Module 8 Quiz

Question 1

Which of the following taxes is NOT allowed as an itemized deduction?

Answer 1

FICA taxes

Question 2

Which of the following circumstances would require most taxpayers to file a federal income tax return?

Answer 2

The taxpayer’s gross income exceeds the standard deduction

Question 3

Which of the following is NOT a filing status for federal income tax purposes?

Answer 3

Qualified disabled

Question 4

What is the significance of a taxpayer supporting a minor child as a dependent for federal income tax purposes?

Answer 4

The taxpayer may claim a tax credit for each dependent child under the age of 17

Question 5

Gross income includes all of the following types of income except _____.

Answer 5

Child support received

Question 6

Which of these would be included in calculating a client’s gross income?

Answer 6

Lottery prize money

Question 7

Which of these is an above-the-line deduction?

Answer 7

Deductible IRA contributions

Question 8

Which of the following is NOT allowed as an itemized deduction?

Answer 8

Rent paid for an apartment

Question 9

Bergen and Chris, a married couple filing jointly, are planning to buy a home in 2022. What is the maximum mortgage amount they can have and fully deduct the mortgage interest?

Answer 9

$750,000

Question 10

Which of these shows the progression through the individual income tax return (Form 1040) in the CORRECT order?

Answer 10

Gross income, adjusted gross income, standard or itemized deduction, taxable income, tax credits

Question 11

Which of the following is a type of additional tax that applies only to higher income taxpayers?

Answer 11

Medicare contribution tax

Question 12

What is the maximum amount of Social Security benefits that may be subject to taxation?

Answer 12

85%

Question 13

Which of the following statements correctly describes an asset’s adjusted basis?

Answer 13

Adjusted basis is the original cost basis of an asset, plus or minus certain adjustments

Question 14

Which of these statements regarding the basis of a gift received by a taxpayer is CORRECT?

Answer 14

A taxpayer’s basis in property received as a gift is generally the same basis as that of the person who gave the taxpayer the gift

Question 15

Under which of the following scenarios would a 55-year-old individual NOT be subject to the 10% penalty tax regarding an annuity?

Answer 15

If the individual begins receiving annuity payments for life

Question 16

Which of the following is a common nonrecognition transaction?

Answer 16

Gain from the sale of a principal residence

Question 17

Which of the following is NOT one of the three main types of income?

Answer 17

Deducted

Question 18

A tax planning strategy that shifts taxes to other individuals would include all of the following except _____.

Answer 18

Nontaxable property exchanges

Question 19

Which of the following statements regarding the filing process is true?

Answer 19

The first step in the filing process is determining a taxpayer’s proper filing status

Question 20

Which of the following statements is CORRECT?

Answer 20

A standard deduction may be taken from adjust gross income (AGI)

Question 21

All of these are potential long-term capital gain tax rates except _____.

Answer 21

35%

Question 22

In January 2019, Phan purchased Alpha stock for $3,000, which included a broker’s commission. In October 2021, he sold the position and netted $7,400 after deducting the broker’s commission. In January 2021, Phan bought a position in Gamma stock for $4,900. In September 2021, he sold the position and netted $4,500. Which of these describes Phan’s net capital gain or loss?

Answer 22

A net long-term capital gain of $4,000

Question 23

On which of the following schedules are itemized deductions reported?

Answer 23

Schedule A

Question 24

Which of these statements about the Lifetime Learning and American Opportunity education tax credits is CORRECT?

Answer 24

Both the Lifetime Learning and American Opportunity tax credits are phased out at higher income levels

Question 25

Which of the following correctly describes the tax consequences of tax credits?

Answer 25

Tax credits reduce a taxpayer’s actual tax liability on a dollar-for-dollar basis

Question 26

Assuming the client has only $2,500 of discretionary income available to divert to employee benefits, which of these employer-offered benefits would result in the greatest amount of tax savings from current income?

Answer 26

Ability to make contributions to a flexible spending account (FSA)

Question 27

Which of these taxpayer scenarios is possible?

Answer 27

Marginal tax rate of 32% and effective tax rate of 23%

Question 28

Which of these correctly describes the holding period for a capital gain or loss to be classified as long term?

Answer 28

The property must be held for more than 12 months

Question 29

Which of the following statements regarding the taxation of annuities is CORRECT?

Answer 29

If annuitized, both fixed-rate and variable annuities will be partially taxable

Question 30

Which of the following is a characteristic of Section 529 plans?

Answer 30

Account beneficiary can be charged