Tax Accounting Practice Exam
Course Introduction
Tax Accounting focuses on the principles, methods, and regulations governing the preparation and reporting of tax information for individuals, partnerships, and corporations. The course examines the application of federal, state, and local tax laws, with emphasis on taxable income determination, tax planning strategies, and compliance requirements. Students will develop skills for analyzing tax transactions, understanding tax consequences of business decisions, and preparing tax returns, while also exploring current issues and ethical considerations in tax practice.
Recommended Textbook
McGraw Hills Taxation of Individuals 2017 8th Edition By
Brian C. Spilker
Available Study Resources on Quizplus
14 Chapters
1609 Verified Questions
1609 Flashcards
Source URL: https://quizplus.com/study-set/3064 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) The income and substitution effects are two opposing effects that one could consider in static forecasting.
A)True
B)False
Answer: False
Q2) Although the primary purpose of a tax system is to raise revenue, Congress uses the federal tax system for other purposes as well. Describe the other ways in which Congress uses the federal tax system. Be specific.
Answer: In addition to the general objective of raising revenue, Congress uses the federal tax system to encourage certain behavior and discourage other behavior. The charitable contribution deduction is intended to encourage taxpayers to support the initiatives of charitable organizations (social objective) whereas deductions for retirement contributions are intended to encourage retirement savings (social objective). Taxes are also often used to encourage investment and stimulate the economy. Likewise, taxes are also used to discourage certain less desirable taxpayer behavior. For example, "sin taxes" impose relatively high surcharges on alcohol and tobacco products to discourage their use.
To view all questions and flashcards with answers, click on the resource link above.
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) Which of the following is not considered a primary authority?
A) Tax Court case
B) Regulation
C) Revenue ruling
D) Tax service
E) None of these.
Answer: D
Q2) If the President vetoes tax legislation, Congress:
A) cannot override the President's veto.
B) can override the President's veto with a 50 percent positive vote in the House and Senate.
C) can override the President's veto with a 2/3rd positive vote in the House and Senate.
D) can override the President's veto with a 75 percent positive vote in the House and Senate.
E) None of these.
Answer: C
To view all questions and flashcards with answers, click on the resource link above. Page 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) Tax savings generated from deductions are considered cash inflows.
A)True
B)False
Answer: True
Q2) Assume that Larry's marginal tax rate is 25%. If corporate bonds pay 10% interest, what interest rate would a municipal bond have to offer for Larry to be indifferent between the two bonds?
A) 25%
B) 12.5%
C) 10%
D) 7.5%
E) None of these
Answer: D
Q3) The constructive receipt doctrine is more of an issue for cash basis taxpayers.
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) Which of the following is NOT a from AGI deduction?
A) Standard deduction
B) Itemized deduction
C) Personal exemption
D) None of these. All of these are from AGI deductions
Q2) Jeremy and Annie are married. During the year Jeremy dies. When Annie files her tax return for the year in which her husband dies, she may file under the married filing jointly filing status even if she does not remarry.
A)True
B)False
Q3) Kabuo and Melinda got married on December 15, year 1. Kabuo's salary for the year was $54,000, and Melinda's was $62,000. In addition, Kabuo received $250 of interest income, ($100 of which was from municipal bonds), and Melinda received $10,000 of alimony from a former spouse. If Kabuo and Melinda choose to file jointly, what is their year 1 gross income?
Q4) The test for qualifying children includes an age restriction but the test for qualifying relative does not.
A)True
B)False
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) The assignment of income doctrine requires that to shift income from property to another person, the taxpayer must transfer only the income to the other person.
A)True
B)False
Q2) Jake sold his car for $2,400 in cash this year. He will realize a taxable gain of $1,000 if he purchased the car for $1,400.
A)True B)False
Q3) Graham has accepted an offer to do graduate work in the chemistry department at State University. The chemistry department offered Graham a $5,000 tuition reduction and $3,500 toward the cost of room and meals. Under the terms of the scholarship Graham must work in the chemistry labs during the summer as a research assistant. What amount must Graham include in his gross income?
A) $8,500
B) $5,000
C) $3,500
D) $2,500
E) Zero - None of these benefits is included in gross income
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) Employees cannot claim business expense deductions.
B) Employees can claim business expense deductions for AGI.
C) Employees can claim business expense deductions as miscellaneous itemized deductions not subject to the 2 percent of AGI limitation.
D) Employees can claim business expense deductions as miscellaneous itemized deductions subject to the 2 percent of AGI limitation.
E) None of these is true.
Q2) Taxpayers traveling for the primary purpose of receiving essential and deductible medical care may deduct the cost of travel.
A)True
B)False
Q3) This year, Benjamin Hassell paid $20,000 of interest on a mortgage on his home (Benjamin borrowed $600,000 to buy the residence and it is currently worth $1,000,000), $12,000 on a $150,000 home equity loan on his home, and $10,000 of interest on a mortgage on his vacation home (loan of $300,000; home purchased for $400,000). How much interest expense can Benjamin deduct as an itemized deduction?
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) Harmony reports a regular tax liability of $15,000 and tentative minimum tax of $17,000. Given just this information, what is her alternative minimum tax liability for the year?
A) $0
B) $2,000
C) $15,000
D) $17,000
Q2) Which of the following represents the correct order in which credits are applied to gross tax liability (from first to last)?
A) Nonrefundable personal, business, refundable
B) Business, nonrefundable personal, refundable
C) Refundable, nonrefundable personal, business
D) Refundable, business, nonrefundable personal
Q3) 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
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) Jim operates his business on the accrual method and this year he received $4,000 for services that he intends to provide to his clients next year. Under what circumstances can Jim defer the recognition of the $4,000 of income until next year?
A) Jim can defer the recognition of the income if he absolutely promises not to provide the services until next year.
B) Jim must defer the recognition of the income until the income is earned.
C) Jim can defer the recognition of the income if he has requested that the client not pay for the services until the services are provided.
D) Jim can elect to defer the recognition of the income if the income is not recognized for financial accounting purposes.
E) Jim can never defer the recognition of the prepayments of income.
Q2) Bryon operates a consulting business and he usually works alone. However, during the summer Bryon will sometimes hire undergraduate students to collect data for his projects. This past summer Bryon hired Fred, the son of a prominent businessman, for a part-time summer job. The summer job usually pays about $17,000, but Bryon paid Fred $27,000 to gain favor with Fred's father. What amount of Fred's summer wages can Bryon deduct for tax purposes? Bryon is on the cash method and calendar year.
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) Which of the following is not usually included in an asset's tax basis?
A) Purchase price
B) Sales tax
C) Shipping
D) Installation costs
E) All of these are included in an asset's tax basis
Q2) Columbia LLC placed in service on October 9, 2014 machinery and equipment (7-year property) with a basis of $2,150,000. Assume that Columbia has sufficient income to avoid any limitations. Calculate the maximum depreciation expense including §179 expensing (but ignoring bonus expensing) for the year, rounded to the nearest whole number. Assume the 2013 §179 limits are extended to 2014.
Q3) Goodwill and customer lists are examples of §197 amortizable assets.
A)True
B)False
Q4) Jaussi purchased a computer several years ago for $2,200 and used it for personal purposes. On November 10th of the current year, when the fair market value of the computer was $800, Jaussi converted it to business use. What is Jaussi's tax basis for the computer?
To view all questions and flashcards with answers, click on the resource link above.
Page 11
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) Collins Corporation, of Camden, Maine, wants to exchange its manufacturing equipment for Rockland Company's equipment. Both parties agree that Collins's machinery is worth $200,000 and that Rockland's machinery is worth $175,000. Collins will not enter into the transaction unless it qualifies as a like-kind exchange. If Collins wants to avoid gain, what could the parties do to equalize the value exchanged but still allow the exchange to qualify as a like-kind exchange?
Q2) Accounts receivable and inventory are examples of ordinary assets.
A)True B)False
Q3) A simultaneous exchange must take place for a transaction to qualify as a like-kind exchange.
A)True
B)False
Q4) The amount realized is the sale proceeds less the adjusted basis.
A)True B)False
Q5) Boot is not like-kind property involved in a like-kind exchange.
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) 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.
Q2) If Adam invested $25,000 in a stock paying annual dividends equal to 5% of his investment, what would the value of his investment be 10 years from now assuming that he reinvested his after-tax dividends each year? Assume Adam's marginal ordinary tax rate is 15%.
A) $26,940
B) $40,722
C) $37,905
D) $101,139
E) None of these
Q3) All life insurance proceeds given to the beneficiary at the time of death of the insured are excluded from gross income.
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) Big Bucks paid its CEO $1,500,000 of compensation for the year. What is the after-tax cost of paying the salary assuming a 30 percent marginal tax rate?
Q2) Which of the following does not qualify as a "for the convenience of the employer" nontaxable fringe benefit?
A) The fair market value of the rent of an apartment manager living on the premises.
B) An overtime meal provided to an employee while working late.
C) A meal provided by a hospital to residents during their shift.
D) A company picnic.
Q3) Hotel employees can receive free nights lodging on a space available basis without incurring compensation.
A)True
B)False
Q4) When stock options are exercised they are converted into actual employer stock. A)True
B)False
Q5) One purpose of Form W-4 is to determine an employee's withholding.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 14
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) On December 1, 2014 Irene turned 71 years old. She is still working for her employer and she participates in her employer's 401(k) plan. Irene is not required to receive a minimum distribution for 2014 from her 401(k) account because she has not yet retired.
A)True
B)False
Q3) Taxpayers who participate in an employer-sponsored retirement plan are not allowed to contribute to individual retirement accounts (IRAs).
A)True
B)False
Q4) Taxpayers never pay tax on the earnings of a traditional 401(k) account.
A)True
B)False
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) Brady owns a second home that he rents to others. During the year, he used the second home for 50 days for personal use and for 100 days for rental use. Brady collected $20,000 of rental receipts during the year. Brady allocated $7,000 of interest expense and property taxes, $10,000 of other expenses, and $4,000 of depreciation expense to the rental use. What is Brady's net income from the property and what type and amount of expenses will he carry forward to next year, if any?
A) $0 net income. $1,000 depreciation expense carried forward to next year.
B) ($1,000) net loss. $0 expenses carried over to next year.
C) $0 net income. $1,000 of other expense carried over to next year.
D) $0 net income. $1,000 of interest expense and property taxes carried over to next year.
Q2) Taxpayers with home offices and who use the actual expense method for computing home office expenses must allocate indirect expenses of the home between personal use and home office use. Only expenses allocated to the home office use are deductible for AGI.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 16