Individual Taxation Test Questions
Course Introduction
This course provides a comprehensive overview of federal income taxation as it applies to individual taxpayers. Topics include the determination of gross income, allowable deductions, credits, filing status, exemptions, and special tax computations. Students will examine tax law principles, tax forms, and reporting requirements while developing practical skills in tax planning and compliance. The course places a strong emphasis on understanding recent tax law changes, ethical considerations, and their real-world implications for individuals and families.
Recommended Textbook
McGraw Hills Taxation of Individuals 2017 8th Edition By
Available Study Resources on Quizplus
14 Chapters
1609 Verified Questions
1609 Flashcards
Source URL: https://quizplus.com/study-set/3064
Brian C. Spilker
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) Margaret was issued a $150 speeding ticket. This is:
A) A tax because payment is required by law
B) A tax because the payment is not related to any specific benefit received from the government agency collecting the ticket
C) Not a tax because it is considered a fine intended to punish illegal behavior
D) A tax because it is imposed by a government agency
E) Not a tax because Margaret could have avoided payment if she did not speed
Answer: C
Q2) Taxes influence which of the following decisions?
A) business decisions
B) personal decisions
C) political decisions
D) investment decisions
E) All of these
Answer: E
Q3) A taxpayer's average tax rate is the most appropriate tax rate to use in tax planning.
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) Basu received a letter from the IRS that gave him the choice of (1) paying a proposed deficiency or (2) filing a petition with the U.S. Tax Court. Basu received the:
A) 30-day letter.
B) 90-day letter.
C) Appeals letter.
D) Tax adjustment letter.
E) None of these.
Answer: B
Q2) The Internal Revenue Code and tax treaties are examples of statutory authorities.
A)True
B)False
Answer: True
Q3) In general, a CPA will satisfy his professional responsibilities under the Statement on Standards for Tax Services when recommending a tax return position if he complies with the standards imposed by the applicable tax authority.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above.
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) In general, tax planners prefer to accelerate deductions.
A)True
B)False
Answer: True
Q2) If Lucy earns a 6% after-tax rate of return, $8,000 received in four years is worth how much today?
A) $8,000
B) $7,544
C) $8,989
D) $6,336
E) None of these Answer: D
Q3) The timing strategy becomes more attractive as interest rates (i.e., rates of return) increase.
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 relationship requirement is more broadly defined (includes more relationships) for a qualifying relative than it is for a qualifying child.
A)True
B)False
Q2) All of the following are tests for determining qualifying relative status except ______.
A) relationship test
B) gross income test
C) support test
D) residence test
Q3) By the end of year 1, Harold and Jamie Allred had been married for 30 years and have filed a joint return every year of their marriage. Their three sons, Jacob, Larry, and Andi, are ages 13, 16, and 23 respectively and all live at home and are fully supported by their parents. Andi is employed full time, earning $17,000 in year 1. How many exemptions are Harold and Jamie entitled to claim?
Q4) Tom Suzuki's tax liability for the year is $2,450. He had $2,050 of federal income taxes withheld from his paycheck during the year by his employer and has $2,000 in tax credits. What are Tom's taxes due or tax refund for the year?
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) Charles purchased an annuity from an insurance company that promised to pay him $20,000 per year for the next 12 years. Charles paid $180,000 for the annuity. How much of the first $20,000 payment should Charles include in gross income?
Q2) Recognized income may be in the form of cash or property received (but not services received).
A)True
B)False
Q3) Terri and Mike are seeking a divorce. Terri and Mike own an art collection worth $357,000 that would belong to Terri. Mike offered to make annual payments of cash to Terri each year for five years if Terry allows Mike to take possession of the art collection. Mike insists however, that the annual payments must cease in the event of Terri's death. What amount of annual payment must Terri demand to make her indifferent after taxes between taking possession of the ($357,000) art versus collecting the cash payments? Assume that Terri has a marginal tax rate of 15 percent and Mike's tax rate is 35 percent and ignore the time value of money.
Q4) A portion of each payment from a purchased annuity represents income.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 7
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) Which of the following is a true statement?
A) A taxpayer can deduct medical expenses incurred for members of his family who are dependents.
B) A taxpayer can deduct medical expenses incurred for a qualified relative even if the relative does not meet the gross income test.
C) A divorced taxpayer can deduct medical expenses incurred for a child even if the child is claimed as a dependent by the former spouse.
D) Deductible medical expenses include long-term care services for disabled spouses and dependents.
E) All of these are true.
Q2) The deduction for medical expenses is limited to the amount of unreimbursed qualifying medical expenses paid during the year reduced by five percent of the taxpayer's AGI.
A)True
B)False
Q3) Last year Henry borrowed $15,000 to help pay for his dependent daughter's college tuition. This year Henry paid $2,800 of interest on the loan. How much, if any, interest can Henry deduct if he files single with AGI of $72,500?
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) All capital gains are taxed at preferential rates.
A)True
B)False
Q2) The American opportunity credit is available only for those students who are in their first or second year of postsecondary education.
A)True
B)False
Q3) Tamra and Jacob are married and they file a joint tax return. Tamra received nearly five times the salary that Jacob received. Which of the following statements is true?
A) Tamra and Jacob likely pay no tax marriage penalty nor receive a tax marriage benefit.
B) Tamra and Jacob likely pay a tax marriage penalty.
C) Tamra and Jacob likely receive a tax marriage benefit.
D) Tamra and Jacob likely will pay a tax marriage penalty and receive a tax marriage benefit.
Q4) Paul and Melissa plan on filing jointly in 2014. For the year, the couple reported taxable income of $130,000. What is their gross tax liability?
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) Which of the following types of transactions may not typically be accounted for using the cash method?
A) sales of inventory
B) services
C) purchases of machinery
D) payments of debt
E) sales of securities by an investor
Q2) All taxpayers must account for taxable income using a calendar year.
A)True
B)False
Q3) Although expenses associated with illegal activities are not deductible, political contributions can be deducted as long as the donation is not made to a candidate for public office.
A)True B)False
Q4) Qualified production activity income for calculating the domestic production activities deduction is limited to taxable income for a business or modified AGI for an individual.
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) Olney LLC placed in service on July 19, 2014 machinery and equipment (7-year property) with a basis of $850,000. Assume that Olney has sufficient income to avoid any limitations. Calculate the maximum depreciation expense including §179 expensing, rounded to the nearest whole number (but ignoring bonus expensing). Assume the 2013 §179 limits are extended to 2014.
Q2) Jorge purchased a copyright for use in his business in the current year. The purchase occurred on July 15th and the purchase price was $75,000. If the patent has a remaining life of 75 months, what is the total amortization expense Jorge may deduct during the current year?
A) $0
B) $5,500
C) $6,000
D) $12,000
E) None of these
Q3) The mid-month convention applies to real property in the year of acquisition and disposition.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
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) An asset's tax adjusted basis is usually greater than its book adjusted basis.
A)True
B)False
Q2) Which one of the following is not considered boot in a like-kind exchange?
A) Cash.
B) Other property.
C) Mortgage given.
D) Mortgage received.
E) All of these.
Q3) Sandra sold some equipment for $10,000 in cash, $1,000 of office products, the buyer assumption of her $1,500 loan, and incurred selling expenses of $500. What is the Sandra's amount realized in the transaction?
Q4) Taxpayers can recognize a taxable gain even though an asset's real economic value has declined.
A)True
B)False
Q5) All tax gains and losses are ultimately characterized as either ordinary or capital. 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) The maximum amount of net capital losses individuals may deduct against their ordinary income per year is:
A) $3,000
B) $5,000
C) Zero, losses are not deductible
D) There is no maximum. All losses are allowed to be deducted.
E) None of these
Q2) Long-term capital gains can be taxed at a maximum rate of:
A) 20 percent
B) 25 percent
C) 28 percent
D) Both 20 percent and 28 percent
E) All of these.
Q3) Passive losses that exceed passive income are deferred until the taxpayer generates passive income to offset these passive losses.
A)True
B)False
Q4) Qualified dividends are always taxed at a 15 percent preferential rate.
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) An employer always receives a deduction for total compensation paid to a CEO.
A)True
B)False
Q2) One primary purpose of equity compensation is to motivate employees.
A)True B)False
Q3) Employers always prefer to award incentive stock options rather than nonqualified stock options.
A)True
B)False
Q4) Employers receive a deduction for compensation paid to and employment taxes paid on behalf of employees.
A)True
B)False
Q5) When stock options are exercised they are converted into actual employer stock. A)True
B)False
Q6) Stock options will always provide employees with future compensation.
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) Which of the following statements regarding Roth 401(k) accounts is false?
A) Employees can make contributions to a Roth 401(k).
B) Employers can make contributions to Roth accounts on behalf of their employees.
C) Contributions to Roth 401(k) plans are not deductible.
D) Qualified distributions from Roth 401(k) plans are not taxable.
Q2) Riley participates in his employer's 401(k) plan. He turns 70 years of age on February 15, 2013 and he plans on retiring on July 1, 2015. When must Riley receive his first distribution from the plan to avoid minimum distribution penalties?
A) by April 1, 2013
B) by April 1, 2014
C) by April 1, 2015
D) by April 1, 2016
Q3) When employees contribute to a Roth 401(k) account, they _____ allowed to deduct the contributions and they _______ taxed on distributions from the plan. A) are; are not B) are; are
C) are not; are
D) are not; are not
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) Alison Jacobs (single) purchased a home in Las Vegas, Nevada for $400,000. She moved into the home on September 1, year 0. She lived in the home as her primary residence until July 1 of year 4 when she sold the home for $675,000. If Alison's marginal ordinary tax rate is 25% what amount of tax will Alison pay on the $275,000 gain?
Q2) Which of the following statements regarding the exclusion of gain on the sale of a principal residence is correct?
A) A taxpayer may not exclude gain if the taxpayer is renting the residence at the time of the sale.
B) A taxpayer may simultaneously own two homes that are eligible for the home sale exclusion.
C) A taxpayer must be living in a residence at the time it is sold to qualify for the exclusion.
D) For a married couple to qualify for the $500,000 exclusion, both spouses must meet the ownership and use tests.
Q3) A personal residence is not a capital asset.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 16