Introduction to Income Taxation Test Preparation
Course Introduction
Introduction to Income Taxation provides students with a foundational understanding of the principles, concepts, and rules governing the U.S. federal income tax system. The course explores the sources of tax law and examines the structure of the Internal Revenue Code, including the calculation of taxable income, determination of gross income, exclusions, deductions, and credits. Key topics also include the tax treatment of individuals, corporations, partnerships, and trusts, as well as tax policy considerations and compliance obligations. Through analysis of statutes, regulations, and case law, students will develop the analytical skills necessary to interpret and apply federal tax rules to common situations faced by taxpayers.
Recommended Textbook
Income Tax Fundamentals 2017 35th Edition by
Gerald E. Whittenburg
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12 Chapters
1259 Verified Questions
1259 Flashcards
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Page 2
Chapter 1: The Individual Income Tax Return
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128 Verified Questions
128 Flashcards
Source URL: https://quizplus.com/quiz/70133
Sample Questions
Q1) Nathan is 24 years old, single, and works as an accountant in a salmon cannery in Alaska. His total wages for 2016 were $32,000. Federal income tax of $4,500 was withheld from his wages. His only other income was $260 of interest and he had no deductible expenses.
Calculate the income tax due or income tax refund on Nathan's 2016 individual income tax return. Use the tax formula for individuals and show your work.
Answer: 11ea8558_f893_231c_a343_0dbe08003d68_TB2114_00
Q2) Scholarships received by a student may be excluded for purposes of the support test for determining the availability of the dependency exemption.
A)True
B)False
Answer: True
Q3) A single taxpayer, who is not a dependent on another's return, not blind and under age 65, with income of $8,750 must file a tax return.
A)True
B)False
Answer: False
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Page 3
Chapter 2: Gross Income and Exclusions
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132 Verified Questions
132 Flashcards
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Sample Questions
Q1) Wages
A)Included
B)Excluded
Answer: A
Q2) Basketball superstar Steph Curry's outstanding player award is not includible in income, since the award is in recognition of his outstanding performance.
A)True
B)False Answer: False
Q3) A gift received from a financial institution for opening a bank account is not taxable income to the recipient.
A)True
B)False Answer: False
Q4) Farm income
A)Included
B)Excluded
Answer: A
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Page 4
Chapter 3: Business Income and Expenses Part I
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122 Verified Questions
122 Flashcards
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Sample Questions
Q1) Jack is a lawyer who is a member at Ocean Spray Country Club where he spends $7,200 in dues, $4,000 in meals, and $2,000 in green fees to entertain clients. He is also a member of the local Rotary club where he meets potential clients. The dues for the Rotary club are $1,200 a year. How much of the above expenses can Jack deduct as business expenses?
A)$4,200
B)$6,000
C)$7,200
D)$14,400
E)None of the above
Answer: A
Q2) If a taxpayer takes a trip within the United States which is primarily for business, the cost of travel to and from the destination need not be prorated between the business and personal portion of the trip.
A)True
B)False
Answer: True
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Chapter 4: Business Income and Expenses Part II
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97 Verified Questions
97 Flashcards
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Sample Questions
Q1) The expenses associated with the rental of a residence used for both personal and rental purposes are subject to three possible tax treatments. Which of the following is not included as one of the three?
A)If a residence is rented for fewer than 15 days during the year the rental period is disregarded and the residence is regarded as a personal residence for tax purposes.
B)If the residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10 percent of the days rented, whichever is greater, the residence is treated as rental property.
C)If the residence is rented for 15 days or more and is used for personal purposes for not more than 14 days or 10 percent of the days rented, whichever is greater, the residence is treated as a personal residence for tax purposes.
D)If the residence is rented for 15 days or more and is used for personal purposes for more than 14 days or 10 percent of the days rented, whichever is greater, allocable rental expenses are allowed only to the extent of rental income.
Q2) What is the difference between the tax treatment of contributions and distributions from a traditional IRA and a Roth IRA?
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6
Chapter 5: Itemized Deductions and Other Incentives
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) Carla is a high school teacher who is required by her school district to take continuing education courses which are offered at the local college. She is also in the process of taking classes at a different university where she is pursuing her Ph.D. to become a research specialist. She pays the tuition for both schools. Which of the following is true?
A)She may deduct all of the tuition from each school because they are education expenses related to job skill improvement.
B)She may not deduct tuition from either school.
C)She may not deduct the continuing education tuition because it is required by her job.
D)She may deduct the continuing education tuition from the local college because it meets her employer's requirement to maintain her current job skills.
E)None of the above is correct.
Q2) In 2016, state income taxes may be deducted as an itemized deduction on Schedule A.
A)True
B)False
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Chapter 6: Credits and Special Taxes
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107 Verified Questions
107 Flashcards
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Sample Questions
Q1) Jeff and Geri are married and have AGI of $95,000 and three young children. Geri pays $6,000 a year to day care providers so she can teach a yoga class and do household errands. Geri earns $5,000 teaching the yoga class. How much child and dependent care credit can Jeff and Geri claim? Why?
Q2) Molly and Steve are married and live in Texas. Molly earns a salary of $50,000 and Steve owns a rental property that gives him $35,000 of income. If they filed separate tax returns, what amount of income would Steve report?
A)$35,000
B)$85,000
C)$42,500
D)$60,000
E)None of the above
Q3) Arthur is divorced with two dependent children, ages 8 and 13. His adjusted gross income is $28,000, and he incurs qualified child care expenses of $6,000, $3,000 for each child.
a.What is the amount of Arthur's qualified child care expenses after any limitation?
b.Calculate the amount of Arthur's child and dependent care credit.
Q4) What is the purpose of the alternative minimum tax?
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Page 8
Chapter 7: Accounting Periods and Methods and Depreciation
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) Cork Oak Corporation purchased a heavy-duty truck (not considered a passenger automobile for purposes of the listed property and luxury automobile limitations) on May 1, 2016 for use in its business. The truck, with a cost basis of $24,000, has a 5-year estimated life. It also is 5-year recovery property. How much depreciation should be taken on the truck for the 2016 calendar tax year using the conventional (for financial accounting purposes) straight-line depreciation method?
A)$400
B)$2,400
C)$3,200
D)$4,800
E)None of the above
Q2) In 2016, a taxpayer purchases a new automobile (5 year recovery) for $56,000 for 100% use in her business. What is the total cost recovery assuming that the taxpayer does or does not elect bonus depreciation on the auto (half-year convention but no immediate expensing)?
A)$11,200 with bonus and $3,160 without bonus
B)$11,160 with bonus and $11,200 without bonus
C)$11,160 with bonus and $3,160 without bonus
D)$8,000 with bonus and $3,160 without bonus
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Chapter 8: Capital Gains and Losses
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109 Verified Questions
109 Flashcards
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Sample Questions
Q1) Which of the following sales results in a short-term gain/loss?
A)A capital asset bought on June 30, 2015 and sold June 20, 2016.
B)A capital asset bought on July 25, 2015 and sold August 19, 2016.
C)A capital asset bought on September 12, 2009 and sold August 19, 2016.
D)A capital asset bought on August 15, 2015 and sold August 16, 2016.
E)All of the above are long-term gains/losses.
Q2) Currently, long-term capital gains are not afforded preferential tax treatment.
A)True
B)False
Q3) Which of the following is not true about capital assets?
A)Real property used in a trade or business is not a capital asset.
B)Capital losses may be carried back for 3 years to offset capital gains in those years.
C)For 2016, net long-term capital gains are granted preferential tax treatment.
D)Individual taxpayers may deduct net capital losses of up to $3,000 per year.
E)Shares of stock held for investment are capital assets.
Q4) Bev owns an apartment complex she purchased 10 years ago for $480,000 with a $80,000 cash down payment accompanied by a $400,000 loan. Bev has made $70,000 of capital improvements on the complex and her depreciation claimed on the building to date is $100,000. Calculate Bev's adjusted basis in the building.
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Chapter 9: Withholding Estimated Payments and Payroll Taxes
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Sample Questions
Q1) Which of the following statements about the FICA tax is not true?
A)The FICA tax is composed of two parts, Social Security and Medicare.
B)Self-employed individuals may elect to pay either FICA taxes or self-employment taxes.
C)FICA taxes are paid by both the employees and their employers.
D)The income amount subject to FICA tax has increased significantly over the years.
E)Wages subject to FICA tax that are received by a self-employed individual reduce the individual's maximum self-employment tax base.
Q2) For 2016, the maximum base amount for computing the Medicare portion of the self-employment tax is $150,000.
A)True
B)False
Q3) Tom had net earnings of $80,000 from the plant nursery he owns. What is his liability for FICA taxes on his earnings?
Q4) An employee is reimbursed for travel and other ordinary and necessary expenses. Under what circumstances would income tax be withheld from the employee on these amounts?
Q5) What is the purpose of backup withholding?
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Chapter 10: Partnership Taxation
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81 Flashcards
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Sample Questions
Q1) For the following separate, independent situations indicate with a "Yes" if a partnership return needs to be filed. Mark with a "No" if a partnership return is not required.
a.Tony and Gina form a joint venture to import goods from South Korea.
b.Nancy decided to start her own private investigative business.
c.Uncle Pennybag's estate assets are pooled together until they can be distributed to the beneficiaries.
d.Howie, Dewey, and Cheatem form an LLC.
e.Flora, Fauna, and Merryweather start a child care business.No official documents are drawn up.
Q2) A distribution of cash to a partner was greater than his basis in the partnership. How would this distribution be treated by the partner, assuming the distribution is not a liquidating distribution?
Q3) There is no general partner required in a limited liability company (LLC).
A)True
B)False
Q4) List three advantages of an LLC.
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Chapter 11: The Corporate Income Tax
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80 Flashcards
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Sample Questions
Q1) The Sapote Corporation is a manufacturing corporation. The corporation has accumulated earnings of $450,000 and the corporation cannot establish a reasonable business need for any of that amount. What is the amount of the accumulated earnings tax, if any, that will be imposed on the corporation?
A)$45,000
B)$30,000
C)$50,000
D)$76,000
E)None of the above
Q2) XYZ Corporation has a December 31 year-end.
a.When is XYZ Corporation's tax return due?
b.When does XYZ Corporation need to make its estimated tax payments?
c.Assuming that XYZ Corporation owes $5,000 on the original tax return due date and it files for an extension and is granted an automatic extension to file tax returns, what is the extended tax return date and when should taxes be paid?
Q3) Is it correct to state that the maximum corporate tax rate is 35 percent? Please describe the structure of the corporate tax rate schedule in your answer.
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Chapter 12: Tax Administration and Tax Planning
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67 Flashcards
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Sample Questions
Q1) Indicate in the blank space the date the statute of limitations would run out on each of the following individual tax returns.
a.
A 2016 tax return filed on April 17, 2017 which omitted $20,000 of income.The total gross income shown on the tax return was $40,000
b.A 2016 tax return filed April 17, 2017 which contained a large bad debt deduction
c.A 2010 tax return that was never filed
d.A 2016 tax return filed on April 17, 2017
e.A fraudulent 2016 tax return filed April 17, 2017
Q2) A taxpayer with an average tax rate of 20 percent who receives additional income of $20,000 will pay additional taxes of $4,000.
A)True
B)False
Q3) A taxpayer's average tax rate is determined by dividing the total tax paid by the total income of the taxpayer.
A)True
B)False
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