increase or decrease the at-risk amount.
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Partnership Taxation
Available Study Resources on Quizplus for this Chatper
74 Verified Questions
74 Flashcards
Source URL: https://quizplus.com/quiz/74673
Sample Questions
Q1) Jose purchased a 30% partnership interest for $38,000 in June 2013.Jose's share of partnership income was $8,000 in 2013,$12,000 in 2014,$28,000 in 2015,and $6,000 in 2016.Jose made no additional contributions to,or withdrawals from,the partnership.On December 29,2016,Jose sold his partnership interest for $108,000.What is Jose's gain or loss on the sale of his partnership interest?
Q2) Cameron has a basis in his partnership interest of $5,000.Cameron's share of partnership income is $5,000.He also receives a cash distribution from the partnership of $13,000.What is his gain or loss as a result of the distribution?
A)$3,000.
B)$0.
C)$5,000.
D)$13,000.
Q3) If Jake contributes land to a partnership with a basis of $12,000 and a FMV of $18,000,the partnership will have a basis in the asset of $12,000.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Corporate Taxation
Available Study Resources on Quizplus for this Chatper
127 Verified Questions
127 Flashcards
Source URL: https://quizplus.com/quiz/74672
Sample Questions
Q1) Corporate distributions to shareholders from earnings and profits are called dividends.
A)True
B)False
Q2) Saffron Corporation has book income of $200,000,which includes tax expense of $40,000 and a net capital loss of $10,000.Saffron's taxable income is:
A)$230,000.
B)$240,000.
C)$210,000.
D)$250,000.
Q3) A corporation has a fiscal year-end of September 30.If the corporation receives an automatic extension to file its return,the return will be due on the 15<sup>th</sup><sup> </sup>day of:
A)July.
B)June.
C)May.
D)August.
Q4) When are estimated income tax payments due for a corporation with a fiscal year-end of November? What if the fiscal year-end is June?
To view all questions and flashcards with answers, click on the resource link above. Page 17