Income Tax Accounting
Mock Exam
Course Introduction
Income Tax Accounting provides an in-depth understanding of the principles and practices involved in accounting for income taxes at both the individual and corporate levels. This course covers topics such as the computation of taxable income, tax liability, and tax credits; deferred tax assets and liabilities; differences between financial accounting and tax reporting; and current tax regulations. Students will gain practical skills in preparing tax returns, interpreting the Internal Revenue Code and relevant tax laws, and applying tax planning strategies. Emphasis is placed on the analysis of case studies and real-world scenarios to develop problem-solving abilities and compliance with ethical standards in tax accounting.
Recommended Textbook
McGraw Hills Taxation of Individuals 2017 8th Edition By
Brian C. Spilker
Available Study Resources on Quizplus
14 Chapters
1609 Verified Questions
1609 Flashcards
Source URL: https://quizplus.com/study-set/3064 Page 2
Chapter 1: An Introduction to Tax
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/60807
Sample Questions
Q1) If Leonardo instead had $30,000 of additional tax deductions for year 2014, his marginal tax rate (rounded) on the deductions would be:
A) 28.00%
B) 25.00%
C) 25.57%
D) 17.07%
E) None of these
Answer: C
Q2) How much implicit tax would Curtis pay on the city of Athens bond?
A) $17,500
B) $1,400
C) $1,300
D) $5,000
E) None of these
Answer: D
Q3) A sales tax is a common example of a progressive tax rate structure.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Tax Compliance, the Irs, and Tax Authorities
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/60806
Sample Questions
Q1) Tina has a very complex tax return and it looks like she will not be able to file her tax return by its due date. When is her tax return due? What are Tina's options for paying her tax due and filing her tax return this year? What are the consequences if Tina does not file or pay her tax timely? Be specific. Tina's tax return is due April 15th. Tina may request an automatic 6 month extension to file her tax return (i.e., until October 15th). Extensions allow the taxpayer to delay filing a tax return but
Answer: do
Q2) In researching a question of fact, the researcher will focus her efforts on identifying authorities with fact patterns similar to her client's facts. A)True
B)False
Answer: True
Q3) If a taxpayer is due a refund, she does not have to file a tax return.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Tax Planning Strategies and Related Limitations
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/60805
Sample Questions
Q1) Assume that Marsha is indifferent between investing in a city of Destin bond that pays 6% interest and a corporate bond that pays 8% interest. What is Marsha's marginal tax rate?
A) 50%
B) 40%
C) 30%
D) 20%
E) None of these
Answer: E
Q2) Effective tax planning does not require consideration of:
A) nontax factors
B) the taxpayer's tax costs of alternative transactions
C) the other party's tax costs of alternative transactions
D) the other party's nontax costs of alternative transactions
E) None of these
Answer: E
Q3) The concept of present value is an important part of the timing strategy.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Individual Income Tax Overview, Exemptions, and Filing Status
Available Study Resources on Quizplus for this Chatper
126 Verified Questions
126 Flashcards
Source URL: https://quizplus.com/quiz/60804
Sample Questions
Q1) The Inouyes filed jointly in 2014. Their AGI is $78,000. They reported $16,000 of itemized deductions and they have two children, one of whom qualifies as their dependent. The 2014 standard deduction amount is $12,400 and each exemption is $3,950. What is the total amount of from AGI deductions they are allowed to claim on their 2014 tax return?
Q2) Tax credits reduce taxable income dollar for dollar.
A)True
B)False
Q3) In June of year 1, Jake's wife Darla died. The couple did not have any children and Jake did not remarry in year 1 or year 2. Which is the most favorable filing status for Jake in year 2?
A) Married filing separately
B) Single
C) Head of household
D) Qualifying widower
Q4) Taxpayers need not include an income item in gross income unless there is a specific tax provision requiring the taxpayer to include the income item in gross income.
A)True
B)False
Page 6
To view all questions and flashcards with answers, click on the resource link above.
Chapter 5: Gross Income and Exclusions
Available Study Resources on Quizplus for this Chatper
131 Verified Questions
131 Flashcards
Source URL: https://quizplus.com/quiz/60803
Sample Questions
Q1) 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 these
Q2) This year Larry received the first payment from an annuity that promises to pay him $3,000 per month for the rest of his life. The IRS tables indicate that given Larry's age, he should expect to receive 310 monthly payments. The cost of the annuity to Larry was $620,000. How much of the first $3,000 payment should Larry include in gross income?
Q3) Identify the rule dictating that on a sale of an asset a taxpayer need only include the incremental gain in gross income rather than the entire proceeds from the sale:
A) Tax benefit rule
B) Constructive receipt
C) Return of capital principle
D) Wherewithal to pay
E) None of these
To view all questions and flashcards with answers, click on the resource link above.
Chapter 6: Individual Deductions
Available Study Resources on Quizplus for this Chatper
114 Verified Questions
114 Flashcards
Source URL: https://quizplus.com/quiz/60802
Sample Questions
Q1) This year, Jong paid $3,000 of interest on a qualified education loan. Jong files married joint and reports modified AGI of $142,000. What is Jong's deduction for interest expense on an educational loan?
A) $2,500
B) $3,000
C) $1,500
D) $1,000
E) None of these.
Q2) All investment expenses are itemized deductions.
A)True
B)False
Q3) Which of the following taxes will not qualify as an itemized deduction?
A) personal property taxes assessed on the value of specific property.
B) state, local, and foreign income taxes.
C) real estate taxes on a residence.
D) gasoline taxes on personal travel.
E) None of these qualifies as an itemized deduction.
Q4) In 2014, personal and dependency exemptions are $6,200 for single taxpayers.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Individual Income Tax Computation and Tax Credits
Available Study Resources on Quizplus for this Chatper
156 Verified Questions
156 Flashcards
Source URL: https://quizplus.com/quiz/60801
Sample Questions
Q1) Which of the following could explain why large number of taxpayers are subject to (or could become subject to) AMT?
A) Regular tax rates have decreased since the AMT was enacted
B) The AMT exemption amount is indexed to increase with inflation
C) Property values are decreasing
D) The personal and dependency exemption amounts are not increasing as fast as the AMT exemption is decreasing
Q2) Jamie is single. In 2014, she reported $100,000 of taxable income, including a long-term capital gain of $5,000. What is her gross tax liability, rounded to the nearest whole dollar amount (use the tax rate schedules)?
A) $22,576
B) $21,176
C) $20,526
D) $15,000
Q3) Johann had a gross tax liability of $22,508 in 2014, but his employer only withheld taxes of $19,500. Johann's gross tax liability was $21,000 in 2013. Calculate Johann's under/overpayment in each quarter for 2014 tax purposes.
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Business Income, Deductions, and Accounting Methods
Available Study Resources on Quizplus for this Chatper
99 Verified Questions
99 Flashcards
Source URL: https://quizplus.com/quiz/60800
Sample Questions
Q1) Dick pays insurance premiums for his employees. What type of insurance premium is not deductible as compensation paid to the employee?
A) Health insurance with benefits payable to the employee.
B) Whole life insurance with benefits payable to the employee's dependents.
C) Group term life insurance with benefits payable to the employee's dependents.
D) key man life insurance with benefits payable to Dick.
E) All of these are deductible by Dick.
Q2) Bryon operates a consulting business and he usually works alone. However, during the summer Bryon will sometimes hire undergraduate students to collect data for his projects. This past summer Bryon hired Fred, the son of a prominent businessman, for a part-time summer job. The summer job usually pays about $17,000, but Bryon paid Fred $27,000 to gain favor with Fred's father. What amount of Fred's summer wages can Bryon deduct for tax purposes? Bryon is on the cash method and calendar year.
Q3) Reasonable in amount means that expenditures can be exorbitant as long as the activity is motivated by profit.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Property Acquisition and Cost Recovery
Available Study Resources on Quizplus for this Chatper
105 Verified Questions
105 Flashcards
Source URL: https://quizplus.com/quiz/60799
Sample Questions
Q1) Cost depletion is available to all natural resource producers.
A)True
B)False
Q2) Santa Fe purchased the rights to extract turquoise on a tract of land over a five-year period. Santa Fe paid $300,000 for extraction rights. A geologist estimates that Santa Fe will recover 5,000 pounds of turquoise. During the current year, Santa Fe extracted 1,500 pounds of turquoise, which it sold for $200,000. What is Santa Fe's cost depletion expense for the current year?
A) $60,000
B) $90,000
C) $110,000
D) $300,000
E) None of these
Q3) Tax cost recovery methods do not include:
A) Amortization
B) Capitalization
C) Depletion
D) Depreciation
E) All of these are tax cost recovery methods
To view all questions and flashcards with answers, click on the resource link above.
Page 11
Chapter 10: Property Dispositions
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/60798
Sample Questions
Q1) Ordinary gains and losses are obtained on the sale of investments.
A)True
B)False
Q2) Alpha sold machinery, which it used in its business, to Beta, a related entity, for $40,000. Beta used the machinery in its business. Alpha bought the equipment a few years ago for $50,000 and has claimed $30,000 of depreciation expense. What is the amount and character of Alpha's gain?
A) $20,000 ordinary income under §1239.
B) $10,000 ordinary gain and $10,000 §1231 gain.
C) $20,000 ordinary gain.
D) $20,000 capital gain.
E) None of these.
Q3) Alexandra sold equipment that she uses in her business for $100,000. Alexandra bought the equipment two years ago for $90,000 and has claimed $25,000 of depreciation expense. What is the amount and character of Alexandra's gain or loss?
Q4) The amount realized is the sale proceeds less the adjusted basis.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 11: Investments
Available Study Resources on Quizplus for this Chatper
104 Verified Questions
104 Flashcards
Source URL: https://quizplus.com/quiz/60797
Sample Questions
Q1) Brandon and Jane Forte file a joint tax return and decide to itemize their deductions. The Forte's income for the year consists of $120,000 in salary, $1,000 interest income, $1,500 nonqualifying dividends, and $1,000 long-term capital gains. The Forte's expenses for the year consist of $3,000 investment interest expense and $900 tax preparation fees. Assuming that the Forte's marginal tax rate is 30%, what is the amount of investment interest expense deduction for the year?
A) Zero; investment interest expense is below two percent of AGI.
B) $1,000
C) $2,500
D) $3,000
E) None of these
Q2) 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 these
Q3) Investment expenses and investment interest expense are for AGI deductions.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Compensation
Available Study Resources on Quizplus for this Chatper
102 Verified Questions
102 Flashcards
Source URL: https://quizplus.com/quiz/60796
Sample Questions
Q1) Which of the following is a fringe benefit that employers can discriminate among employees?
A) No additional cost service.
B) Qualified employee discount.
C) Qualified transportation fringe.
D) Employee educational assistance.
Q2) Employees will always prefer to receive incentive stock options over nonqualified stock options.
A)True
B)False
Q3) A section 83(b) election freezes the value of restricted stock for compensation purposes on the vesting date.
A)True
B)False
Q4) The use of restricted stock is rising relative to the use of stock options.
A)True
B)False
Q5) Employees complete a Form W-2 to specify their income tax withholding. A)True
B)False
Page 14
To view all questions and flashcards with answers, click on the resource link above.
Chapter 13: Retirement Savings and Deferred Compensation
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/60795
Sample Questions
Q1) On December 1, 2014 Irene turned 71 years old. She is still working for her employer and she participates in her employer's 401(k) plan. Irene is not required to receive a minimum distribution for 2014 from her 401(k) account because she has not yet retired.
A)True
B)False
Q2) Both employers and employees may contribute to defined contribution plans. However, the amount that employees may contribute to the plan in a given year is limited by the tax law while the amount that employers may contribute is not.
A)True
B)False
Q3) Amy is single. During 2014, she determined her adjusted gross income was $12,000. During the year, Amy also contributed $1,500 to a Roth IRA. What is the maximum saver's credit she may claim for the year?
A) $750
B) $1,000
C) $1,500
D) $0
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 14: Tax Consequences of Home Ownership
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/60794
Sample Questions
Q1) The ownership test for excluding gain on the sale of a principal residence requires the taxpayer to have owned the property for three or more years during the five year period ending on the date of sale.
A)True
B)False
Q2) Brady owns a second home that he rents to others. During the year, he used the second home for 50 days for personal use and for 100 days for rental use. Brady collected $20,000 of rental receipts during the year. Brady allocated $7,000 of interest expense and property taxes, $10,000 of other expenses, and $4,000 of depreciation expense to the rental use. What is Brady's net income from the property and what type and amount of expenses will he carry forward to next year, if any?
A) $0 net income. $1,000 depreciation expense carried forward to next year.
B) ($1,000) net loss. $0 expenses carried over to next year.
C) $0 net income. $1,000 of other expense carried over to next year.
D) $0 net income. $1,000 of interest expense and property taxes carried over to next year.
Q3) Renting a residence may have nontax advantages over owning a home.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
16