Federal Taxation
Question Bank
Course Introduction
Federal Taxation is an in-depth course examining the principles, laws, and regulations governing the federal tax system in the United States. The course covers the structure and application of federal income taxation for individuals, businesses, and corporations, emphasizing topics such as gross income, deductions, tax credits, capital gains and losses, and the tax implications of various business and investment activities. Students learn to interpret the Internal Revenue Code and related regulations, analyze tax planning strategies, and prepare basic federal tax returns, equipping them with the foundational knowledge necessary for careers in accounting, finance, and tax law.
Recommended Textbook
Concepts in Federal Taxation 2018 25th Edition by Kevin E.
Murphy
Available Study Resources on Quizplus
16 Chapters
2096 Verified Questions
2096 Flashcards
Source URL: https://quizplus.com/study-set/3540 Page 2
Chapter 1: Conceptual Foundations of Tax Law
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/70323
Sample Questions
Q1) The statute of limitations is three years,six years if the taxpayer omits gross income in excess of 25%,and there is no statute of limitations if the taxpayer willfully defrauds the government.
A)True
B)False Answer: True
Q2) Gifts to qualified charitable organizations may be deducted as a contribution,but not to exceed 50% of an individual taxpayer's adjusted gross income.
A)True
B)False Answer: True
Q3) How much additional Social Security tax does Connie pay in 2017 on her $10,000 Christmas bonus? Her total earnings for the year (before the bonus)are $42,000.
A)$ 0
B)$145.00
C)$620.00
D)$765.00
Answer: D
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Income Tax Concepts
Available Study Resources on Quizplus for this Chatper
153 Verified Questions
153 Flashcards
Source URL: https://quizplus.com/quiz/70322
Sample Questions
Q1) Tax law generally disallows deductions for personal expenditures.However,due to legislative grace,there are certain exceptions to this general provision of tax law.These exceptions include
I.Itemized Deductions.
II.Standard Deduction amount.
III.Personal Exemption amounts.
IV.Dependency Exemption amounts.
A)Statements I and IV are correct.
B)Statements I,II,and III are correct.
C)Statements I and II are correct.
D)Statements I,II,III,and IV are correct.
E)Statements III and IV are correct.
Answer: D
Q2) At what three points in time might a given expenditure be deductible?
c.______________________
Answer: 11ea8564_c7f5_09ad_9aec_d953679c751c_TB1197_00
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Income Sources
Available Study Resources on Quizplus for this Chatper
154 Verified Questions
154 Flashcards
Source URL: https://quizplus.com/quiz/70321
Sample Questions
Q1) An accrual basis taxpayer does not have income until there is an actual or constructive receipt of income earned.
A)True
B)False
Answer: False
Q2) Paul won the Nobel Prize for Literature.He is awarded $1,000,000.His tax situation is
I.In general,the award must be included in gross income.
II.The award may be excluded if he gives it to a qualified charity.
III.The award may be excluded if he gives it to the U.S.Government.
IV.Awards for literary achievement are not taxable.
A)Only statement I is correct.
B)Only statement II is correct.
C)Only statements I,II,and III are correct.
D)Only statement IV is correct.
E)Only statements I,II,and IV are correct.
Answer: C
To view all questions and flashcards with answers, click on the resource link above.
Page 5
Chapter 4: Income Exclusions
Available Study Resources on Quizplus for this Chatper
161 Verified Questions
161 Flashcards
Source URL: https://quizplus.com/quiz/70320
Sample Questions
Q1) Qualified pension plan
A)An employee may exclude up to $5,000 annually of these employer-provided services.
B)If cash is received under this program,taxpayers are taxed on the amount of cash received.
C)A salary reduction plan that allows employees to pay for medical and child care costs with before-tax dollars.
D)A transfer of property without any profit motivation with an intention that includes affection,charity,and respect.
E)Payments made into an employee's account are not taxable in the current period;taxation is deferred until funds are withdrawn.
F)Employer provided benefit that may be excluded from income because the dollar amounts are too small for a reasonable accounting.
Q2) What are the differences between a cafeteria plan and a flexible benefits (salary reduction)plan?
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Introduction to Business Expenses
Available Study Resources on Quizplus for this Chatper
167 Verified Questions
167 Flashcards
Source URL: https://quizplus.com/quiz/70319
Sample Questions
Q1) Premiums the insured taxpayer pays for life insurance
A)Capitalized and amortized over a number of accounting periods
B)Expensed in the period incurred
C)Not deductible
D)Can be capitalized and amortized or deductible depending on the amount of the expenditure
Q2) All-events Test
A)Specifically disallowed.
B)Appropriate and helpful.
C)Considered a trade or business.
D)Not considered a trade or business.
E)Problems with this generally arise with related parties.
F)This is met when services or property are provided to the taxpayer.
G)Normal,common,and accepted but not necessarily regularly recurring.
H)This is met when the existence and the amount of a liability have been established.
Q3) An individual should be indifferent whether an expense is deducted for or deducted from adjusted gross income.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Business Expenses
Available Study Resources on Quizplus for this Chatper
148 Verified Questions
148 Flashcards
Source URL: https://quizplus.com/quiz/70318
Sample Questions
Q1) Fred and Irma are married with salaries of $49,000 and $44,000,respectively.Their combined AGI is $109,000.Both are active participant in their companies' qualified pension plans.Determine their maximum combined IRA contribution and deduction amounts?
Maximum Maximum Contribution Deduction
A)$5,500 $ 2,750
B)$11,000 $2,750
C)$11,000 $5,500
D)$11,000 $7,500
E)$11,000 $11,000
Q2) Walter is a cash basis taxpayer with a drapery cleaning business.In the current year he determines he will never receive payment from Davis for cleaning services provided to Davis.Can Walter record a deduction for the bad debt? Explain.
Q3) Legal expenses are generally deductible if they have a business purpose;they are generally not deductible if they originate from a personal transaction. A)True B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 8
Chapter 7: Losses -- Deductions and Limitations
Available Study Resources on Quizplus for this Chatper
129 Verified Questions
129 Flashcards
Source URL: https://quizplus.com/quiz/70317
Sample Questions
Q1) Which of the following must be classified as "portfolio income?"
I.Interest income on CDs from First National Bank.
II.Loss realized from the sale of one-half of his stock shares in Lockleed Corp.Lockleed is qualified small business stock.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q2) Frasier sells some stock he purchased several years ago for $10,000 to his brother,Niles,for $6,000.
I.If this is Frasier's only stock transaction,he can deduct only $3,000 of the loss.
II.If Niles sells the stock for $10,000,his taxable gain is $4,000.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q3) Why did Congress enact the at-risk rules?
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Taxation of Individuals
Available Study Resources on Quizplus for this Chatper
163 Verified Questions
163 Flashcards
Source URL: https://quizplus.com/quiz/70316
Sample Questions
Q1) Married,filing separately
A)Unmarried without dependents.
B)Generally used when financial disagreement exists.
C)Unmarried and provides a household for a dependent.
D)Use the same tax rate schedule as married,filing jointly.
E)Determines which tax rate schedule and standard deduction amount is applicable.
Q2) To be a qualifying relative,an individual must meet certain tests.These tests include,
I.the citizen or residency test.
II.the gross income test.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q3) Taxpayer contribution of $250 to the Democratic Party.
A)Not Deductible
B)Deductible - For AGI
C)Deductible - From AGI
To view all questions and flashcards with answers, click on the resource link above.
10
Chapter 9: Acquisitions of Property
Available Study Resources on Quizplus for this Chatper
106 Verified Questions
106 Flashcards
Source URL: https://quizplus.com/quiz/70315
Sample Questions
Q1) Tony died on April 5,2017.As part of his will,he leaves land that he paid $6,000 for in 2003 to his son Philip.On April 5,2017,the land is worth $11,000.However,due to local real estate conditions,the land continues to decline in value.On July 28 it is worth only $10,000;it declines further to $9,000 on October 5 and plunges to $7,000 on December 18.
I.In the absence of any special elections,Philip's basis in the land is $6,000.
II.If the executor distributes the land to Philip on July 28,Philip's basis in the land will be $10,000.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q2) Perry inherits stock from his Aunt Margaret that had a basis of $40,000 to Margaret and a fair market value of $54,000 on May 20,2017,the date of her death.Paul sells the stock on June 21,2017 for $65,000.What is the amount and character of the gain or loss on the sale?
To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 10: Cost Recovery on Property: Depreciation, depletion, and Amortization
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/70314
Sample Questions
Q1) Annie owns a mine,which cost her $460,000 several years ago.In prior years she had claimed depletion in the amount of $140,000.It is estimated that 800,000 tons of minerals remained in the mine at the beginning of the year.During the current year,Annie mined and sold 180,000 tons.What is the amount of Annie's cost depletion deduction for the current year?
A)$56,000
B)$72,000
C)$80,500
D)$103,500
E)$180,000
Q2) Shannon purchases equipment classified as 3-year property on December 19,2076,at a cost of $100,000.Section 179 is not elected and Shannon does not use the straight-line method.Shannon purchased no other depreciable property in 2017.What is the amount of the MACRS depreciation deduction for 2017?
A)$5,000
B)$8,330
C)$20,000
D)$33,333
Q3) Discuss why listed property gets special attention.
Page 12
To view all questions and flashcards with answers, click on the resource link above.
Chapter 11: Property Dispositions
Available Study Resources on Quizplus for this Chatper
139 Verified Questions
139 Flashcards
Source URL: https://quizplus.com/quiz/70313
Sample Questions
Q1) Gross selling price includes
I.the amount of a seller's debt assumed by the buyer.
II.the fair market value of services received by the seller from the buyer.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q2) Tonya purchased 500 shares of Home Depot,Inc.common stock on December 13,2014,at a cost of $3,600.She paid a commission of $150 on the purchase.On February 18,2016,she received 250 shares of Home Depot,Inc.common stock as a tax-free dividend.Tonya sells 600 shares for $3,700 on January 8,2017,and pays a $100 commission on the sale.Tonya's gain (loss)on the sale is characterized as:
A)Long-term capital gain of $600.
B)Long-term capital gain of $500;short-term capital gain of $100.
C)Long-term capital loss of $50.
D)Short-term capital gain of $600.
Q3) What incentive provisions or preferential treatments exist for capital gains?
Q4) Discuss the general differences between Section 1245 and Section 1250 property.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Nonrecognition Transactions
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/70312
Sample Questions
Q1) Rebecca trades in her four-wheel drive truck for a new one.Rebecca's truck cost $20,000 and has an $8,000 basis on the date of the trade-in.The price of the new truck is $27,000 and the dealer gives Rebecca a $10,000 trade in allowance on her old truck.She uses the trucks in her business.What is Rebecca's basis in the new truck?
A)$8,000
B)$18,000
C)$25,000
D)$27,000
E)$29,000
Q2) Third-party exchange
A)Losses are never deferred.
B)Can be within the same NAICS Code.
C)Not considered like-kind property.
D)A taxpayer can have only one at a time.
E)The maximum amount that can be recognized on a like-kind exchange.
F)This type of exchange must be completed within 180 days of first property transfer.g.The concept upon which the ability to defer gains on certain nontaxable transactions relies.
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 13: Choice of Business Entity -- General Tax and
Nontax Factorsformation
Available Study Resources on Quizplus for this Chatper
101 Verified Questions
101 Flashcards
Source URL: https://quizplus.com/quiz/70311
Sample Questions
Q1) Nick and Rodrigo form the NRC Partnership by combining the assets of their respective businesses.Nick contributes $10,000 and assets worth $90,000 (adjusted basis of $60,000)for a 1/3 interest.Rodrigo contributes $90,000 and assets worth $270,000 (adjusted basis of $150,000)for a 2/3 interest.NRC also assumes $60,000 of debt on Rodrigo's assets.What is Nick's basis in his partnership interest?
A)$70,000
B)$90,000
C)$100,000
D)$120,000
E)$160,000
Q2) Western Corporation began operations in 1999.Its fiscal year end is October 31.This date coincides with its natural business year.On June 2,2016,Western elects S corporation status.All of the corporate shareholders consented to the election.The earliest date the corporation is recognized as an S corporation is
A)November 1,2018.
B)January 1,2017.
C)June 2,2017.
D)November 1,2017.
E)December 31,2017.
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Choice of Business Entity -- Operations and Distributions
Available Study Resources on Quizplus for this Chatper
96 Verified Questions
96 Flashcards
Source URL: https://quizplus.com/quiz/70310
Sample Questions
Q1) Regarding a partnership,which of the following statements is/are always correct?
I.If a partnership is an active trade or business and it has a $65,000 loss from its business operations that is passed-through as an active loss to its partners,each active partner can deduct his full share of loss for the year to the extent they have basis that is at-risk.
II.Salaries and bonuses paid to partner-employees (other than guaranteed payments)are a deductible business expense.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q2) A sole proprietor may deduct investment interest and investment expense without limitations if investments are made in the name of the business.
A)True
B)False
Q3) Withdrawals of cash by a partner are taxable.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 16
Chapter 15: Choice of Business Entity -- Other
Considerations
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/70309
Sample Questions
Q1) A Keogh plan is administratively more convenient and economical than a simplified employee pension plan (SEP).
A)True
B)False
Q2) When calculating AMTI,individual taxpayers must add back the following:
I.Miscellaneous itemized deductions subject to the 2% limitation.
II.Personal exemption amounts.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q3) Jose is an employee of O'Hara Industry and earns $100,000 in 2017.The maximum amount O'Hara can contribute to a money purchase plan on behalf of Jose is
A)$15,000
B)$20,000
C)$25,000
D)$35,000
E)$40,000
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Tax Research
Available Study Resources on Quizplus for this Chatper
92 Verified Questions
92 Flashcards
Source URL: https://quizplus.com/quiz/70308
Sample Questions
Q1) The court that a taxpayer may not select for trial is
A)the Tax Court.
B)the U.S.Claims Court.
C)the U.S.District Court.
D)the U.S.Court of Appeals.
Q2) Taxpayers may elect to use the small claims division of the U.S.Tax Court if the amount of tax in dispute is less than
A)$1,000
B)$2,500
C)$5,000
D)$10,000
E)$50,000
Q3) The Internal Revenue Service is a branch of A)Congress
B)The Secret Service
C)The Federal Reserve Bank
D)The Treasury Department
E)The Federal Bureau of Investigation
Q4) Describe the steps of the tax research process.
To view all questions and flashcards with answers, click on the resource link above. Page 18