Tax Research Practice Questions
Course Introduction
Tax Research is an advanced course designed to develop students expertise in identifying, interpreting, and applying tax laws and regulations. The course emphasizes mastery of research methodologies necessary for resolving complex tax issues faced by individuals and entities. Students will learn to utilize both primary and secondary tax authorities, employ electronic databases and research tools, and practice effective communication of tax findings through written memoranda and client correspondence. Through real-world case studies and projects, learners will hone their analytical abilities and strengthen their understanding of ethical considerations in tax practice.
Recommended Textbook
Concepts in Federal Taxation 2019 26th Edition Kevin E. Murphy
Available Study Resources on Quizplus
16 Chapters
2071 Verified Questions
2071 Flashcards
Source URL: https://quizplus.com/study-set/3648
Page 2
Chapter 1: Federal Income Taxation-An Overview
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/72568
Sample Questions
Q1) Which of the following is an example of tax evasion?
A)Beth invests money in tax exempt municipal bonds instead of corporate bonds.
B)Bryan uses the cafeteria plan offered by his employer to fund pension plan contributions for his retirement.
C)Bauregard, a very wealthy 87-year-old individual, gives bonds to each of his grandchildren so that the interest income on them would be taxed at a lower tax rate.
D)Bertha won $500 cash in an amateur mud-wrestling contest but doesn't report it on her tax return.
E)All of the above are examples of tax evasion.
Answer: D
Q2) Adam Smith identified efficient, certainty, convenience, and economy as the four basic requirements for a good tax system.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Income Tax Concepts
Available Study Resources on Quizplus for this Chatper
151 Verified Questions
151 Flashcards
Source URL: https://quizplus.com/quiz/72560
Sample Questions
Q1) In which of the following situations does the taxpayer have a claim of right to the payment received?
I.Ellen is on the Carlyle city council. She accepts $5,000 from a contractor who is seeking rezoning of his land before the commission on the condition that Ellen supports the rezoning. The payment is illegal under state law and Ellen will have to repay the $5,000 if the arrangement with the contractor is discovered.
II.Alan's automobile is damaged in an automobile accident. Because he uses the automobile in his job, his employer gives him $4,000 to have the car repaired. The employer will withhold $100 per paycheck until the $4,000 is repaid.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
Chapter 3: Income Sources
Available Study Resources on Quizplus for this Chatper
146 Verified Questions
146 Flashcards
Source URL: https://quizplus.com/quiz/72559
Sample Questions
Q1) Connie was walking her dog when she came across a paper bag with $20,000 in it. She turned the money into the police. After the appropriate period of time, no one claimed the money and the police returned the money to Connie. Connie does not have to recognize any taxable income since it was not derived from capital or labor.
A)True
B)False
Answer: False
Q2) Penelope purchased an annuity contract that cost $45,000. The contract will pay Penelope $600 per month for 10 years after she reaches the age of 62. During the current year, Penelope turns 62 and receives 4 payments under the contract. The amount Penelope may exclude from taxable income as a return of capital on this years payments is:
A)$692
B)$900
C)$1,500
D)$2,250
E)$2,400
Answer: C
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Income Exclusions
Available Study Resources on Quizplus for this Chatper
160 Verified Questions
160 Flashcards
Source URL: https://quizplus.com/quiz/72558
Sample Questions
Q1) Norma is in the 32% marginal tax bracket. Because of her high tax rate, Norma would like to reinvest a $10,000, 6%, certificate of deposit in a tax-exempt bond. What is the minimum rate of interest Norma would have to receive to make the tax exempt-bond a more profitable investment?
A)4.1%
B)6.0%
C)8.4%
D)9.0%
Q2) Bernice is the beneficiary of a $50,000 insurance policy on her father's life. If she receives the proceeds in installments from the insurance company that carries the policy, she will earn only five-percent interest per year, receiving $10,500 per year for five years. Bernice decides to take the $50,000 in a lump-sum payment and invest the funds herself. Of the $50,000 received:
A)All $50,000 is tax-free.
B)All $50,000 is taxable income.
C)$500 is interest income for each year.
D)The first $25,000 is taxable.
Q3) What are the differences between a cafeteria plan and a flexible benefits (salary reduction) plan?
To view all questions and flashcards with answers, click on the resource link above.
Page 6
Chapter 5: Introduction to Business Expenses
Available Study Resources on Quizplus for this Chatper
167 Verified Questions
167 Flashcards
Source URL: https://quizplus.com/quiz/72557
Sample Questions
Q1) Start-up costs over $5,000.
A)Capitalized and amortized over a number of accounting periods
B)Expensed in the period incurred
C)Not deductible
D)Can be capitalized and amortized or deductible depending on the amount of the expenditure
Q2) Shaheen owns 2 rental properties. She hires her 21 year old son, who is a junior at State College, to obtain tenants, negotiate leases, make arrangements for repairs, and pay expenses related to the properties.
I.Shaheen's sale of the properties will result in a capital gain or loss.
II.Shaheen's sale of the properties at a loss results in a current-year loss deduction of no more than $3,000.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q3) List the criteria necessary for an expenditure to be deductible as a trade or business expense or an expense for the production of income.
To view all questions and flashcards with answers, click on the resource link above.
Page 7
Chapter 6: Business Expenses
Available Study Resources on Quizplus for this Chatper
146 Verified Questions
146 Flashcards
Source URL: https://quizplus.com/quiz/72556
Sample Questions
Q1) Lynn is a sales representative for Textbook Publishing Company. He receives a monthly travel allowance from Textbook to cover his travel costs (transportation, food, lodging, entertainment, etc.). If Lynn is not required to account to Textbook for the use of the travel advance
I.Lynn will not have to show any aspect of the travel reimbursement or expenses incurred if he spends all of the reimbursement on valid travel expenses.
II.To the extent Lynn is reimbursed for his costs he will get a deduction for AGI.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q2) Discovery, Inc., a cash-basis consulting firm, can deduct a twelve-month insurance premium in the year the premium is paid even though the policy remains in effect into the following year.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 7: Losses-Deductions and Limitations
Available Study Resources on Quizplus for this Chatper
129 Verified Questions
129 Flashcards
Source URL: https://quizplus.com/quiz/72555
Sample Questions
Q1) Roscoe and Amy are married and own 12,000 shares of qualifying small business stock that they purchased for $150,000. During the current year, they sell 10,000 shares of the small business stock to an unrelated third party for $30,000. Eager to sell the remaining shares, they sell the other 2,000 shares to Amy's sister for $4,000. In addition, they sell stock with a basis of $5,000 for $10,000. The stock was acquired in 2007. In 2010, Roscoe and Amy loaned her brother, Carl, $8,000 to start his business. Carl has only repaid $2,000 on his documented loan. During the year, Carl has filed for bankruptcy. The bankruptcy court liquidates all of Carl's assets and Roscoe and Amy receive nothing from the liquidation.
I.Roscoe and Amy can deduct $120,000 as an ordinary loss on the small business stock. II.Roscoe and Amy have a net short-term capital loss of $1,000.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
Q2) Why do the wash sale rules apply to the sale of stock at a loss but not to the sale of stock at a gain?
To view all questions and flashcards with answers, click on the resource link above.
Page 9
Chapter 8: Taxation of Individuals
Available Study Resources on Quizplus for this Chatper
163 Verified Questions
163 Flashcards
Source URL: https://quizplus.com/quiz/72554
Sample Questions
Q1) Discuss why the distinction between deductions for adjusted gross income and deductions from adjusted gross income is important for individual taxpayers.
Q2) Explain the support test and the gross income test to be a qualifying relative.
Q3) Larry is a single parent with an 11-year-old daughter. Larry's adjusted gross income is $27,000, and he pays $2,100 in qualified child-care expenses. Larry can claim a child and dependent-care credit of:
A)$420
B)$441
C)$609
D)$735
E)$2,100
Q4) Sale of stock results in a loss of $7,000. The only other capital transaction for the year results in a gain of $6,000. Amount: $7,000
A)Not Deductible
B)Deductible - For AGI
C)Deductible - From AGI
Q5) Explain the non-support test and the principle residence test to be a qualifying child.
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Acquisitions of Property
Available Study Resources on Quizplus for this Chatper
106 Verified Questions
106 Flashcards
Source URL: https://quizplus.com/quiz/72553
Sample Questions
Q1) Determine the proper classification(s) of the asset discussed in the following scenario: Judge Marshall purchased a new gold-trimmed gavel to decorate his living room.
I.Personal use property.
IV.Intangible property.
II.Business use property.
V.Real estate.
III.Tangible property.
VI.Personal property.
A)Statements I and III are correct.
B)Only statement VI is correct.
C)Statements II and III are correct.
D)Statements II, III, and VI are correct.
E)Statements I, III and VI are correct.
Q2) The split basis rule for determining the basis of gifts allows for one basis for determining losses and another for calculation of gains.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 11
Chapter 10: Cost Recovery on Property: Depreciation, Depletion,
and Amortization
Available Study Resources on Quizplus for this Chatper
110 Verified Questions
110 Flashcards
Source URL: https://quizplus.com/quiz/72567
Sample Questions
Q1) Qualified Section 179 property for a retail store includes I.Store shelving.
II.Company auto used by salesmen.
III.Sidewalks in front of the store.
IV.Delivery van owned by the store.
A)Only statement I is correct.
B)Only statement III is correct.
C)Statements I and IV are correct.
D)Statements II and III are correct.
E)Statements I, II, and IV are correct.
Q2) While Congress has enacted several different depreciation methods, all currently owned assets are depreciated using the method in effect when the asset was placed in service.
A)True
B)False
Q3) Under current law, taxpayers must use regular MACRS.
A)True
B)False
Q4) Discuss why listed property gets special attention.
To view all questions and flashcards with answers, click on the resource link above. Page 12
Chapter 11: Property Dispositions
Available Study Resources on Quizplus for this Chatper
139 Verified Questions
139 Flashcards
Source URL: https://quizplus.com/quiz/72566
Sample Questions
Q1) In July 2018, Hillary sells a stamp from her stamp collection at a gain of $500. Hillary purchased the stamp in 2011. If Hillary is in the 22% marginal tax rate bracket and has no other capital asset sales in 2018, what is her tax on the sale of the stamp?
A)$- 0 -
B)$25
C)$50
D)$75
E)$110
Q2) "Recapture of depreciation" refers to:
A)Downward adjustments of past depreciation charges by IRS review.
B)Increasing depreciation charges by changing accounting method.
C)Filing an amended return where less than maximum depreciation charges have been claimed as deductions.
D)Taxing the smaller of past depreciation or gain as ordinary income on the disposition of equipment.
Q3) Unrecaptured Section 1250 gain is taxed at a maximum rate of 25%.
A)True
B)False
Q4) Discuss the general differences between Section 1245 and Section 1250 property.
To view all questions and flashcards with answers, click on the resource link above. Page 13
Chapter 12: Non-Recognition Transactions
Available Study Resources on Quizplus for this Chatper
117 Verified Questions
117 Flashcards
Source URL: https://quizplus.com/quiz/72565
Sample Questions
Q1) Rosilyn trades her old business-use car with an adjusted basis of $13,000 and an outstanding loan liability balance of $2,000 for a new business-use car valued at $9,000 plus $3,000 cash from Bob's Auto Sales and Loan Company. Bob assumes Rosilyn's loan balance. What is Rosilyn's realized gain on the transaction?
A)$- 0 -
B)$1,000
C)$2,000
D)$3,000
E)$5,000
Q2) For a transaction to qualify as a third-party exchange,
I.The exchange must be completed within 1 year of the first exchange.
II.The property exchanged must be identified within 45 days of the first exchange.
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.
To view all questions and flashcards with answers, click on the resource link above.
14
Chapter 13: Choice of Business Entity-General Tax and Nontax Factorsformation
Available Study Resources on Quizplus for this Chatper
99 Verified Questions
99 Flashcards
Source URL: https://quizplus.com/quiz/72564
Sample Questions
Q1) Claudia owns 10% of the stock of Fitness Design Corporation, an S corporation. She is also its controller. Fitness Design reports taxable income of $70,000 and pays $60,000 in dividends to shareholders before considering Claudia's salary. Claudia receives a $75,000 salary. What is Claudia's income from Fitness Design?
A)$6,000
B)$74,500
C)$75,000
D)$81,000
E)$82,000
Q2) Zeppo and Harpo are equal owners of the Marx Corporation. During the current year, they agree to admit Groucho as a shareholder. Groucho will contribute $35,000 in cash and property worth $75,000 (adjusted basis of $55,000) for 40% of Marx Corporation's stock. How much gain will Groucho recognize from the transfer of the assets to the corporation?
A)$-0-
B)$20,000
C)$35,000
D)$55,000
E)$75,000
To view all questions and flashcards with answers, click on the resource link above. Page 15
Chapter 14: Choice of Business Entity-Operations and Distributions
Available Study Resources on Quizplus for this Chatper
93 Verified Questions
93 Flashcards
Source URL: https://quizplus.com/quiz/72563
Sample Questions
Q1) Cornell and Joe are equal partners in Jones Company. For the current year, Jones reports the following items of income and expense: ?
\[\begin{array} { l r }
\text { Sales revenues } & \$ 500,000 \\
\text { Long-term capital gains } & 14,000 \\
\text { Short-term capital losses } & ( 30,000 ) \\
\text { Trade and business expenses } & ( 200,000 ) \\
\text { Limited partnership loss } & ( 50,000 ) \\
\text { Taxable income } & \$ 234,000
\end{array}\]
In addition to his Jones earnings, Joe has other net taxable income of $45,000. Included in the $45,000 is $10,000 in income from a passive activity. Joe's income is:
A)$152,000
B)$157,000
C)$162,000
D)$167,000
E)$182,000
To view all questions and flashcards with answers, click on the resource link above.
Page 16
Chapter 15: Choice of Business Entity-Other Considerations
Available Study Resources on Quizplus for this Chatper
103 Verified Questions
103 Flashcards
Source URL: https://quizplus.com/quiz/72562
Sample Questions
Q1) Jose is an employee of O'Hara Industry and earns $100,000 in 2018. The maximum amount O'Hara can contribute to a money purchase plan on behalf of Jose is
A)$15,000
B)$20,000
C)$25,000
D)$35,000
E)$40,000
Q2) Any structure over 100 years old is eligible for the rehabilitation tax credit.
A)True
B)False
Q3) IRS scrutiny of reasonable compensation usually deals with excess compensation paid to the shareholders of closely held corporations and unreasonably low salaries to shareholders of an S corporation.
A)True
B)False
Q4) The alternative minimum tax applies only to corporations. A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 16: Tax Research
Available Study Resources on Quizplus for this Chatper
92 Verified Questions
92 Flashcards
Source URL: https://quizplus.com/quiz/72561
Sample
Questions
Q1) During the legislative process, several groups of lawmakers become part of the system. Those groups include the
I.House Ways and Means Committee
II.Joint Conference Committee
III.U.S. Supreme Court
IV.Joint Committee on Taxation
V.U.S. Senate
A)Statements II and III are correct.
B)Statements I, IV, and V are correct.
C)Statements I, II, and V are correct.
D)Only statement I is correct.
E)Only statement V is correct.
Q2) Tax statute
A)Tax Court Reports
B)United States Tax Cases
C)Internal Revenue Code
D)Cumulative Bulletin
E)Not a primary source
Q3) Describe the steps of the tax research process.
To view all questions and flashcards with answers, click on the resource link above. Page 18