Introduction to Taxation Test Bank
Course Introduction
Introduction to Taxation provides a foundational understanding of the principles, structures, and application of tax systems, with a primary focus on the taxation framework in the relevant jurisdiction. The course covers the key objectives of taxation, types of taxes, the role of taxation in economic and social policy, and the basic legal and ethical obligations of individuals and businesses. Students will learn to identify taxable entities and events, calculate basic tax liabilities, and recognize compliance requirements. Practical case studies and real-life scenarios introduce tax planning considerations and emphasize the impact of taxation on decision-making for individuals and organizations.
Recommended Textbook
Income Tax Fundamentals 2017 35th Edition by Gerald
Available Study Resources on Quizplus
12 Chapters
1259 Verified Questions
1259 Flashcards
Source URL: https://quizplus.com/study-set/3531
E. Whittenburg
Page 2
Chapter 1: The Individual Income Tax Return
Available Study Resources on Quizplus for this Chatper
128 Verified Questions
128 Flashcards
Source URL: https://quizplus.com/quiz/70133
Sample Questions
Q1) If taxpayers are married and living together at the end of the year, they must file a joint tax return.
A)True
B)False
Answer: False
Q2) Which of the following taxpayers does not have to file a tax return for 2016?
A)A single taxpayer who is under age 65, with income of $10,500.
B)Married taxpayers (ages 45 and 50 years), filing jointly, with income of $21,000.
C)A student, age 22, with unearned income of $1,200 who is claimed as a dependent by her parents.
D)A qualifying widow (age 67) with a dependent child and income of $14,500.
E)All of the above.
Answer: D
Q3) State two reasons why a person would want to e-file their return instead of mailing it.
Answer: A return that is e-filed has a smaller error rate than paper-filed returns. (Less than 1 percent versus more than 20 percent). E-filing also offers a faster refund because the IRS is able to process the return more quickly.
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Gross Income and Exclusions
Available Study Resources on Quizplus for this Chatper
132 Verified Questions
132 Flashcards
Source URL: https://quizplus.com/quiz/70132
Sample Questions
Q1) Indicate whether each item below would be included in or excluded from the income of the recipient.
a.Payment for laboratory assistant position at University of California State
b.A $1,000 scholarship for tuition
c.College books paid for by grandma and grandpa
d.A $1,000 college loan
e.A scholarship for room and board
f.A new car given to recruit a basketball player
g.A scholarship used for supplies and equipment that are required for courses
Answer: a. Included
b. Excluded
c. Excluded
d. Excluded
e. Included
f. Included
g. Excluded
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 3: Business Income and Expenses Part I
Available Study Resources on Quizplus for this Chatper
122 Verified Questions
122 Flashcards
Source URL: https://quizplus.com/quiz/70131
Sample Questions
Q1) Choose the correct statement:
A)If a taxpayer does a lot of business travel, the taxpayer may deduct the amount paid for an airline club membership.
B)Membership dues to a golf club are deductible as long as there is a business purpose.
C)In order to be deductible, dues and subscriptions must be related to the taxpayer's occupation.
D)If a financial planner becomes certified, then he/she may not deduct the Certified Financial Planner (CFP) dues because it is not necessary to be certified in order to engage in the business of being a financial planner.
Answer: C
Q2) Under the specific charge-off method, a deduction for a bad debt is taken when the debt is determined to be worthless.
A)True
B)False
Answer: True
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Business Income and Expenses Part II
Available Study Resources on Quizplus for this Chatper
97 Verified Questions
97 Flashcards
Source URL: https://quizplus.com/quiz/70130
Sample Questions
Q1) For the current year, Robert, a single taxpayer, earned wages of $235,000 from Big Shot Corporation. He also received interest income of $1,000 from Little Credit Union. Robert had a $9,000 loss from his rental property which he actively manages. $2,000 of income was also reported on his Schedule K-1 from ABC Limited Partnership. Neither the rental property nor the partnership investment has passive losses carried over from prior years. Since Robert is not an active participant in a retirement plan, he decides to contribute $5,500 to his IRA.
a.Calculate Robert's adjusted gross income using the above information.
b.How much is Robert's unallowed loss from his passive investments?
c.What happens to the unallowed passive loss?
d.Calculate Robert's adjusted gross income assuming his wages were only $35,000.
Q2) Ned has active modified adjusted gross income before passive losses of $160,000. He has a loss of $15,000 on rental property he actively manages. How much of the loss is he allowed to deduct against his other income?
A)None
B)$10,000
C)$15,000
D)$5,000
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Itemized Deductions and Other Incentives
Available Study Resources on Quizplus for this Chatper
143 Verified Questions
143 Flashcards
Source URL: https://quizplus.com/quiz/70129
Sample Questions
Q1) To deduct interest paid with respect to indebtedness, the taxpayer must be legally liable for the debt.
A)True
B)False
Q2) Dr. Wheeler donates her time and services to Doctors with No Limits, a qualified charity. Dr. Wheeler can take a tax deduction for the $3,400 market value of her time donated.
A)True
B)False
Q3) Steve keeps a valuable bonsai collection in his back yard. In the current year, thieves disarmed his security system and stole several of the bonsai. The stolen bonsai had a fair market value and adjusted basis of $4,500. Assuming that Steve had no insurance coverage on the bonsai and his adjusted gross income for the current year is $28,000, calculate the amount of his theft loss deduction.
Q4) If business property is completely destroyed, the casualty or theft loss is the lesser of the decrease in market value or the adjusted basis of the property.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: Credits and Special Taxes
Available Study Resources on Quizplus for this Chatper
107 Verified Questions
107 Flashcards
Source URL: https://quizplus.com/quiz/70137
Sample Questions
Q1) In 2016, which of the following children would have income taxed at their parents' rates?
A)A 13-year-old child with salary income of $12,000
B)A 12-year-old child with net unearned income of $2,000
C)A non-student, 19-year-old child with net unearned income of $12,000
D)A 9-year-old child with salary income of $1,000
E)All of the above
Q2) Marion has an 11-year-old daughter. Please calculate her child and dependent care credit under these two alternatives:
a.Marion pays $4,000 a year in day care costs.Her salary is $32,000.
b.Marion pays $8,000 a year in day care costs.Her salary is $80,000.
Q3) Jasmine is a single marketing manager with a college degree. She continually updates her marketing knowledge and gets fresh ideas by taking classes at the local community college. This year she spent $1,500 on course tuition and fees. If Jasmine has AGI of $57,000, how much lifetime learning credit can she claim on her tax return? Explain.
Q4) New York is a community property state.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 8
Chapter 7: Accounting Periods and Methods and Depreciation
Available Study Resources on Quizplus for this Chatper
111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/70128
Sample Questions
Q1) What is the maximum depreciation expense deduction for Year 2 (2017) for a passenger automobile, used 100 percent for qualified business use, placed in service on June 15, 2016 and costing $16,000 (the election to expense is not made and no bonus depreciation was taken)?
A)$2,800
B)$3,160
C)$3,200
D)$5,100
E)$5,120
Q2) Depreciation is the process of allocating the cost of assets to expense over a period of years.
A)True
B)False
Q3) Mark the correct answer. Section 197 intangibles:
A)Are amortized based on current fair market value rather than their actual cost.
B)Must be amortized over a 15 year life, regardless of their actual life.
C)Include intangible assets created and not purchased by the taxpayer.
D)Do not include purchased goodwill or going-concern value.
Q4) To be depreciated, must an asset actually lose value each year?
Page 9
To view all questions and flashcards with answers, click on the resource link above.
Chapter 8: Capital Gains and Losses
Available Study Resources on Quizplus for this Chatper
109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/70127
Sample Questions
Q1) A taxpayer eligible to use the installment method for reporting gain on the sale of an asset must use the installment method unless he or she elects out of the provision.
A)True
B)False
Q2) If the following are capital assets, mark with a "Yes." If they are not capital assets, mark with a "No."
a.A taxpayer's personal jet ski ______
b.Ford Motor Credit Company bond held by an investor ______
c.A baseball for sale at Sports.com ______
d.J.K.Rowling's personal copy of her original manuscript of Harry Potter and the Sorcerer's Stone ______
e.An antique grandfather clock inherited from the taxpayer's aunt ______
Q3) An asset's adjusted basis is computed as:
A)Original basis + capital improvements - accumulated depreciation.
B)Original basis - capital improvements + accumulated depreciation.
C)Original basis + capital improvements + accumulated depreciation.
D)Original basis + capital improvements + gain or loss realized.
E)None of the above.
Q4) What are capital assets?
To view all questions and flashcards with answers, click on the resource link above. Page 10
Chapter 9: Withholding Estimated Payments and Payroll Taxes
Available Study Resources on Quizplus for this Chatper
82 Verified Questions
82 Flashcards
Source URL: https://quizplus.com/quiz/70126
Sample Questions
Q1) Gordon is 60 years old and Mary is 55 years old. They are married with three dependent children over age 17, and Gordon has one job. Assuming that Mary is unemployed, how many allowances should Gordon claim on his Form W-4, assuming no extra allowances for deductions or adjustments?
A)Five
B)Six
C)Seven
D)Eight
E)Nine
Q2) Janet is single and claims two allowances on her Form W-4. Her salary is $1,800 per month.
a.Use the percentage method to calculate the amount of Janet's withholding for a monthly pay period.
b.Use the withholding tables to determine the amount of Janet's withholding for a monthly pay period.
Q3) Household employers are not required to pay FICA taxes on cash payments of less than $2,000 paid to any household employee in a calendar year.
A)True
B)False
11
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Partnership Taxation
Available Study Resources on Quizplus for this Chatper
81 Verified Questions
81 Flashcards
Source URL: https://quizplus.com/quiz/70136
Sample Questions
Q1) Oscar and Frank form an equal partnership, the O and F Partnership. Oscar contributes land with an adjusted basis of $45,000, subject to a mortgage of $100,000, in exchange for a partnership interest worth $250,000. Frank contributes cash of $100,000 and performs services for the partnership in exchange for a partnership interest worth $250,000.
a.What is the amount of Oscar's recognized gain or loss (if any) as a result of the contribution to the partnership in exchange for the partnership interest?
b.What is Oscar's basis in his partnership interest immediately after the contribution?
c.What is the amount of Frank's recognized income or loss (if any) as a result of the receipt of the partnership interest in exchange for the cash and services?
d.What is the partnership's basis in the land received from Oscar?
Q2) A partnership reports its income on Form 1040.
A)True
B)False
Q3) Limited liability companies may operate in more than one state.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 11: The Corporate Income Tax
Available Study Resources on Quizplus for this Chatper
80 Verified Questions
80 Flashcards
Source URL: https://quizplus.com/quiz/70135
Sample Questions
Q1) Brokers' fees incurred in the issuance of a corporation's stock are considered organizational expenditures.
A)True
B)False
Q2) If a corporation is unable to deduct a capital loss against capital gains for a particular tax year, it loses the tax benefit since the loss may not be carried to other tax years.
A)True
B)False
Q3) On July 1, of the current year, Robert forms the Yew Corporation. In exchange for 100 percent of the corporation's stock, Robert contributes land with a fair market value of $100,000. Robert acquired the land 5 years ago at a cost of $30,000. At the date of the contribution, the land is subject to a $10,000 mortgage which the corporation assumes. What is the basis of the land to Yew Corporation?
A)$20,000
B)$30,000
C)$90,000
D)$100,000
E)None of the above
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 12: Tax Administration and Tax Planning
Available Study Resources on Quizplus for this Chatper
67 Verified Questions
67 Flashcards
Source URL: https://quizplus.com/quiz/70134
Sample Questions
Q1) 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
Q2) Mark with a "Yes" if the following statement is true and is in Publication 1, The Taxpayer Bill of Rights. Mark with a "No" if the following statement is false or is not addressed in Publication 1.
A)A phone number to call to have tax questions answered.
B)If a taxpayer is unable to provide or to verify information, then the IRS may contact a neighbor, bank, employer, or employees in order to obtain the information.
C)Only the taxpayer has the right to represent themselves in front of the IRS.
D)Publication 1 explains what to do if an IRS employee has not provided prompt, courteous, and professional assistance to the taxpayer.
Q3) Tax return preparers must enter the annual filing season program (AFSP).
A)True
B)False
Q4) List three different ways that a tax return may be selected for an audit.
Q5) What is the difference between tax avoidance and tax evasion?
To view all questions and flashcards with answers, click on the resource link above. Page 14