Individual Taxation
Chapter Exam Questions
Course Introduction
This course provides an in-depth analysis of federal income taxation as it applies to individual taxpayers in the United States. Topics include gross income, exclusions, deductions, credits, capital gains and losses, tax rates, and the preparation of individual tax returns. The course also examines the Internal Revenue Code, relevant regulations, and IRS procedures, with an emphasis on tax planning strategies and ethical considerations. Through case studies and practical examples, students will gain a foundational understanding of how tax laws impact individuals, developing the skills necessary to apply tax rules and make informed personal financial decisions.
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) Which of the following payments is a tax?
I.Artis paid the IRS a penalty of $475 (above his $11,184 income tax balance due)because he had significantly underpaid his estimated income tax.
II.Lindsey paid $135 to the State of Indiana to renew her CPA license.
III.Carrie paid a $3.50 toll to cross the Mississippi River.
IV.Darnell paid $950 to the County Treasurer's Office for an assessment on his business equipment.
A)Only statement IV is correct.
B)Only statement III is correct.
C)Statements II and IV are correct.
D)Statements I,II,and III are correct.
E)Statements I,II,III,and IV are correct.
Answer: A
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
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) An asset's adjusted basis is the amount of unrecovered investment after considering any increases and decreases in the original purchase price.
A)True
B)False
Answer: True
Q2) Samuel owns some land,which has an oil deposit underneath it.His annual royalties vary from $50,000 to $60,000.Because Samuel is in the highest marginal tax rate bracket,he would like to have some (or all)of the royalty income taxed to his son,Jack,thus lowering the overall tax on the royalty income.To do this
I.Samuel can gift part of the land to Jack.
II.Samuel can gift part of each year's royalties to Jack.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Answer: A
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) The intent of the alimony recapture rules is to
A)Prevent the payee from having a large tax liability when there is not an adequate wherewithal to pay.
B)Prevent former spouses from skipping out of their obligations to pay the other spouse.
C)Reclassify property settlements as capital gains,rather than ordinary income.
D)Prevent child support from being disguised as alimony.
E)Prevent tax deductions for property settlements.
Answer: E
Q2) One type of imputed income that always escapes taxation is
A)Bargain purchases by employees.
B)Value of growing one's own vegetables for personal consumption.
C)Payment of personal expenses by a corporation in which stock is owned.
D)Interest free loan from parents.
Answer: B
Q3) For any unrecovered portion of an annuity investment,the taxpayer is allowed a deduction in the year of death.
A)True
B)False
Answer: True
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) The tax law allows the exclusion of general types of employment-related fringe benefits provided they are made available to employees on a nondiscriminatory basis.Which of the following must be provided on a nondiscriminatory basis to be excluded from income?
I.De minimis fringe benefits.
II.Employee discounts.
III.No additional cost services.
IV.Working-condition fringes.
A)Only statement I is correct.
B)Only statement II is correct.
C)Statements II and III are correct.
D)Statements III and IV are correct.
E)Statements I,II,III,and IV are correct.
Q2) Gifts received are not subject to income taxation;however the donor is subject to the gift tax rules on the making of a gift.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 6
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) In the current year,Paul acquires a car for $16,000.He uses the car in his advertising business and for personal purposes.His records indicate the car is used 60% for business and that the total operating expenses,including depreciation,are $4,700.Paul expects to use the car for 5 years in his business.What amount can Paul deduct as the operating costs of the car?
A)$- 0 -
B)$2,400
C)$2,820
D)$4,700
E)$12,000
Q2) Personal Expense
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.
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) George is a full-time student at Indiana State University majoring in accounting.He works 12 to 20 hours per week at a local CPA firm inputting data for spreadsheets to prepare monthly financial statements for the firm's clients.George's tuition,fees,books,and supplies related to his education are $3,000 for the current year.
I.The educational costs are deductible from AGI because they prepare him for a new trade or business.
II.The education costs are deductible because it is part of a program that will qualify George to become a CPA.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q2) A taxpayer may use either the actual cost method or the standard mileage rate for deducting auto expenses.
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) Maria,an engineer,has adjusted gross income of $167,000 before considering the following losses.The passive activity rules disallow the deduction for the loss in which of the following?
I.Maria has a $21,000 loss from her ownership of Family Apartment Village,a low-income housing project.
II.Maria owns and actively participates in managing a rental house across the street from East State College.This activity generates a $7,000 loss in the current year.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q2) The term tax shelter refers to investment property that involves residential and commercial real estate.
A)True
B)False
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) Anita receives a state income tax refund of $550 in May 2017.When she filed her 2016 federal income tax return,she used the standard deduction amount.Although the all-inclusive income concept would require Anita to report the $550 in her federal gross income for 2017,she may exclude it.What tax concept explains why the exclusion is permitted in this case?
A)Wherewithal to pay.
B)Tax benefit rule.
C)Ability to pay.
D)Assignment of income.
E)Administrative convenience.
Q2) To qualify as a qualifying relative,an individual must meet three of five tests.These are the gross income test;the support test;the relationship or member of the household test;the citizen or residency test;and the joint return test.
A)True
B)False
Q3) Unreimbursed medical costs are deductible only to the extent that they exceed 3.0% of the taxpayer's adjusted gross income.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 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) During 2006,Charles purchased 1,000 shares of Ryan Corporation stock for $12,000.On February 22,2017,he sells all the shares for $9,000.On March 15,2017,he repurchases 1,000 shares of Ryan for $8,000 and holds them until May 29,2076,when he sells them for $10,000.What is Charles' recognized gain or loss on the May 29,2017,sale?
A)$1,000 loss.
B)$2,000 gain.
C)$2,000 loss.
D)$1,000 gain.
E)No gain or (loss)recognized
Q2) General Telephone gave Wynonna $2,000 for an easement for power lines across her property.She must realize the gain or loss on the receipt of cash.
A)True
B)False
Q3) Pedro purchased all of the stock of Regis Corporation.Since he purchased all of the stock the basis in all of the corporation's assets must be restated to fair market value.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 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) Chestnut Furniture Company purchases a delivery van on June 14,2017,at a cost of $30,000.The delivery van has a 5-year MACRS life and an ADS recovery period of 5 years.What is Chestnut's minimum cost recovery deduction on the van in 2017?
A)$- 0 -
B)$3,000
C)$4,500
D)$6,000
E)$26,850
Q2) MACRS applies to new and used depreciable personal property used for the production of income.
A)True
B)False
Q3) What is the MACRS recovery period for a warehouse placed in service on August 31,2016?
A)10 years.
B)27.5 years.
C)31.5 years.
D)39 years.
E)40 years.
To view all questions and flashcards with answers, click on the resource link above. Page 12
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) Which of the following is not a capital asset?
A)Office building used as a rental property by a real estate professional..
B)Antique automobile.
C)Land held for investment.
D)Stock held for investment.
Q2) Drew traded his office copier in for a new one.The old copier had an adjusted basis of $400.The new copier cost $1,350,and he was given a trade-in allowance of $500.
I.The amount realized is $400.
II.Drew has a realized gain of $100.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q3) Explain why a taxpayer would ever consider using accelerated depreciation methods on personal property,given the provisions of Section 1245.
Q4) Unrecaptured Section 1250 gain is taxed at a maximum rate of 25%.
A)True
B)False
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) The recognition of a loss realized on an involuntary conversion is mandatory.
A)True
B)False
Q2) Boot
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.
Q3) Land held as an investment for land used in a business.
A)qualifies as a like-kind exchange
B)does not qualify as a like-kind exchange
Q4) Microsoft common stock for Merrill Lynch common stock.
A)qualifies as a like-kind exchange
B)does not qualify as a like-kind exchange
Q5) Discuss the concepts underlying the determination of the basis of property received in a nontaxable exchange.
Page 14
To view all questions and flashcards with answers, click on the resource link above.
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) The shareholder of an S corporation can reduce income taxes by passing income to the owner-employee as a dividend rather than paying salary.
A)True
B)False
Q2) Marty owns 30% of the stock of Myron Corporation.Myron reports taxable income of $100,000 and pays $80,000 in dividends to shareholders.What is Marty's income from Myron Corporation?
A)$-0-
B)$24,000
C)$30,000
D)$54,000
E)$80,000
Q3) S corporation status is attained when a qualifying corporation elects this status. A)True
B)False
Q4) Does the selection of a corporate entity ever make sense based on a desire for lower marginal tax rates? Discuss.
Q5) Discuss the characteristics of a personal service corporation (PSC).
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) The Polaris S Corporation has operating income of $50,000.Andrew is the sole shareholder of the corporation that has had the S election in effect since its inception.At the beginning of the current year,Andrew's basis in his S corporation stock is $2,000.During the year Andrew receives cash distributions totaling $55,000.How much income must Andrew recognize for the current tax year?
A)$50,000 ordinary income;$55,000 dividend income.
B)$50,000 ordinary income.
C)$50,000 ordinary income;$3,000 capital gain.
D)$55,000 dividend income;$3,000 capital gain.
E)$55,000 dividend income.
Q2) Sales of property between a partner who owns more than 50% of a partnership's interest and the partnership are subject to the related party rules.
A)True
B)False
Q3) A family entity combines the tax-planning aspects of the progressive tax rate structure with the use of the owner's family to minimize the overall tax liability of the entire family.
A)True
B)False
Page 16
To view all questions and flashcards with answers, click on the resource link above.
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) Alex is 37 years old,single and employee of Ellis Company.
I.If Alex is an active participant in the company's pension plan,he is allowed to make a contribution to his IRA account only if his adjusted gross income is less than $62,000.
II.If Alex is an active participant in the company's pension plan,and has adjusted gross income of $67,000,he is allowed to contribute $5,500 to his IRA account,but he is only allowed a deduction of $2,750 for the contribution because his adjusted gross income is between $62,000 - $72,000.
A)Only statement I is correct
B)Only statement II is correct
C)Both statements are correct.
D)Neither statement is correct.
Q2) Jane is a partner with Smithstone LLP.Smithstone maintains a profit-sharing Keogh plan for its partners and employees.Determine the maximum deductible contribution Jane can make to the plan in each of the following situations:
a.Jane's net self-employment income is $80,000.
b.Jane's net self-employment income is $280,000.
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) A taxpayer who loses in the U.S.Tax Court may appeal directly to the:
A)Supreme Court.
B)U.S.Court of Federal Claims.
C)U.S.District Court.
D)U.S.Circuit Court of Appeals.
E)Any of the above.
Q2) Ways and Means Committee
A)Where federal tax legislation generally originates.
B)Has jurisdiction over all tax matters in the U.S.Senate.
C)The committee responsible for initial hearings and deliberations on a tax bill.
D)Responsible for negotiating a resolution of the differences in the House and Senate versions of a tax bill.
E)The agency within the administrative branch of government with overall responsibility for administration of tax law.
F)Oversees the operation and administration of the tax system as a whole,and prepares a general explanation of any tax bill signed by the President.
Q3) Describe the steps of the tax research process.
To view all questions and flashcards with answers, click on the resource link above.
18