Test Flashcards
Q1
Arthur files a single income tax return and his maximum tax-free interest under the education savings bond program is $6,000. How much of the interest is excludible if his modified adjusted gross income exceeds the applicable dollar limit by $5,000 (one-third of the phaseout range?
Chapter 1
a. $4,000
b. $2,000
c. $6,000
d. $0
a. $4,000
(MAGI minus Applicable dollar amnt divided by 15k times Maximum tax free interest = inludable interest
The amount of interest excludible under the program is equal to the max tax-free interest minus the portionof it that must be included income because of the taxpayer’s MAGI.
$96,850-91,850 ÷15k x 6000
$5000 ÷ 15,000 = .33333
.3333 x $6000 = $2,000
$6000-$2000 = $4,000
See Picture for 2024 -12/5
What is the maximum amount that may be contributed to an employer’s flexible spending arrangement for medical expenses in 2023?
Search Chapter 1
a. $3,050
b. $5,100
c. $10,200
d. No dollar limit applies to flexible spending account contributions for medical expenses
$3,050
For 2024 -3200
p15 2023
Barbara is a single taxpayer who had a 2023 gross income of $25,000 and contributed $4,000 to her traditional IRA. Assuming she has a $2,000 income tax liability for the year, what is her maximum retirement contribution savings credit?
a. $200
b. $800
c. $1,000
d. $2,000
Wrong c. $1,000
i would say: $2000
Big Broker, Inc., an employer with 200 employees, offers health insurance coverage to its employees and dependents and pays one-half of employee premiums. For what potential tax penalty would it be liable if two of its employees obtained insurance coverage through an exchange in 2023 and received a premium subsidy for the entire year if hte applicable annual penalty amount is $4,320
a. $0
b. $4,320
c. $8,640
d. $40,000
$4,320 is wrong
Helen’s Helper, Inc, a house cleaning company, employs 10 full-time enrolled employee and its monthly insurance premium rates are $400 for employee-only coverage and $1,000 for family coverage, what is the minimum monthly premium contribution the firm must make in order to qualify for the Small Business Tax Credit
Search Chapter 1
a. $2,000
b. $4,000
c. $5,000
d. $10,000
a. $2,000
Q2 p14
Julian is age 60 and paid $1,800 for qualified long-term care insurance in 2023, how much of the premium can he include in his medial expenses?
Chapter 1
a. $0
b. $1,060
c. $1,790
d. $1,400
c. $1,790
$1760 2024 p14/8
Q3 -p14/2024
Lloyd is chronically ill and received tax-qualified long-term care insurance benefits in 2024 amounting to $9,000 to cover a 30-day nursing home stay. What amount, if any, must he include in income if actual nursing home costs for the 30 days amounted to $8,500 and the applicable per diem limitation was $410?
Chapter 1
a. a. $0
b. $500
c. $8,500
d. $9,000
a. $0
If the benefit does not exceed the per diem limitation, all benefits are tax-ree even though the benefits exceed the actual costs incurred
Q4
What is the Social Security taxably earnings limit applicabe to wages received in 2023?
Chapter 1
a. $51,300
b. $108,600
c. $160,200
d. No limit applies
c. $160,200
2024 168,600 p21/15
Q5 - p172023 p109 2024
Barbara’s household income in 2022 is 150% of the federal poverty line, and she purchased health insurance coverage through an ACA marketplace whose premium does not exceed the premium for a benchmark plan. what percentage of the premium cost is her expected contribution toward the premium?
Chapter 1
a. She has no expected contribution
b. 8.5%
c. 12.05%
d. 15.08
a. She has no expected contribution
Q6 - p17 2023 p. 109 2024
What is a taxpayer’s maximum expected contribution toward health insurance coverage whose premium does not exceed the premium for a benchmark plan purchased through an ACA marketplace in 2023?
Chapter 1
a. 2%
b. 4%
c. 6%
d. 8.5%
d. 8.5%
Q7 - p16 2023 p 109 2024
If a taxpayer’s 2022 household income of $60,000 places the taxpayer at 250% of the federal poverty level, what is the taxpayer’s normal expected contribution when calculating the refundable tax credit for which the taxpayer may be eligible in 2022 under the ACA to purchase a qualified plan
(chapter 1)
a. $1,200
b. $2,400
c. $4,800
d. $5868
B: $2,400
.04 times $60,000 = $2400
Q8 - p20 2023 p19 2024
What is the maximum percentage of the paid health insurance premium for which an eligible non-profit small employer could be eligible as a tax credit in 2023?
(Chapter 1)
a. 0%
b. 25%
c. 35%
d 50%
c. 35%
Q9
Al, age 35, owned a family high deductible health policy as part of his HSA for the entire year. What is his maximum permitted contribution to the HSA in 2023 if his deductible is $5,000
Chapter 2
a. $3,350
b. $3,750
c. $5,000
d. $7,300
d. $7,300
$8300 Family 2024
4150 Self 2024
Jennifer is required to take a $30,000 minimum ditribution from her traditional IRA but decided only to take a distribution of $20,000. For what penalty tax, if any, is she liable?
Search Chapter 2
a. No tax penality is imposed
b. $1,000
c. $2,500
d. $5,000
c. $2,500
2024 RMD p43-44/37-38 Secure act reduces excise tax from 50% - 25% and further reduced to 10%. See p 44/38
Dan purchased 2 exterior doors for $500 apiece and 3 energy-efficient windows for $400 apiece. Assuming the items qualify for an energy-efficient home improvement tax credit, for what tax credit would he be eligible?
Search Chapter 2
a. $660
b. $980
c. $1.560
d. $2,200
a. $660
2024 See example p. 83-84 /77-78
1000 x .30 = $300 Doors
3 X 400 = 1200 x .30 = $360
Total: 300 + 360 = $660
Harry became age 72 in 2022. Which of the following choices is correct concerning his need to take required minimum distributions from his traditional individual retirement account?
Search Chapter 2
a. No RMD is required
b. RMDs must begin by April 1, 2022
c. RMDs must begin by April 1, 2023
d. RMDs are delayed for Harry until December 31,2023
Answer: C RMDs must begin by April 1 2023
P. 43/37
For which filing status is the base amount the highest for determing the taxability of a taxpayer’s Social Security benefits?
Chapter 3
a. Married Filing Jointly
b. Married filing separately
c. Single
d. Head of Household
a. Married Filing Jointly
Q10
Cheryl took early retirement at age 55 last year and received a $10,000 taxable distribution from her HSA during the year. What, if any, tax penalty will be imposed on her HSA distributio if no exception to the penalty applies.
Chapter 2
a. $500
b. $1,000
c. $2,000
d.
c. $2,000
Q11
Justin, age 66, paid $6,000 in qualified medical expenses in 2022 and took an $8,000 HSA distribution during the year. What tax penalty will apply with respect to the excess distribution?
Chapter 2
a. $0
b. $400
c. $1000
d. $1,600
Got wrong; $400 is wrong
Believe $0 since he is over 65
Q12
Jack is age 45 and owns a self-only high deductible health policy with a $7,000 deductible under his HSA. What is his maximum permitted HSA contribution in 2022?
Chapter2
a. $3,250
b. $3,650
c. $4,600
d. $7,200
b. $3,650
2024 Self- only is $4150
Family 8300
Q13
Bob, an age 55 taxpayer with family coverage under his HDHP, may make an HSA contribution not exceeding _______ in 2022
Chapter 2
a. $3,600
b.$4,600
C. $7,300
d. $8,300
d. $8,300
Q14
Trevor reported a $63,000 coronavirus-related distribution on his 2020 form 8915-E and spread the income over three years, 2020 through 2022. Trevor made repayments of $21,000 in 2020 and 2021, but only made a repayemt of $6,000 in 2022. How much of the distribution, if any, would Trevor be required to recognize as income in 2022?
Chapter 2
a. $63,000
b. $21,000
c. $15,000
c. $0
c. $15,000
Q15
What is the maximum additional health savings account (HSA) contribution that may be made by a 60 year old partipant because of age?
chapter 2
a. $0
b. $500
c. $1,000
d. $2,500
c. $1,000
Q16
Phil operated his personal vehicle for business purposes in 2022. If he travels 20,000 miles on business and uses the business standard mileage deduction, by what amount must he reduce the vehicle’s basis?
Chapter 2
a. $2,700
b. $5,200
c. $8,100
d. $10,800
b. $5,200
p. 23/16
2024 $0.30 per mile
.30 x 20,000 = $6,000
Q17
Sally is an online retailer who engages in Third-Party Network transactions via NetTrans, Inc. Payment Company to facilitate financial transaction in the sale of her products. forr 2022, what is the minimum aggregate sales nad number of sales per year required to trigger a 1099-k by Net Trans, Inc Payment Company?
Chapter 2
a. more than $20,000 in aggregate sales, minimum of 200 sale transaction
b. more than $10,000 in aggrage sales, minimum of 100 sale transaction
c. more than $5,000 in aggregate sales, minimum of 50 sale transactions
d. more than $600 in aggregate sales, no minimum number of sale transaction
d. more than $600 in aggregate sales, no minimum number of sale transaction
p. 23/17 - 2024
Q18
Joan reported an $18,000 coronavirus on her 2020 Form 8915-E and spread the income over three years. She made a $6,000 repayment in 2020, and a $10,000 repayment in 2021. If she made no repayment in 2022, what amount of income, if any would sh e be required to recognize in 2022?
a. $2,000
b. $4,000
c. $6,000
d. $10,000
a. $2,000
Which of the following factors determines whether Social Secuirty benefits received by a taxpayer are tax tree?
Chapter 3
a. The taxpayer’s gender
b. Whether the benefits are survivor, disability or retirement benefits
c. The taxpayer’s income from all sources
d. whether the taxpayer has foreign earned inconme
c. The taxpayer’s income from all sources
Q19
John, a cash method taxpayer, received advance comissions in 2023 for work he will be doing in each of the three following years. In what year(s) must he include the commissions in his income for tax purposes.
chapter 3
a. In 2023
b. In 2024, the first year of performing the work
c. In each of the years 2024 to 2026, equally
d. In 2026 when the final work is complete.
a. In 2023
Q20
Alan’s employer maintains a long-term disability income plan on which it pays all premiums. Last year, alan received $40,000 in benefits under the plan during his period of disabilty. How much of the benefits received, if any, must Alan include in his income?
chapter 3
a. $0
b. $10,000
c. $30,000
d. $40,000
d. $40,000
p. 39/33
Q21
Shirley received $500 monthly sick pay under a welfare fund and $6,500 monthly under a disability insurance policy offered by her employer on which she paid the premiums. How much, if any, of the $7,000 monthly benefits would be taxable to her?
Chapter 3
a. $0
b. $500
c. $6,500
d. $7,000
b. $500
Q22
Last year Ellen received $75,000 in compensation from her employer who also agreed to pay her Social Security taxes of $4,650 and Medicare taxes of $1,088 without deducting them from her wages. Based soley on these facts, what amount must Ellen include in her income?
Chapter 3
a.$75,000
b. $76,088
c, $79,650
d. $80,738
d. $80,738
Q23
When must a taxpayer who has received stock appreciation rights from an employer include the value of the rights in income?
Chapter 3
a. In the year in which the rights are granted
b. In the year in which the taxpayer is free to exercise the rights
c. In the year in which the rights are exercised
d. Never
c. In the year in which the rights are exercised
Q24
Audrey was granted stock appreciation rights in $10,000 shares of company stock when the share price was $50. If she exercised her rights when the share price was $70, how much income, if any, must she recognize at that time?
Chapter 3
a. $0
b. $200,000
c. $500,000
d. $700,00
b. $200,000
p. 40-41/33-34
Q25
Schedule B, Part III, Foreign Accounts and Trusts, must be completed if any of the following apply except:
Chapter 3
a. The taxpayer had more than $1,500 of taxable interest or ordinary dividends
b. The taxpayer had a foreign account
c. The taxpyaer received a distribution from a foreign trust
d. The taxpayer is claiming the exclusion of interest from series EE Savings bonds
d. The taxpayer is claiming the exclusion of interest from series EE Savings bonds
p. 40/34 2024
Q26
Shirley and Bob are married, receive Social Security benefits and file a joint tax return.. What is the base amount with which 1/2 of their net Social Security benefits plus other income must be compared to determine the amount includible in income?
Chapter 3
a. $0
b. $25,000
c. $32,000
d. $50,000
c. $32,000
Q27
Susan has remained in the service of the employer sponsoring the qualified retirement plan beyond her normal retirement age. When must she begin taking required minimum distributions from the plan?
Chapter 3
a. Age 59 1/2
b. Age 65
c. Age 73
d. The later of her age 72 or retirement from the service of the employer sponsoring the plan
d. The later of her age 72 or retirement from the service of the employer sponsoring the plan
Q28
What is the maximum percentage of a taxpayer’s social Security benefits that may be included in income for tax purposes?
Chapter 3
a. No Social Security benefits are includible in a taxpayer’s income for tax purposes
b. 15%
c. 85%
d. 100%
c. 85%
Q29
For which filing status is the base amount the highest for determing the taxability of a taxpayer’s Social Security benefits?
Chapter 3
a. Marrief filing jointly
b. Married filing separately
c. single
d. Head of Household
a. Marrief filing jointly
Q30
Alan, a married taxpayer who lives with is spouse, files his tax return as married filing separately. What base amount applies in connection with determing the taxability of his soical Secuirty benefits.
Chapter 3
a. $0
b. $16,000
c. $25,000
d. $32,000
a. $0
Q31
At what age must traditional IRA owners begin taking required minimum distributions in 2022?
a. Age 65
b. Age 701/2
c. Age 72
d. Traditional IRA owners are not required to take required minimum distributions
c. Age 72
p.43/37
Q32
Harry received $20,000 of unemployment compensation in 2023. How much of that unemployment compensation must he include in his income?
Chapter 4
a. $0
b. $9,800
c. $10,200
d. $20,000
d. $20,000
Which of the following would be considered a direct expense when using the actual expense method of figuring the deduction for a taxpayer’s business use of part of his or her home?
Chapter 4
a. Homeowner association dues
b. Expenses of cleaning the carpets in the space used for business purposes
Lawn maintenance expenses
d. Expenses incurred for heating the home
b. Expenses of cleaning the carpets in the space used for business purposes
As an alternative to using the actual expense method of determing a home office deduction, a taxpayer may elect to use
Chapter 4
a. The decling balance method
b. The historical use method
c. The simplified method
d. The average annual use method
c. The simplified method
Jeremy entered into a divorce agreement in 2023 under which he agreed to make annual payments of $100,000. How much of the payments made to his ex-spous may he deduct.
a. $0
b. $25,000
c. $50,000
d. $100,000
a. $0
Q33
Shirely had made $4,000 of nondeductible payments to a govenmental unemployment compensatin program at the time she began receiving unemploymnet benefits under the program. If she received $10,000 of unemployment compensation in 2023, how much of the benefits received mush she include in her income, assuming, she had never previously received unemployment compensation
Chapter 4
a. No governmental unemployment compensation program benefits are includable in income
b. $4,000
c. $6,000
d. $10,000
c. $6,000
Q34
Susan received unemployment amounting to $8,500 in 2023 and repaid $1,500 in the same year. How is the unemployment reported?
Chapter 4
a. The total unemployment compensation received must be included in compensation
b. the amount repaid should be subtraced from the total amount of unemployment compensation received and the difference entered on Form 1040, Shecule 1.
c. The amount repaid should be deducted on Form 1040 Schedule A
d. No reporting is required since unemployemnt compensation is not includible in income.
b. the amount repaid should be subtracted from the total amount of unemployment compensation received and the difference entered on Form 1040, Shecule 1.
p. 50/44
Q36
The characteristics of a third party payment network include All the following except:
Chapter 4
a. The existence of a central organization with whom providers of goods and services have established accounts
b. an agreement between the central organization and providers to settle transactions between the providers of goods and services and purchasers.
c. The establishment of standards and mechanisms for settling such transactions, and the guarantee of payment in settlement of such transactions.
d. the requirement of being an online auction payment facilitator.
d. the requirement of being an online auction payment facilitator.
Q37
Ellen had church employee income during the year. Under IRS rules, she must file a Form 1040 and Schedule SE if her church employee income is _ or more.
Chapter 4
a. $108.28
b. $400.65
c. $600
d.$1,000
a. $108.28
Q38
Peter is a carpenter employed by Big Contruction, Inc. In addition to his work as an employee he also builds and sells cabinets on a self-employed basis. Accordingly, he must file a Form 1040 and Schedule SE if his net earning from self employment are ____
or more.
a. 108.28
b. $400
c. $600
d. $1,000
b. $400
Q39
Arthur had gross recipts of $8,000 from his hobby and incurred necesary expenses of $10,000. How much of his incured expenses may he deduct?
chapter 5
a. $0
b. $2,000
c. $8,000
d .$10,000
a. $0
Q40
An activlely engaged in by a taxpayer is presumed to be carried on for a profit and is, therefore, a business rather than a hobby if it makes a profit during at least___ of the last five tax years, including the current year.
Chapter 4
a. one
b. two
c. three
d. four
c. three
Q41
Which of the following taxpayers may qualify for a home office deduction for business use of the taxpayer’s home even though the use of the space is not exclusive to the business?
chapter 4
a. Shirley, who uses part of her home in her beauty shop
b. Bob a self-employed chiropractor, who uses a room in his home to see patients.
c. Audrey, who operates a daycare facilty
d. Arthur, a statutory employee, who uses a room in his home to schedule appointments with clients
c. Audrey, who operates a daycare facilty
Q42
Jim used the actual expense method of determing his home office deduction last year and was required to carryover expenses of $1,500. How much of that carried over expense can he deduct this year when he uses the simplified method, assuing he uses 10% of his home for business purposes?
Chapter 4
a. $0
b. $150
c. $1,350
d. $1,500
a. $0
p.57/51
A43
Which of the following expenses incurred with respect to the busness use of a home are normally deductible in full, subject to any applicable deduction limit?
Chapter 4
a. Depreciable expenses
b. Indirect expense
c. Unrelated expenses
d. Direct expenses
d. Direct expenses
Q44
Which of the following would be considered a direct expense when using the actual expense method of figuring the deduction for a taxpayer’s business use of part of his or her home.
chpater 4
a. Howeowner association dues
b. Expenses of cleaning the carpets in the space used for business purposes
c. Lawn maintenance expenses
d. Expenses incurred for heating the home
b. Expenses of cleaning the carpets in the space used for business purposes
Q45
For purposes of figuring the home-office deduction, the term ___ refers to an expense a taxpayer incurs for keeping up and running his or her entire home
Chapter 4
a. direct expense
b. unrelated expense
c. Qualified expense
d. indirect expense
d. indirect expense
Q46
Which of the following expenses is not deductible when a taxpayer uses the simplified method of calculating the home office deduction?
Chapter 4
a. Business telephone expenses
b. The cost of repairs to the office
c. The cost of cleaning carpeting in the office
d. Depreciation
d. Depreciation
p. 57/51
Q47
Phyllis operates her business from her home and maintains a 400 square foot office if she uses the simplified method of determing her deduction for business use of her home and the prescribed rate is $5.00, what is her deduction for business use of her home?
Chapter 4
a. $500
b. $1,000
c. $1,500
d. $2,000
c. $1,500
The simplified method allows a standard deduction of $5 per square foot of home used for business, with a maximum of 300 square feet.
Q48
Which of the following expenses are deductible under the home office deduction only in an amount equal to the total of such expenses multiplied by the percentage of the home used for business?
Chapter 4
a. Indirect expenses
b. direct expenses
c. Unrelated expenses
d. Qualified expenses
a. Indirect expenses
Q49
A self-employed taxpayer must retain all the following supporting documents EXCEPT:
Chapter 4
a. The taxpayer’s gross receipts
b. Amounts paid for inventory
c. The number of hours the taxpapyer worked
d. Business expense records
c. The number of hours the taxpapyer worked
Q50
For what minimum period must a self-employed taxpayer retain business documents supporting her federal tax return?
chapter 4
a. For 6 months followoing hte due date of hte return
b. For 2 years following the due date of the return
c. For 3 years following the due date of the return
d. For as long as they are material to the administration of tax law
d. For as long as they are material to the administration of tax law
A taxpayer’s 16-year old dependent son earned $7,000 in 2023, what is the standard deduction for him?
Chapter 5
a. $7,400
b. $13,850
c. $1,150
d. $0
a. $7,400
What is the maimum amount of the refundable Child Tax Credit available for each qualify child age 6 or older in 2023?
a. $0
b. $1,600
c. 2,000
d. $3,600
Wrong: $2,000
Additional child credit would be: $1,600
John and Debbie refinanced their $300,000 home mortgage balance for a new mortgage of $400,000, all of which was used to substantially improve their home. How much of the $400,000 morgage debt would be considered home acqusition debt?
Chapter 5
a. $0
b. $100,000
c. $300,000
d. $400,000
Wrong: $300,000
p.68/62
Cynthia made a large charitable contribution that exceeded her deductible limit. What is the maximum number of years, if any, she can carroy over the amount exceeding her dedutbile limit?
Chapter 5
a. charibable contribution may not be carried over
b. Two years
c. Five years
d. Seven years
c. Five years
Q52
Which of the following would be ineligible to take the standard deduction?
Chapter 5
a. Peter, who files as head of household
b. Adrienne, who files as married filing separately and whose spouse itemizes deductions
c. Harry, who claims the qualified business income deduction
d. Shirely, a dependent
b. Adrienne, who files as married filing separately and whose spouse itemizes deductions
Q53
By what percentage of AGI must expenses be reduced for the tapayer for the taxpayer who itemizes deductions for medical and dental care on Schedule A, for 1040.
Chapter 5
a. 0%
b. 5%
c. 7.5%
d. 10%
c. 7.5%
Q54
Helen and Jim itemize deductions when they file their income tax return as married filing jointly. If they paid $14,000 in state and local taxes in 2023, what would be the maximum state and local tax deduction they can take on their federal income tax return.
Chapter 5
a. $0
b. $4,000
c. $10,000
d. $14,000
c. $10,000
Q55
Bob and Carol refinanced their sole residence, valued at $500,000. In 2023. Under the refinancing arrangement, they refinanced their $300,000 indebtedness for $400,000, receiving $100,000, in cash that they used to pay for their daughter’s wedding. What percent of the interesst they pay on the refinanced property are they able to deduct.
Chapter 5
a. 25%
b. 50%
c. 75%
d. 100%
c. 75%
Q56
What is the limit generally applicable to an itemizing taxpayer charitable cash contributions made in 2022?
Chapter 5
a. 20% of the donor’s contibution base
b. 30% of the donor’s contribution base
c. 50% of the donor’s contribution base
d. 60% of the donor’s contribution base
d. 60% of the donor’s contribution base
Q57
Which of the following is not required in a contemporaneous written acknowledgement of a charitable gift?
Chapter 5
a. The amount of cash and a description of any property other than cash contributed.
b. Whether the organization receiving the gift provided any goods or services in return for the gift.
c. A statement concerning the donor’s cost basis
d. A descrition and a good-faith estimate of the value of any goods or services given by the donor
c. A statement concerning the donor’s cost basis
Q58
Which of the following 2022 losses is tax deductibly?
Chapter 5
a. A loss of money due to theft
b. A loss of valuable jewlery due to theft
c. A casualty loss attributable to a federally declared disaster
d. A casualty loss due to dampness
c. A casualty loss attributable to a federally declared disaster
Q59
John and Shirely have one twelv- year- old child eligible for the Child Tax Credit, file their tax return as married filing jointly and have an AGI that exceeds the threshold at which the credit amount begins to phase out by $10,000. For what Child Tax Credit would they be eligible.
Chapter 6
a. $0
b. $500
c. $1,500
d. $3,000
Got wrong
a. $0 is wrong
b. $500 is wrong
Q60
What is the maximum amount of the refundable Child Tax available for each qualifying child age 6 or older in 2023?
a. $0
b. $1,600
c. $2,000
d. $3,000
Wrong c. $2,000
Answer: $1,600
p. 74/68
Q61
What is the maximum percentage of eligible expenses a taxpayer’s child and dependent care tax credit may be for 2023?
Chapter 6
a. 15%
b. 25%
c. 35%
d. 50%
c. 35%
p. 74/68
Q62
What is the maximum amount of work related child and dependent care credit that may be claimed for 2022 by a taxpayer who has three qualiying persons
Chapter 6
a. $1,000
b. $3,000
c. $ 6,000
d. $9,000
c. $ 6,000
Q63
Peter has three daughers who are eligible students. What is the maximum amount of tax credit available to him under the American Opportunity credit, assuming he meets all requirements.
Chapter 6
a. $2,000
b. $2,500
c. $7,500
d. 12,000
c. $7,500
Q64
For what maximum period of time is an American opportunity credit available for each eligible student?
Chapter 6
a. Four years
b. Six years
c. For the period of time needed by the student to earn an undergraduate degree
d. No maximum period is prescribed
a. Four years
Q65
Ellen paid $15,000 of qualified education expenses for an eligible student. Based on those expenses, for what lifetime learning credit would he be eligible, assuming she qualifies in all other respects?
Chapter 6
a. $2,500
b. $2,000
c. $3,000
d. $1,500
b. $2,000
Q66
What is the basis of virtual currency received by a taxpayer as payment for goods and services.
Chapter 7
a. The Fair Market Value of the virtual currency in U.S. dollars as of the date of receipt
b. The fair market value of the virtual currency in U.S. dollars as of the date it is subsequently traded.
c. The cost of the goods and services traded for the virtual currency as of the date of receipt
d. $0
a. The Fair Market Value of the virtual currency in U.S. dollars as of the date of receipt
Which of the following would be deemed a specified service trade or busiess in addition to the various trades or businesses identified by the law and reulation as SSTBs?
Chapter 7
a. A trade or business whose principal asset is the reputation or skill of one or more of its employees
b. A trade or business operated without common law employees
c. a corporation
d. The trade or business of being an architect
a. A trade or business whose principal asset is the reputation or skill of one or more of its employees
p. 95/89
Bill and Edna are married and file a joint tax return in 2023, what is their applicable income threshold for the 199A pass-through deduction?
Chapter 7
a. $182,100
b. $232,100
c. $354,200
d. $464,200
c. $354,200
2024 -383,900 p. 96/90
What is the maximum anount that may be withdrawn fro a Section 529 Qualified Tutition Plan in 2023 for elementary school tuition that would be considered a qualified education expense.
Chapter 7
a. No elementary school tuition would be considered a qualified educatin expense under a Section529 Plan
b. $10,000
c. $25,00
d. No limit applie
b. $10,000
At what 2023 alternative minimum income (AMTI) threshold does a taxpayer’s alternative minimum taxable income exemption begin to phase out if the taxpayer’s filing status is married filing jointly?
Chapter 7
a. $85,650
b. $114,600
c. $523,600
d. $1,156,300
d. $1,156,300
A child’s 2023 income subject to the Kiddie Tax is taxed in accordance with ____________ rates and brackets
a. the child’s parents’
b. married taxpayers’ filing jointly
c. unmarried taxpayers’
d. head of household
a. the child’s parents’
p103/97
Arthur is a tax preparer doing business as a sole proprietor. Under what circumtances could he receive a pass-throu deduction that is not limited as a result of being an SSTB?
Chapter 7
a. Only if Arther were a CPA
b. Only if Arthur’s business is aggregated with another business that is not an SSTB
c. Only if Arthur’s taxable income does not exceed the applicable threshold
c. Only if Arthur’s business QBI does not eced the applicable threshold
c. Only if Arthur’s taxable income does not exceed the applicable threshold
p95/89
Q67
As a single tax payer, Jennifer’s AMTI exemption would be $81,300 if her AMTI did not exceed $578,150. Because her AMTI was $678,150, what is her AMTI exemption ?
Chapter 7
a. $0
b. $23,600
c. $56,300
d. $73,600
c. $56,300
Q69
Jennifer’s pass-through has total qualified business income of $100,000 and combined REIT dividends/PTP income of $20,000. Since her taxable income. of $150,000, including $10,000 of net capital gain, is below the applicable threshold, what is her pass through deduction.
a. $20,000
b. $24,000
c. $28,000
d. $30,000
Wrong a. $20,000
Q70
Which of the following taxpayers would not be eligible for the pass-through deduction available under secction 199A of the Tax Cuts and Jobs Act of 2017?
Chapter 7
a. Sarah, who operates a a clothing store as a sole proprietor
b. Will who operates a gun shop organized as an S corporation
c. Adrian, who operates a landscaping business as a C corporation
d. Shirely whose limited liability company (LTC) profides stenographic services to the legal profession
c. Adrian, who operates a landscaping business as a C corporation
p. 95/89
Q71
Which of the followoing businesses would be ineligible for the “pass-through” deduction?
Chapter 7
a. A sole proprietorship
b. A regular corporation
c. A partnership
d. A limited liability company taxed as a partnership
b. A regular corporation
p.95/89
Q72
A/n ________ as the term is used with respect to the pass through deduction means any trade or business other than a specified service trade or business or the trade or business of performing services as an employee.
Chapter 7
a. SSTB
b. Pass-through business
c. Relevant pass-through or business
d. Qualified trade or business
d. Qualified trade or business
p. 95/89
Q74
Harry experienced a substantial net operating loss in 2022. What is the maximum percent of that loss that may be carried forward
a. No more than 40% of the taxpayers taxable income
b. No more than 60% of the taxpayer taxable income
c. No more than 80% of the taxpaye’s taxable income
d. No more than 100% of the taxpayer’s taxable income
c. No more than 80% of the taxpaye’s taxable income
Q75
Which of the following 2023 elementary school expenses, if any, is considered a qualified education expense under a Section 529 Tuition Savings Plan?
Chapter 7
a. Expenses for needed books and suppplies
b. Expenses for tuition
c. Expenses for room and board.
d. No elementary school expenses are considered qualfied epenses undera Section529 plam
b. Expenses for tuition
From course: However, elementary and secondary school expenses were not considered qualified education expenses.
The TCJA broadens the definition of qualified education expenses by authorizing an annual qualified
distribution of contributions made after 12/31/17 (and income on such contributions) of up to $10,000
from all of a taxpayer’s §529 plans for elementary or secondary school tuition.
Note: Expenses for college include
https://turbotax.intuit.com/tax-tips/college-and-education/information-on-529-plans/L0vrZiFuC
Qualifying expenses typically include books, tuition, mandatory fees, room and board and any necessary equipment.
Q76
A designated beneficiary of an ABLE accuont must be ____ in order to meet the special rules that apply to the increased contributin limit authorized under the Tax Cuts and Jobs Act
Chapter 7
a. an employee for whom no contribuition is made for the taxable year to a defined contribution, TSA or section 457 deferred compensation plan
b. terminally ill
c. age 55 or older
d. on public assistance
a. an employee for whom no contribuition is made for the taxable year to a defined contribution, TSA or section 457 deferred compensation plan
p. 106/100
Q77
The tax Cuts and Jobs Act expanded the tax-free nature of student loan forgiveness due to the student’s.
Chapter 7
a. death or disability
b. working in identified professions
c. working in underserved areas
d. working for the federal government
a. death or disability
p. 107/101
Q78
Student loan forgiveness in 2023 that would be includible in income except for the passage of the American Rescue Plan Act is tax free UNLESS:
Chapter 7
a. The loan discharge is made on account of services performed
b. The taxpayer has died
c. The taxpayer is in the military and stationed outside of the U.S.
d. The taxpayer is disabled
a. The loan discharge is made on account of services performed
p. 107/101
Q79
What is the maximum period authorized under the Tax Cuts and Jobs Act net operating losses may be carried forward to offset taxable income.
a. No carryforward is allowed
b. 10 years
c. 20 years
d. Indefinetly
d. Indefinetly
p. 108/102
Q80
All of the following changes were made to ABLE accounts by the Tax Cuts and Jobs Act of 2017 EXCEPT:
Chapter 7
a. Additional annual contributions are permitted
b. A designated beneficiary is permitted to claim the saver’s credit for contributions made to the account.
C. Rollovers from 529 Tuition Savings Plans to ABLE accounts are permitted
d. Contributions not eceeding the overall limit on contributions are tax deductible.
d. Contributions not eceeding the overall limit on contributions are tax deductible.
p. 105/99
Q81
At a $30,000 annual household income Shirley’s 2023 income places her at less than150% of the federal poverty level. What would be her expeted contribution for purposes of determining her healthcare premium tax credit pursuant to the American Rescue Plan?
Chapter 7
a. She would have no epected contribution
b. $906
C. $1209
d. $2868
a. She would have no expected contribution
p. 109/103
From Course
As can be seen from the above chart, applicable taxpayers whose household income is 150% of the
federal poverty level or less will not normally be required to pay any premium when purchasing a health
plan whose premium does not exceed the premium for a benchmark plan through an ACA marketplace.
Those applicable taxpayers with household income exceeding 150% of the federal poverty level but less
than 400% will have an expected contribution of gradually increasing percentages up to 8.5% for such a
plan, and those taxpayers with household incomes of 400% or more of the federal poverty level will have
expected contributions of 8.5% of household income
Q82
At a $100,000 annual household income, Phil’s 2022 income places him at 400% of the federal poverty level. What would be his expected contribution for purposes of determingng his healthcare premium tax credit pursuant to the American RescuePlanAct?
Chapte 7
a. He would have no epected contribution
b. $6,000
c. $8,500
d. $9,500
c. $8,500
p. 109/103
Q83
Bigbucks Brokerage provided the taxpayer $2,400 in bicycle commuting reimbursement in 2022. How much of that reimbursement, if any, must be included in the taxpayer’s income?
Chapter 7
a. $0
b. $600
c.. $1,800
d. $2,400
d. $2,400
p. 112/106
Although qualified bicycle commuting reimbursements will continue to be tax-deductible, within
applicable limits, to the employer providing them, employees’ exclusion of qualified bicycle
commuting reimbursements from income for tax purposes is suspended for taxable years
beginning after December 31, 2017 and before January 1, 2026. Accordingly, bicycle commuting
reimbursements, if provided by an employer, will be includable in the employee’s income.
Q84
For which of the following transportation fringe benefit expenses provided in 2022 would an employer receive a tax deductions
Chapter 7
a. Transporatin in a commuter highway vehicle in connection with travel between the employee’s residence and place of employment
b. Transit pass
c. Qualified parking reimbuarsement
d. qualified bicycle commuting reimbursement
d. qualified bicyvcle commuting reimbursement Not sure if that is correct
p. 112/106
From Course
Although qualified bicycle commuting reimbursements will continue to be tax-deductible, within
applicable limits, to the employer providing them, employees’ exclusion of qualified bicycle
commuting reimbursements from income for tax purposes is suspended for taxable years
beginning after December 31, 2017 and before January 1, 2026. Accordingly, bicycle commuting
reimbursements, if provided by an employer, will be includable in the employee’s income.
Q85
What are tax preparers asked to do to prevent filing returns with stolen identies?
Chapter 8
a. Prepare tax returns only for existing clients
b. Ask taxpayers not known to them to provided two forms of identification
c. Check the IRS database to determine if a return for the current year has already been filed under that Social Scurity number
d. Photograph all taxpayes for whom returns are filed and retain the photos for subsequent investigation by authorities, if applicable8
b. Ask taxpayers not known to them to provided two forms of identification
Karl’s client is a married woman who wants to claim the earned income credit using head of household filing status. Which of the following should Karl do to perform the appropriate due dilligence with respect to his client claiming the credit?
Chapter 8
a. Confirm that the client’s 2023 AGI was less than $20,000
b. Ensure the client did not live with her spouse at any time during the last six months of the year
c. Obtain a copy of the client’s marriage license
d. Ensure the client had no investment income
b. Ensure the client did not live with her spouse at any time durig the last six months of the year
Q86
Audrey’s client’s tax return was rejectecd, and the IRS reject code indicates the taxpayer’s Social Security number has already been used. What should Audrey do if she and the client suspect the client is a victim of tax-related identity theft?
Chapter 8
a. Nothing; She should assume that the client had previously had another tax return preparer complete the return and forgot.
b. Complete for 14039, Identiy Theft Affidavit, attach it to the client’s paper return and mail it according to instructions.
c. Request that the IRS send her a copy of the previously filed return
d. Report the idenity theft to a local law enforcement agency
b. Complete for 14039, Identiy Theft Afficavit, attach it to the client’s paper return and mail it according to instructions.
Q87
Which of the following is/are required for a paid tax preparer to comply with the FTC Financial Privacy Rule?
Chapter 8
a. To provide a notice to consumers explaining their information collection sharing practices
b. To have security systems in place to prevent unauthorized access to taxpayer accounts and personal information
c. To develop, implement and maintain an information security program
d. To preserve records and data from destruction, loss, unauthorized alteration or other misuse.
a. To provide a notice to consumers explaining their information collection sharing practices
From Course
FTC Financial Privacy Rule19 requiring professional tax preparers to give customers privacy
notices explaining the preparer’s information collection and sharing practices;
Q88
To which of the following would the IRS issue an individual Tax Identification Number (ITIN)
Chapter 8
a. Harry, an immigrant with a green card, who works at a local grocery store
b. Edna, a foreign national, who has a U.S tax reporting requirement
c. Shirley, a U.S prison inmate, who never appled for a Social Security Number
d. Carl, a U.S citizen, who has foreign investment income
b. Edna, a foreign national, who has a U.S tax reporting requirement
From Course:
the IRS issues ITINs to foreign nationals and others who have federal
tax reporting or filing requirements and who don’t qualify for a Social Security number. ITINs are issued
to help individuals comply with the U.S. tax laws, and to provide a means for the IRS to efficiently
process and account for tax returns and payments for those not eligible for Social Security numbers. They
are issued regardless of immigration status, because both resident and nonresident aliens may have a U.S.
filing or reporting requirement under the Internal Revenue Code. ITINs do not serve any purpose ot
Q89
An ITIN issued in 2013 or later will remain in effect only until it has not been used on a federal tax return for ____ consecutive tax years.
Chapter 8
a. Two
b. three
c. four
d. Five
b. three
p. 131/125
According to the IRS, ITINs that have not been used on a federal tax return at least once in the last three consecutive years will expire123. So, if you have an ITIN issued in 2013 or later, you need to use it at least once every three years to keep it valid. Otherwise, you will need to renew it by filing IRS Form W-712.
Q90
Bob, a tax preparer, failed to excercise due dilligence in determining a taxpayer’s eligiblity for the earned income credit. if the failure is not deemd to be the result of an unreasonal position or intentional or reckless is disregard of regulations, he may be subject to a penalty of.
Chapter 8
a. $250
b. $560
c. $1,000
d. $5,100
b. $560
p. 133/127 $600 2024
Q91
Ellen, a tax return preparer, discussed her client’s tax return with an acquaintance and it was determined she did so without authorization from the client. For what dollar penalty is she liable?
Chapter 8
a. $100
b. $250
c. $1,000
d. $5,000 or 75% of income
b. $250
p. 133/127 2024- $250
Q92
Sybil, a tax return preparer, charged a taxpayer $600 to prepare his income tax return that claimed a $5,000 refund based on an unreasonable position. To what penalty is she subject if she knew the position was unreasonable but it was determined not to be the result of her willful and reckless conduct?
a. $300
b. $500
c. $1,000
d. $5,000
c. $1,000
From course
Understatement of taxpayer’s liability
due to unreasonable positions (§
6694(a)) —-Greater of $1,000 or 50% of income derived by preparer with respect
to the return or claim for refund
p.134/128
Q93
Peter, a tax return preparer, was found to have taken an uneasonable position with respect to a client’s prepared tax return that understanted the taxpayer’s tax liability, and the preparer should have know it was unreasonable. if the preparer’s conduct was considered willful or reckless, for what minimum penalty, if any ,would he be liable?
Chapter 8
a. $250
b. $530
c. $1,000
d. Greater of $5,000 or 75% of income derived by preparer
d. Greater of $5,000 or 75% of income derived by preparer
p. 134/128
From Course
Understatement of taxpayer’s liability
due to willful or reckless conduct (§
6694(b)) —-Greater of $5,000 or 75% of income derived by preparer with respect
to the return or claim for refund.
p126
Q94
To avoid costly EITC errors involving a child failing to meet the qualifying child requirements, a tax preparer must find out all of the following concerning the child EXCEPT:
Chapter 8
a. whether the child lived with the taxpayer for more than half the year
b. Whether the child is related to the taxpayer
c. Whether the child lived with the non-custodial parent for any period of time
d. whether the child meets the age test
c. Whether the child lived with the non-custodial parent for any period of time
From Course
Claiming EITC for a child who does not meet the qualifying child requirements – To help
avoid errors involving qualifying child requirements make sure you find out if the child –
o Lived with your client for more than half the year,
o Is related to him or her, and
o Meets the age test.
p. 133
Q95
In order for a taxpayer to qualify for head of household filing status, the taxpayer must have __
for the tax year.
Chapter 8
a. Lived with his or her spouse
b. Paid more than half the cost of keeping up the taxpayer’s home
c. paid the entire cost of keeping up the taxpayer’s home
d. Owned a home
b. Paid more than half the cost of keeping up the taxpayer’s home
Q96
Which of the following is not taken into account when determining a taxpayer’s cost for keeping up a home for purposes of eligiility for head of houehold filing status?
Chapter 8
a. Rent
b. Mortgage principal payments
c. Real estate taxes
d. Insurance on the home
b. Mortgage principal payments
A taxpayer is keeping up a home only if the taxpayer pays more than half the cost of its upkeep for the
year. The cost of keeping up a home includes:
Rent;
Mortgage interest** (but not principal payments);**
Real estate taxes;
Insurance on the home;
Repairs;
Utilities; and
Food eaten in the home.
p. 130
Q97
Which of the following relatives of a taxpayer is not required to live in the taxpayer’s home in order for the taxpayer to qualify for head of household filing status based on the relative.
a. The taxpayer’s mother or father
b. the taxpayer’s brother or sister
c. The taxpyaer’s grandchild
d. the taxpayer’s son-in-law
a. The taxpayer’s mother or father
Q98
Which of the following is not an eligible educational institution for claiming the American Opportunity Tax Credit?
Chapter 8
a. A high school
b. A college
c. A university
d. A techinical school
a. A high school
Q99
To which of the following federal tax return filer does the e-file requirement not apply?
Chapter 8
a. Audrey, an enrolled agent, preparing a tax return for a client
b. Bob, who is filing a tax return as a fiduciary
c. Shirley, a CPA, who is filing a cliet’s tax return
d. Tom, a registered tax return preparer, filing a federal tax return for a client
b. Bob, who is filing a tax return as a fiduciary
From course:
The requirement to e-file does not apply to individuals who do not meet the definition of “tax return
preparer” under the Internal Revenue Code, such as an individual who provides tax assistance under a
Volunteer Income Tax Assistance (VITA) program, a person who merely prepares a return of the
employer by whom employed or a person who prepares a return as a fiduciary.
P. 135
Q100
Which of the following tax return preparers must file federal income tax returns electroncially?
Chapter 8
a. Bob, who provides tax assistance under the Volunteer Income Tax Assistance program
b. Ellen, who prepares a return of the employer by whom she is employed
c. Peter, a tax return preparer who expects to file 20 individual income tax returns
d. Lynn, who prepares 20 tax returns as a fiduciary
c. Peter, a tax return preparer who expect to file 20 individual income tax returns
From Course
A tax preparer generally required to electronically file federal income tax returns is one who reasonably
expects to file 11 or more covered returns in a calendar year. The returns that are “covered” under the efile requirement are income tax returns on individuals, trusts or estates, such as Forms 1040 and 1041.
Q73
