Taxation for Individuals Mock Exam
Course Introduction
This course provides a comprehensive overview of the principles and practices involved in the taxation of individuals. It covers the structure of income tax systems, including the determination of taxable income, allowable deductions, tax credits, and the calculation of tax liabilities. Students will explore topics such as reporting requirements, filing statuses, tax planning strategies, and compliance obligations. Real-world case studies and practical examples are incorporated to enhance understanding of current tax laws and their application to various individual circumstances. This course is designed to equip students with the foundational knowledge necessary for effective tax planning and compliance.
Recommended Textbook
Income Tax Fundamentals 2017 35th Edition by Gerald E. Whittenburg
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12 Chapters
1259 Verified Questions
1259 Flashcards
Source URL: https://quizplus.com/study-set/3531 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) The 3.8 percent ACA Medicare surtax does not apply to:
A)Interest
B)Dividends
C)Capital gains
D)Wages
Answer: D
Q2) Which one of the following provisions was passed by Congress to meet a social goal of the tax law?
A)The deduction for job hunting expenses.
B)The charitable deduction.
C)The moving expense deduction for adjusted gross income.
D)The deduction for soil and water conservation costs available to farmers.
E)None of the above.
Answer: B
Q3) The Affordable Care Act (ACA) added a Medicare surtax of 3.8 percent on net investment income.
A)True
B)False
Answer: True
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Page 3
Chapter 2: Gross Income and Exclusions
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132 Verified Questions
132 Flashcards
Source URL: https://quizplus.com/quiz/70132
Sample Questions
Q1) A scholarship for room and board granted in 2016 is fully taxable to the recipient.
A)True
B)False
Answer: True
Q2) Qualified dividends are given special tax treatment. Describe how they are taxed.
Answer: Qualified dividends are taxed at 0 percent, 15 percent, or 20 percent. The 0 percent rate applies to taxpayers in the ordinary income tax brackets of 10 percent and 15 percent. The 15 percent rate applies to taxpayers in the ordinary income tax brackets of 25 percent through 35 percent. The 20 percent rate applies to taxpayers in the 39.6 percent ordinary income tax bracket. An additional 3.8 percent Medicare surtax may apply for high-income taxpayers.
Q3) To promote business activity, the tax rules generally are very liberal in treating business gifts as tax-free income to the recipient.
A)True
B)False
Answer: False
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4
Chapter 3: Business Income and Expenses Part I
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122 Verified Questions
122 Flashcards
Source URL: https://quizplus.com/quiz/70131
Sample Questions
Q1) In determining whether an activity should be classified as a hobby, the tax law provides a rebuttable presumption with regard to the profits or losses of an activity. Which of the following statements describes the profit/loss test which must be satisfied in order to meet the presumption that the activity is not a hobby?
A)The activity shows a profit for 3 of the 5 previous years.
B)The activity shows a loss for 3 of the 5 previous years.
C)The activity shows a profit for 3 of the 7 previous years.
D)The activity shows a loss for 3 of the 7 previous years.
E)None of the above.
Answer: A
Q2) There is a limitation of $25 per donee on the deduction of gifts to employees for length of service.
A)True
B)False
Answer: False
Q3) The standard mileage rate for automobiles in 2016 is 56 cents per mile.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Business Income and Expenses Part II
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97 Verified Questions
97 Flashcards
Source URL: https://quizplus.com/quiz/70130
Sample Questions
Q1) 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?
Q2) John is a single 40-year-old landscape architect earning $125,000 a year and is not covered by a pension plan at work. How much can he put into a Traditional IRA in 2016?
Q3) What is the maximum amount a 55-year-old taxpayer and a 48-year-old spouse can put into a Traditional or Roth IRA for 2016, assuming they earn $85,000 in total and are not participants in pension plans?
Q4) Net losses on the rental of vacation homes are limited to 15 percent of total gross income.
A)True
B)False
Q5) Serissa Corporation has a Section 401(k) plan for its employees. The plan provides for a maximum contribution equal to 15 percent of the employees' salaries. Scott, a 40-year-old employee of Serissa Corporation, elects to contribute the maximum amount possible to the Section 401(k) plan. During 2016, Scott has $42,000 in wages. For 2016, what is the maximum amount that Scott may contribute to the plan on a tax-deferred basis?
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Page 6
Chapter 5: Itemized Deductions and Other Incentives
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143 Verified Questions
143 Flashcards
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Sample Questions
Q1) Roberto, age 50, has AGI of $110,000 for 2016. He has medical expenses of $13,200. How much of the medical expenses can Roberto deduct on his Schedule A for 2016?
A)$0
B)$4,950
C)$11,000
D)$13,200
E)None of the above
Q2) If a taxpayer contributes a painting to a museum but reserves the right to use the painting for parties, he may not be allowed a deduction for the charitable contribution.
A)True
B)False
Q3) Which one of the following is not considered a casualty or theft loss for tax purposes?
A)A taxpayer's residence is progressively destroyed by termites
B)A taxpayer's residence is burned down during a wild fire.
C)A taxpayer's car is destroyed by wild fire.
D)A taxpayer's bicycle is vandalized by local teenagers.
E)All of the above are casualty or theft losses.
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7
Chapter 6: Credits and Special Taxes
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107 Verified Questions
107 Flashcards
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Sample Questions
Q1) William and Irma have two children, Tom, age 13, and Sara, age 8. For 2016, Tom and Sara have a total parental tax of $5,600. Tom's net unearned income is $5,000, while Sara's net unearned income is $15,000. How much of the parental tax would be allocated to Sara on her 2016 tax return?
A)$0
B)$4,200
C)$2,800
D)$5,600
E)None of the above
Q2) All taxpayers are required to have minimum essential health coverage.
A)True
B)False
Q3) Unearned income of a 16-year-old child may be taxed at his or her parents' income tax rate.
A)True
B)False
Q4) New York is a community property state.
A)True
B)False
Q5) What is the purpose of the alternative minimum tax?
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Chapter 7: Accounting Periods and Methods and Depreciation
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111 Verified Questions
111 Flashcards
Source URL: https://quizplus.com/quiz/70128
Sample Questions
Q1) An asset (not an automobile) put in service in June 2016 has a depreciable basis of $535,000 and a recovery period of 5 years. Assuming bonus depreciation is used, a half-year convention, and no expensing election, what is the maximum amount of cost that can be deducted in 2016?
A)$107,000
B)$267,500
C)$321,000
D)$374,500
E)$535,000
Q2) Which one of the following may not be depreciated using an accelerated method?
A)A farming tractor
B)A computer used strictly for the farming business
C)A corn-husking machine
D)A farm truck that is operated for personal use more than 50 percent of the time
E)All of the above items may be depreciated using an accelerated method
Q3) The maximum annual Section 179 immediate expensing deduction in 2016 is $500,000.
A)True
B)False
Page 9
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Chapter 8: Capital Gains and Losses
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109 Verified Questions
109 Flashcards
Source URL: https://quizplus.com/quiz/70127
Sample
Questions
Q1) Sol purchased land as an investment on January 12, 2010 for $85,000. On January 31, 2016, Sol sold the land for $30,000 cash. In addition, the purchaser assumed the mortgage of $70,000 on the land. What is the amount of the realized gain or loss on the sale?
A)$65,000 loss
B)$15,000 gain
C)$5,000 gain
D)$90,000 gain
E)None of the above
Q2) Which one of the following is a capital asset?
A)Accounts receivable
B)Copyright held by the author
C)Securities held for investment
D)Inventories
E)All of the above are capital assets
Q3) Assuming a taxpayer has no other gains or losses for the year, a loss from the theft of a Section 1231 asset is treated as a capital loss.
A)True
B)False
Q4) What is the treatment given to personal casualty gains and losses?
Page 10
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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) Which of the following items may be subject to the self-employment tax?
A)A partner's distributive share of partnership income
B)Dividend income
C)Capital gains
D)Interest income
E)None of the above
Q2) Karen is single with no dependents and earns $18,000 a year. She gives her employer a Form W-4 on which she claims 17 allowances. What is her employer required to do about the Form W-4? Explain.
Q3) In 2016, the maximum amount of wages subject to the Social Security portion of the FICA tax is $118,500.
A)True
B)False
Q4) Gambling winnings must be reported to the IRS, but withholding of taxes on winnings is never required.
A)True
B)False
Q5) Tom had net earnings of $80,000 from the plant nursery he owns. What is his liability for FICA taxes on his earnings?
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Chapter 10: Partnership Taxation
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81 Verified Questions
81 Flashcards
Source URL: https://quizplus.com/quiz/70136
Sample Questions
Q1) Guaranteed payments made by a partnership must be made to individuals other than partners in the partnership.
A)True
B)False
Q2) Barry owns a 50 percent interest in B&B Interests, a partnership. His brother, Benny, owns a 35 percent interest in that same partnership, and the remaining 15 percent is owned by an unrelated individual. During the current year, Barry sells a rental property with a basis of $60,000 to B&B Interests for $100,000. The partnership intends to hold the rental as inventory for resale. What is the amount and nature of Barry's gain or loss on this transaction?
A)$40,000 long-term capital loss
B)$0 gain or loss
C)$40,000 long-term capital gain
D)$40,000 ordinary income
E)None of the above
Q3) The "at-risk" rule acts to prevent tax shelters from generating large losses for their investors while exposing them to little personal risk.
A)True
B)False
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Page 12
Chapter 11: The Corporate Income Tax
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80 Verified Questions
80 Flashcards
Source URL: https://quizplus.com/quiz/70135
Sample Questions
Q1) The original due date for a tax return of a corporation filing a Form 1120 with a calendar tax year-end falls before the original due date of a return for an individual taxpayer with the same tax year.
A)True
B)False
Q2) Harry forms the Nectarine Corporation during the current tax year. To form the corporation, Harry transfers assets having a fair market value of $650,000 to Nectarine Corporation for 100 percent of the corporation's stock. Harry's adjusted basis in the assets transferred was $375,000 and Nectarine Corporation assumed a $200,000 mortgage on the assets. If the fair market value of the stock received by Harry is $450,000, what is his basis in the stock received from the corporation?
A)$175,000
B)$200,000
C)$375,000
D)$450,000
E)None of the above
Q3) Corporations pay a flat 30 percent federal income tax.
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
Source URL: https://quizplus.com/quiz/70134
Sample Questions
Q1) Which of the following is the calculation of the failure-to-file penalties?
A)Half of 1 percent (0.5 percent) of the tax due for each month late, limited to 25 percent of the taxes due
B)5 percent of the tax due for each quarter late, limited to 25 percent of the taxes due
C)5 percent of the tax due for each month or part of the month that it is late, limited to 25 percent of the taxes due
D)20 percent of the tax due
E)5 percent of the tax due
Q2) Tax evasion involves the use of illegal methods to reduce or avoid income tax.
A)True
B)False
Q3) Which of the following is the most common type of audit for an individual taxpayer?
A)Office audit
B)Telephone audit
C)Correspondence audit
D)Field audit
E)None of the above
Q4) List three different ways that a tax return may be selected for an audit.
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Page 14