Saturday
August 2, 2014

Homework Help: Individual Income

Posted by Kheang on Wednesday, June 30, 2010 at 5:52pm.

1. Ann Bolen's husband died last year. Ann maintains a household where she and
her 8-year-old daughter reside for the tax year. On her tax return, she
properly claims a dependency exemption for her daughter. For the current year,
Ann should file her tax return as:
a. married taxpayer filing separately.
b. surviving spouse.
c. head of household.
d. single individual.
e. none of the above.

4. Tammy Yeager (unmarried, age 56) claims her elderly mother (age 74) as a
dependent. Tammy's mother does not live with her, but Tammy pays for almost
all of the costs of maintaining her mother's household. Tammy's 2009 standard
deduction is:
a. $8,350.
b. $9,750.
c. $5,700.
d. $7,100.
e. $9,450.
Answer: ______

10. In 2008, a couple pays $10,000 towards the adoption of a U.S. born child.
The couple pays another $10,000 in 2009 when the adoption is finalized. In
both years, AGI is less than $150,000. Which of the following statements best
describes the couple's adoption credit?
a. The couple is entitled to a $10,000 adoption credit in 2008, and a
$2,150 adoption credit in 2009.
b. The couple is entitled to a $20,000 adoption credit in 2009.
c. The couple is entitled to a $12,150 adoption credit in 2009, and will
carryover $7,850 to 2010.
d. The couple is entitled to a $10,000 adoption credit in 2009, and will
carryover $7,850 to 2010.
e. none of the above.
Answer: ______

11. A married couple with two dependent children (ages 6 and 9) and AGI of
$121,600 can claim a child tax credit of:
a. $0.
b. $600.
c. $1,400.
d. $2,000.
e. none of the above.
Answer: ______

12. A taxpayer's earned income and AGI is $23,000. The taxpayer's total tax
liability (before any tax credits) is $1,300. The taxpayer's only tax credits
are a $840 child and dependent care credit and the child tax credit for two
qualifying children. The taxpayer's refundable child tax credit is:
a. $2,000.
b. $460.
c. $0.
d. $1,540.
e. $700.
Answer: ______

16. As part of their divorce agreement, Harry transfers to Mary, his former
spouse, GM stock with a market value of $30,000. Harry had $20,000 invested in
the stock. How does this transfer affect Harry, and what is Mary's basis in
the stock?
a. Harry has no gain or loss, and Mary's basis is $20,000.
b. Harry has no gain or loss, and Mary's basis is $30,000.
c. Harry has a gain of $10,000, and Mary's basis is $20,000.
d. Harry has a gain of $10,000, and Mary's basis is $30,000.
e. None of the above.
17. Joyce Rescho is self-employed and uses the calendar year and the accrual
method of accounting. She reports the following activities for December:
Received
$10,000
from
clients
for
services
to be
performed
next year
Received
$30,000
for
services
performed
in
December
Reports
$15,000 in
accounts
receivable
for work
performed
in
December
Received
$2,000 for
services
performed
in
November
What amount must Rescho include in gross income for December?
a. $45,000
b. $47,000
c. $55,000
d. $57,000
e. None of the above
Answer: ______

19. Dan's taxable income falls in the 15% tax bracket. Included in his taxable
income is $5,000 of ordinary dividends, of which $2,000 are qualified
dividends. The amount of tax Dan will pay on his qualified dividends is:
a. $300.
b. $0.
c. $250.
d. $100.
e. $200.
Answer: ______


23. Which of the following statements does not apply to Coverdell education
savings accounts?
a. Parents may make nondeductible contributions of up to $2,000 per
child each year.
b. Contributions must be for a child of the taxpayer under the age of
c. Qualifying educational expenses include tuition, books, supplies, and
room and board.
d. When the child reaches age 30, unused amounts are distributed to the
parent who is taxed on any accumulated earnings.
e. All of the above apply to Coverdell education savings accounts.
Answer: ______

24. Mike and Deb (ages 49 and 53, respectively) file a joint return. Mike's
wages of $92,300 are their only source of income in 2009. Mike contributes to
his 401(k) plan at work. What amount can Mike contribute and deduct to his
traditional IRA for 2009?
a. $0
b. $3,730
c. $4,180
d. $5,000
e. $6,000
Answer: ______

25. The maximum dollar limit on deductible moving expenses is:
a. $2,250.
b. $5,250.
c. $7,250.
d. $10,250.
e. None of the above.
Answer: ______

26. Which of the following statements does not apply to the deduction for
student loan interest?
a. The student loan interest deduction is a deduction for AGI.
b. The deduction is available only for the first 60 months of interest
payments.
c. Acceptable educational expenses include tuition, books, supplies, and
room and board.
d. An interest deduction phase-out may apply.
e. None of the above.
Answer: ______

27. Post-graduate fellowship grants are taxable.
a. True
b. False
Answer: ______

28. A single person with $2,400 of earned income and $3,000 of unearned income
is entitled to contribute $5,000 to her IRA.
a. True
b. False
Answer: ______

29. Expenses not allowed as deductible medical expenses include:
a. cost of artificial teeth or limbs.
b. expenses to hire an ambulance.
c. premiums on life insurance.
d. cost of orthopedic shoes.
e. all of the above are deductible medical expenses.
Answer: ______

30. Olin owns a principal residence and two vacation homes. His home mortgage
interest on these three homes is $16,950, $20,900, and $22,680, respectively.
How much of the $60,530 can Olin deduct on Schedule A?
a. $60,530
b. $16,950
c. $39,630
d. $37,850
e. $43,580
Answer: ______

31. The Starks own a home in Tampa, Florida. They paid $1.2 million for the
home several years ago. They originally took out a $1 million mortgage on the
home. In the current year, the Starks refinanced their home at a time when the
home was worth $2 million and the outstanding mortgage balance was $700,000.
Their new mortgage is for $1.3 million. After the refinancing, the Starks's
acquisition debt amount is:
a. $1.2 million.
b. $700,000.
c. $1.3 million.
d. $1 million.
e. $800,000.
Answer: ______

32. The Martins' home is damaged in a hurricane. Prior to the hurricane, their
living expenses were $3,000 a month. Because the Martins had to move out of
their home for five months while it was being fixed, their total living
expenses increased to $5,000 a month. The insurance company reimbursed the
Martins $2,000 a month for their temporary living expenses. The amount that
the Martins must include in gross income is:
a. $0.
b. $5,000.
c. $2,000.
d. $3,000.
e. $10,000.
Answer: ______

33. Tom incurred two casualties during the year. The first involved his car,
which was involved in an accident. Tom's basis in the car was $15,000. Prior
to the accident, the car was worth $5,000; after the accident it was worth
$2,800. Tom's insurance company reimbursed him $1,000 for his loss. The second
casualty involved a theft of artwork from his home. Tom purchased the artwork
for $20,000 and it was worth $35,000 at the time of the theft. Tom's insurance
company reimbursed him $10,000 for his loss. If Tom's AGI is $55,000, his
casualty and theft loss deduction on Schedule A is:
a. $4,700.
b. $5,700.
c. $5,200.
d. $0.
e. None of the above.
Answer: ______

34. Investment income includes net capital gain and qualified dividends that
the taxpayer pays a lower (0% or 15%) tax rate on.
a. True
b. False
Answer: ______

35. When an individual has insurance coverage but declines to report a car
accident to the insurance company in order to avoid an increase in future
insurance premiums, the taxpayer cannot claim a casualty loss deduction for
any of the loss.
a. True
b. False
Answer: ______

36. Which of the following is not a factor considered in determining whether
an activity is a business or a hobby?
a. Locating the activity in the taxpayer's home
b. Relative amount of pleasure derived from the activity
c. Time and effort devoted to the activity
d. Extent of dependence on the activity for financial support
e. All of the above are factors considered in determining whether an
activity is a business or a hobby
Answer: ______

38. A taxpayer has $7,200 in gambling losses and has $6,000 of lottery
winnings. On his tax return:
a. The taxpayer will deduct $1,200 of gambling losses as a miscellaneous
itemized deduction subject to the 2% AGI rule.
b. The taxpayer will deduct $1,200 of gambling losses as a miscellaneous
itemized deduction (not subject to the 2% AGI rule).
c. The taxpayer will deduct $6,000 of gambling losses as a miscellaneous
itemized deduction (not subject to the 2% AGI rule).
d. The taxpayer will deduct $6,000 of gambling losses as a miscellaneous
itemized deduction subject to the 2% AGI rule.
e. None of the above.
Answer: ______

39. Katie is sent by her employer on a domestic business trip. She is gone a
total of 8 days. She flies to New York on Saturday and spends Sunday
sightseeing. She attends a conference Monday - Friday of that next week and
then flies home on Saturday. What portion of her airfare can Katie take as a
travel expense deduction?
a. 62.5%
b. 75%
c. 80%
d. 87.5%
e. 100%
Answer: ______

40. Which of the following statements is false regarding the hobby loss rules?
a. The deduction for expenses related to hobby activities cannot exceed
hobby income.
b. Hobby income is included in gross income and hobby-related expenses
are miscellaneous deductions subject to the 2% AGI rule.
c. Depreciation is the last expense taxpayers deduct against hobby
income.
d. Hobby deductions in excess of hobby income are carried over to offset
hobby income in future tax years.
e. All of the above statements are true (there are no false statements).
Answer: ______

41. Impairment-related work expenses for disabled employees are subject to the
2% of AGI rule in computing deductible miscellaneous expenses.
a. True
b. False
Answer: ______

42. Dues paid to public service organizations are deductible as employee
business expenses.
a. True
b. False
Answer: ______

43. Which of the following is generally not a deductible business expense on
Schedule C?
a. Office supplies
b. Depreciation
c. Rent
d. Charitable contributions
e. All of the above are deductible business expenses on Schedule C
Answer: ______

44. If the accumulation of home office expenses for the business use of a home
results in a net loss for the year, the expense that is the last deduction
taken and thus the first expense postponed to the next year is:
a. mortgage interest.
b. property taxes.
c. depreciation.
d. utilities.
e. none of the above.
Answer: ______

45. The maximum number of employees that an employer can have to be able to
offer a SIMPLE plan is:
a. 25.
b. 50.
c. 100.
d. 200.
e. none of the above.
Answer: ______

46. If a 45-year-old employee contributes $11,000 to his employer's 401(k)
plan during 2009, how much can he contribute to his employer's Roth 401(k)?
a. $5,500.
b. $16,500.
c. $11,000.
d. $10,500.
e. $0.
Answer: ______

47. The self-employment tax in 2009 for a sole proprietor with $154,800 of
profits from self-employment and no wages is:
a. $23,684.
b. $17,389.
c. $21,873.
d. $16,340
e. none of the above.
Answer: ______

48. The self-employment tax in 2009 for a sole proprietor with $154,800 of
profits from self-employment and $54,500 of wages is:
a. $8,002.
b. $12,437.
c. $10,631.
d. $15,346.
e. none of the above.
Answer: ______

49. If a taxpayer has Schedule C net profit of $60,000, the maximum
contribution to a SEP plan is $12,000, which is 20% of the Schedule C net
profit.
a. True
b. False
Answer: ______

50. On the first of each month, Donna's employer gives her $500 to cover her
work-related car expenses. The employer does not require Donna to report her
actual costs. During the year, Donna can substantiate driving 24,000
work-related miles. Which of the following describes the correct tax treatment
of Donna's car expenses and reimbursement?
a. Donna's employer adds $6,000 to her wages, and Donna deducts $6,000
for AGI and $7,200 as a miscellaneous deduction subject to the 2% AGI
rule.
b. Donna's employer adds $6,000 to her wages and Donna deducts $13,200
as a miscellaneous deduction subject to the 2% AGI rule.
c. Donna is not taxed on the reimbursement and she deducts $7,200 as a
miscellaneous itemized deduction subject to the 2% AGI rule.
d. Donna is not taxed on the reimbursement and she deducts $7,200 for
AGI.
e. Donna is not taxed on the reimbursement and she deducts $13,200 as a
miscellaneous deduction subject to the 2% AGI rule.
Answer: ______

Answer this Question

First Name:
School Subject:
Answer:

Related Questions

income tax - Hamad is an employee of Mountain Company. He properly completed his...
Tax - Hamad is an employee of Mountain Company. He properly completed his Form ...
Tax - Hamad is an employee of Mountain Company. He properly completed his Form ...
Fundamentals of Taxation - Hamad is an employee of Mountain Company. He properly...
Finance - An income-producing property is priced at $600,000 and is expected to ...
accounting - Complete the work sheet. In completing the worksheet, compute State...
accounting-income tax - During the current year, Deborah Baronne, a single ...
finance - Mary Watson is 24 years old and single, lives in an apartment, and ...
Accounting - pierce co has a june 30 fiscal year end. it estimated its annual ...
accounting - Ayres Services acquired an asset for $80 million in 2011. The asset...

Search
Members