Personal Tax Planning Exam Bank
Course Introduction
Personal Tax Planning focuses on the principles, laws, and strategies involved in effectively managing individual tax obligations. The course examines the structure of personal income tax systems, including taxable income, deductions, credits, and specialized issues such as investment income, retirement planning, and estate considerations. Students learn to analyze tax laws, utilize tax planning tools, and develop strategies to minimize tax liabilities in compliance with current regulations. Practical case studies and real-world scenarios prepare students to make informed tax decisions, provide basic tax advice, and understand the implications of tax planning for financial well-being.
Recommended Textbook
Income Tax Fundamentals 2017 35th Edition by Gerald
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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
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128 Verified Questions
128 Flashcards
Source URL: https://quizplus.com/quiz/70133
Sample Questions
Q1) Amended individual returns are filed on:
A)Form 1040X
B)Form 1120S
C)Form 1041
D)Form 1040Amend
Answer: A
Q2) During 2016, Howard maintained his home in which he and his 16 year-old son resided. The son qualifies as his dependent. Howard's wife died in 2015. What is his filing status for 2016?
A)Single
B)Head of household
C)Married, filing separately
D)Qualifying widow(er)
E)None of the above.
Answer: D
Q3) Gerald is single and earns $80,000 in dividend income and $180,000 in wage income in 2016. Compute his additional ACA Medicare surtax on net investment income.
Answer: $2,280 = 3.8% x [the lesser of ($260,000 - $200,000) or $80,000]
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3
Chapter 2: Gross Income and Exclusions
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132 Verified Questions
132 Flashcards
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Sample Questions
Q1) Which of the following is classified as nontaxable income?
A)Unemployment compensation
B)Dividend income
C)Income from real estate rental property
D)Welfare payments
E)None of the above
Answer: D
Q2) Richard, who retired on April 30, 2016, receives a monthly employee annuity benefit of $1,400 payable for life, beginning May 1, 2016. During his years of employment, Richard contributed $29,400 to the company's plan. Richard's age on May 1 is 66. Using the simplified method, how much of the $11,200 annuity payment received during 2016 may Richard exclude from gross income?
A)$427
B)$1,120
C)$1,680
D)$11,200
E)None of the above
Answer: B
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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) Which of the following taxpayers may not use the standard mileage method of calculating transportation costs?
A)A self-employed CPA who drives a computer-equipped minivan to visit clients.
B)A taxpayer who has a fleet of 10 business automobiles.
C)A real estate salesperson who drives a $70,000 Mercedes while showing houses.
D)An attorney who uses his Yaris for calling on clients.
E)All of the above taxpayers may use the standard mileage method.
Answer: B
Q2) A business gift with a value of $35 presented to a client and his nonclient spouse is fully deductible by the donor.
A)True
B)False
Answer: False
Q3) The cost of transportation from New York to London for a trip that is for both business and pleasure may be deducted in full as a travel expense.
A)True
B)False
Answer: False
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5
Chapter 4: Business Income and Expenses Part II
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97 Verified Questions
97 Flashcards
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Sample Questions
Q1) What is the difference between the tax treatment of contributions and distributions from a traditional IRA and a Roth IRA?
Q2) Which of the following is not deductible as a moving expense?
A)The cost of moving household goods
B)Lodging for household members during the move
C)The cost of a pre-move house-hunting trip
D)Travel expenses during the move
E)All of the above are deductible as moving expenses
Q3) Under a defined contribution plan, the contribution made on behalf of the employee is determined using a formula dependent on the employee's current compensation.
A)True
B)False
Q4) Earnings on nondeductible IRA contributions are allowed to accumulate tax-free until they are withdrawn.
A)True
B)False
Q5) Tony makes a maximum contribution to his employer's 401(k) plan. He earns $360,000 a year. How much income is he allowed to contribute to the plan for 2016?
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Chapter 5: Itemized Deductions and Other Incentives
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) Agnes is retired and has only a $12,000 annual pension as income. In 2016, Agnes' aunt dies and leaves her land worth $1.2 million. Agnes sees no need for the land and donates it immediately to a qualified public charity. Agnes may deduct a $1.2 million charitable contribution on her 2016 tax return.
A)True
B)False
Q2) Lourdes is a paralegal. Since she often deals with legal matters, she feels a law degree would be beneficial to her. May Lourdes deduct her educational expenses for law school as a miscellaneous itemized deduction? Explain.
Q3) Frank was so entertained by the Paris Symphony on his visit to France that he mailed them a donation of $100 to support their organization as soon as he returned home to Seattle. Frank may deduct the charitable contribution to the Paris Symphony on his U.S. tax return.
A)True
B)False
Q4) The cost of a chiropractor's services qualifies as a medical deduction.
A)True
B)False
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Page 7
Chapter 6: Credits and Special Taxes
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107 Verified Questions
107 Flashcards
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Sample Questions
Q1) Salary earned by minors may be taxed at their parents' tax rate.
A)True
B)False
Q2) All taxpayers are required to have minimum essential health coverage.
A)True
B)False
Q3) Fletch and Cammie Gates are married with three dependent children and household income of $51,138 in 2016. The Gates purchased health care insurance on their state's exchange for total premiums of $6,800. A designated silver plan for their family in their state costs $9,700. Calculate the Gates' premium tax credit.
Q4) For all taxpayers, except those married filing separately, the individual alternative minimum tax rate for 2016 is 26 percent on the first $186,300 of income and 28 percent on income above $186,300.
A)True
B)False
Q5) The alternative minimum tax must be paid only if the tentative minimum tax exceeds a taxpayer's regular tax liability.
A)True
B)False
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Chapter 7: Accounting Periods and Methods and Depreciation
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) Which one of the following entities cannot use the cash method for tax purposes?
A)A large almond farm with $40 million in gross receipts.
B)A continuing education provider with $2 million in gross receipts and 20 employees.
C)A law firm operating as a personal service corporation with $5.4 million in gross receipts.
D)A small sole proprietorship with $150,000 in gross receipts.
E)All of the above may use the cash method.
Q2) 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
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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) Terry has a casualty gain of $1,000 and a casualty loss of $5,500, before the $100 floor and before the adjusted gross income limitation. The gain and loss were the result of two separate casualties occurring during the current year and both properties were personal-use assets. If Terry itemizes deductions on her current year return and has adjusted gross income of $25,000, what is Terry's gain or net itemized deduction as a result of these casualties?
A)$5,300 itemized deduction, $1,000 capital gain
B)$1,900 itemized deduction
C)$1,800 itemized deduction
D)$2,800 itemized deduction, $1,000 capital gain
E)None of the above
Q2) Taxpayers are allowed to offset net short-term capital losses with net long-term capital gains.
A)True B)False
Q3) The exchange of shares of stock does not qualify for like-kind exchange treatment. A)True B)False
Q4) What are capital assets?
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Chapter 9: Withholding Estimated Payments and Payroll Taxes
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82 Verified Questions
82 Flashcards
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Sample Questions
Q1) Mary is self-employed for 2016. Mary estimates her required annual estimated tax payment for 2016 to be $4,000. Mary had a $500 overpayment of last year's taxes which she will apply against her first quarter estimated payment.
a.How much should Mary pay with her first quarter estimated tax voucher?
b.When is the payment due?
Q2) Which one of the following forms must an employer provide to his employee by January 31 of the following year?
A)W-3
B)W-2
C)W-4
D)941
E)1040
Q3) Provide answers to the following questions:
a.What form does an employer use to report wages to an employee?
b.When must the employer give this form to the employee?
c.What form does an employer use to report wages to the Social Security Administration?
d.When must the employer file the form with the Social Security Administration?
Page 11
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Chapter 10: Partnership Taxation
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81 Verified Questions
81 Flashcards
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Sample Questions
Q1) Loretta contributes property to a partnership in exchange for a 25 percent partnership interest. The property contributed has a fair market value of $45,000 and a basis of $35,000 on the date of the contribution to the partnership. In addition, Loretta receives a 10 percent partnership interest, valued at $18,000, in exchange for services rendered to the partnership. What is Loretta's basis in her partnership interest, immediately after these transactions?
A)$35,000
B)$45,000
C)$53,000
D)$63,000
E)None of the above
Q2) Cypress Road is a partnership with two partners, Saul, a 60 percent partner, and Robbie, a 40 percent partner. The partnership has income for the year of $100,000 before guaranteed payments to Robbie. Guaranteed payments of $50,000 are paid to Robbie for his management services during the year. Calculate the amount of income that should be reported by Saul and Robbie from the partnership for the year. Saul should report income of $__________. Robbie should report income of $__________.
Q3) List three advantages of an LLC.
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Page 12
Chapter 11: The Corporate Income Tax
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80 Verified Questions
80 Flashcards
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Sample Questions
Q1) Corporations are not allowed to amortize the costs of organizing the corporation.
A)True
B)False
Q2) What is the purpose of Schedule M-1?
Q3) Which of the following is not a requirement for qualification as an S corporation?
A)The corporation must be a domestic corporation.
B)The corporation must have 25 or fewer shareholders.
C)The corporation must have only one class of stock outstanding.
D)The shareholders of the corporation must not be nonresident aliens.
E)None of the above.
Q4) The corporate alternative minimum tax rate is 28 percent.
A)True
B)False
Q5) Corporations may deduct without limitation any amount of charitable contributions providing the amounts are paid to qualified organizations.
A)True
B)False
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Page 13
Chapter 12: Tax Administration and Tax Planning
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67 Verified Questions
67 Flashcards
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Sample Questions
Q1) Answer the following:
a.
Geoffrey filed his tax return 2 months and 8 days late and had not requested an extension of time for filing.Geoffrey's return indicated that he is to receive a $600 refund in taxes.Calculate the amount of Geoffrey's penalty for failure to file his tax return on time, assuming the failure to file was not fraudulent.
b.
John filed his individual income tax return 3 1/2 months after it was due.He had not requested an extension of time for filing.Along with his return, John remitted a check for $1,000, which was the balance of the taxes he owed with his return.Disregarding interest, calculate the total penalty that John will be required to pay, assuming the failure to file was not fraudulent (and that he is not subject to failure-to-pay penalties).
Q2) List three different ways that a tax return may be selected for an audit.
Q3) What is the difference between tax avoidance and tax evasion?
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