Federal Individual Taxation

Question 1

individual’s suspended passive activity losses

Answer 1

Passive activity losses not deductible nor carried back in the current year can only be carried forward, until utilized

Question 2

Beginning in 2005, the term “dependent” means:

Answer 2

a qualifying child or a qualifying relative

Question 3

Losses from gambling may be deducted as itemized deductions to the extent of

Answer 3

gambling winnings

Question 4

Gambling winnings must be shown at the

Answer 4

gross amount

Question 5

Doyle won $3,000 from gambling, how much of his grambling losses can be deducted:

Answer 5

3,000

Question 6

Interest income from municipal bonds is

Answer 6

excluded from gross income

Question 7

Wages paid for domestic services are subject to Social Security and Medicare taxes if

Answer 7

they exceed $1,800 in a calendar year to one employee

Question 8

If the second residence had been rented part of the year, the utilities and insurance may have been deductible, subject to the

Answer 8

vacation home rules.

Question 9

retirement plan rollovers is taxable when

Answer 9

Rollover of a traditional IRA into a Roth IRA

Question 10

the contribution to a traditional IRA is

Answer 10

deductible

Question 11

withdrawals from a Roth IRA are

Answer 11

tax-free,

Question 12

Commercial buildings placed in service after May 12, 1993, are depreciated over 39 years using

Answer 12

straight-line depreciation and mid-month convention

Question 13

is an allocation process to orderly reduce bond premium, bond discount, and bond issue costs by allocating the cost of an intangible asset to expense over time.

Answer 13

Amortization

Question 14

Smith is a member of the U.S. Armed Forces (an enlisted person) and is assigned to service in Iraq (a designated combat zone) for a period that begins on January 20 of the current year and ends on May 5 of the current year. How many months of military pay may Smith exclude from gross income for the current year?

Answer 14

5 months

Question 15

How is the depreciation deduction of nonresidential real property, placed in service in this year, determined for regular tax purposes using MACRS?

Answer 15

Straight-line method over 39 years

Question 16

What is the tax treatment of net losses in excess of the at-risk amount for an activity?

Answer 16

Any losses in excess of the at-risk amount are suspended and carried forward without expiration and are deductible against income in future years from that activity.

Question 17

An individual starts paying student loan interest in the current year. How many years may the individual deduct a portion of the student loan interest?

Answer 17

Duration of time that interest is paid

Question 18

A taxpayer reports a deduction for a long-term capital loss on his tax return for the current tax year. Match the phrase that best describes the status for alternative minimum tax (AMT) computations of this tax item.

Answer 18

Not a preference or an adjustment for the AMT

Question 19

Tax-exempt interest paid on private activity bonds issued after August 7, 1986, generally is a

Answer 19

tax preference which is an exclusion item.

Question 20

When a corporation has a group term life insurance plan available for employees, the following is considered to be discriminatory:

Answer 20

the plan will offer $50,000 of group term life insurance to officers and $10,000 of group-term life insurance to all nonofficers.

Question 21

Credit card interest is considered personal interest and is NOT

Answer 21

deductible on an individual’s tax return.

Question 22

Mike and Jane Lewis, a married couple filing a joint return, paid funeral expenses of $10,000 for their dependent child in 2013. Select the appropriate tax treatment of the funeral expenses.

Answer 22

Not deductible on Form 1040

Question 23

Funeral expenses are not deductible on

Answer 23

an individual’s income tax return.

Question 24

Which phrase best describes the status for alternative minimum tax (AMT) computations if a difference between profits on construction contracts computed under the percentage-of-completion method and completed-contract method for a contractor who uses the completed-contract method for regular tax exists?

Answer 24

An AMT preference or adjustment which is a deferral item for the AMT

Question 25

Alimony received should be included when determining

Answer 25

adjusted gross income

Question 26

compensation for injuries or sickness, rental value of parsonages, and tuition scholarship are excluded from

Answer 26

AGI

Question 27

A taxpayer reports a deduction for depreciation of business assets under the MACRS depreciation system on his tax return for the current tax year. Match the phrase that best describes the status for alternative minimum tax (AMT) computations of this tax item.

Answer 27

An AMT preference or adjustment which is a deferral item for the AMT

Question 28

Donations must be made to a qualifying organization to be

Answer 28

deductible for income taxes.

Question 29

Donation to an individual is NOT

Answer 29

Deductible

Question 30

a church or conventions or associations of churches charitable deduction is limited to

Answer 30

limited to 50% of an individual’s adjusted gross income.

Question 31

Security deposits by a lessee for performance of the terms of a lease are not income to the lessor if

Answer 31

the deposits are returnable to the lessee

Question 32

A taxpayer’s spouse dies in August of the current year. Which of the following is the taxpayer’s filing status for the current year?

Answer 32

Married filing jointly

Question 33

John Larken is a single taxpayer. He sells the home he has owned and lived in for the past 31 years for a gain of $200,000 on October 5, 2013. How much of this gain may he exclude?

Answer 33

$200,000