TAX Test Two Actual Exam
Study Guide. Graded A+. With
Questions And 100% Verified
Answers. Latest 2026 Update
Which of the following statements about self employment income is NOT true?
- Ans✔✔-A self-employed taxpayer may take a deduction on his personal
return for 60% of the employment tax paid
Brad makes the following payments to his ex-wife Jen in 2018. Which payment
can he claim as alimony? - Ans✔✔-$2,000 paid under a written separation
agreement to the Actor's Studio for Jen to take acting lessons.
The balance in Tony's traditional IRA at the beginning of the year was $40,000.
All of his contributions were tax-deductible and he is 45 years old. On July 1,
Tony borrowed $20,000 from the IRA account, which he repaid in December.
Which of the following is true about this transaction? - Ans✔✔-Tony reports
$40,000 as a distribution.
Which credit, if claimed, will disqualify the taxpayer from taking the tuition and
fees deduction? - Ans✔✔-Education credit
,Withdrawals, other than required distributions, from a qualified plan (QP) or
IRA maintain tax deferred treatment as long as the funds are rolled over into
another QP or IRA within how many days? - Ans✔✔-60
Andy has a traditional IRA account. His IRA can invest in which of the following
as an allowable investment? - Ans✔✔-One-ounce silver coins minted by the U.
S. Treasury Department
A taxpayer can make contributions to a traditional IRA at any time during the
year, but at the latest by: - Ans✔✔-April 15 - the due date for filing the return
Adam did not receive the required minimum distribution from his qualified
retirement plan. Which form is he required to fill out? - Ans✔✔-Form 5329
Charles, age 65, Kathleen, age 63 are married and file a joint return. Charles is
covered by a retirement plan at work and his salary is $106,000. Kathleen's
income was $10,800 of social security. Their joint return for year 2019 had
MAGI of $130,000. They both have IRAs and would like to contribute to both.
Which of the following will provide them the greatest allowable tax benefit? -
Ans✔✔-They may contribute $7,000 to each IRA, but only take a deduction for
the $7,000 to Kathleen's IRA
Which funds cannot be transferred to a taxpayer's traditional IRA without tax
consequence? - Ans✔✔-Funds from a traditional IRA that the taxpayer
inherited from his brother
John Small put $1,000 into a Roth individual retirement account (IRA) when he
was 48 years old. When he turned 62, he took the entire amount of $1,900 out.
The extra $900 had been earned over the years. Which of the following
,statements is true - Ans✔✔-The entire $1,900 is tax free when removed from
the Roth IRA.
Which one of the following is not an adjustment to total income in arriving at
adjusted gross income? - Ans✔✔-Contributions to a Roth IRA
Which of the following is compensation for the purpose of contributions to
individual retirement accounts? - Ans✔✔-Taxable alimony and separate
maintenance paid under the terms of a divorce decree finalized before 2019
A distribution from a traditional IRA that changes the characteristics of the
account to a Roth IRA is best described as a: - Ans✔✔-Conversion
Bob Slate Jr.'s mother passed away and he inherited half of her traditional IRA
account. What can he do? - Ans✔✔-He can treat himself as the beneficiary of
the IRA
Luis is an ordained minister and common-law employee of a church. His
earnings and parsonage allowance are treated as self-employment income on
which he pays self-employment tax. The church has no retirement plan
covering Luis. Which of the following is Luis permitted to establish for himself?
- Ans✔✔-Traditional IRA
Pedro borrows money to pay for his junior year at State University. Pedro may
be able to deduct the interest he pays on the loan if he obtains the loan from
which of the following sources? - Ans✔✔-A loan he obtains from a federal post-
secondary education loan program
, Jacob's return is missing information regarding his IRA contribution. Which of
the following sections of his tax return should have included this content? -
Ans✔✔-Adjustments to Income
Ben has a filing status of single. He has only one traditional IRA and his basis is
$8,800. On December 31, he converts $44,000 of the $88,000 IRA value to a
Roth IRA account. Ben's AGI before considering the conversion is $62,000.
What amount of income is added to Ben's tax return as a result of the IRA
conversion? - Ans✔✔-$39,600
Tom Johnson has an IRA account. He wants to expand his IRA's portfolio into
other sorts of investments. What can he use his IRA funds to purchase without
penalty? - Ans✔✔-Gold bullion
Regarding retirement plans, prohibited transactions are transactions between
the plan and a disqualified person. Which of the following is not exempt from
the prohibited transaction rules? - Ans✔✔-An employer whose employees are
covered by the plan
George age 60, a single taxpayer, has W-2 income of $31,000 and self-
employment income of $3,000. During the 2019 tax year he contributed $6,000
to his IRA (traditional). George has excess contributions of how much? -
Ans✔✔-$-0-
Barry reached age 50 in 2019. Which of the following is an allowable catch-up
contribution for Barry to a retirement plan? - Ans✔✔-$6,000 for a 401(k) plan
$3,000 for a SIMPLE plan
$1,000 for a traditional IRA
All of the above
Study Guide. Graded A+. With
Questions And 100% Verified
Answers. Latest 2026 Update
Which of the following statements about self employment income is NOT true?
- Ans✔✔-A self-employed taxpayer may take a deduction on his personal
return for 60% of the employment tax paid
Brad makes the following payments to his ex-wife Jen in 2018. Which payment
can he claim as alimony? - Ans✔✔-$2,000 paid under a written separation
agreement to the Actor's Studio for Jen to take acting lessons.
The balance in Tony's traditional IRA at the beginning of the year was $40,000.
All of his contributions were tax-deductible and he is 45 years old. On July 1,
Tony borrowed $20,000 from the IRA account, which he repaid in December.
Which of the following is true about this transaction? - Ans✔✔-Tony reports
$40,000 as a distribution.
Which credit, if claimed, will disqualify the taxpayer from taking the tuition and
fees deduction? - Ans✔✔-Education credit
,Withdrawals, other than required distributions, from a qualified plan (QP) or
IRA maintain tax deferred treatment as long as the funds are rolled over into
another QP or IRA within how many days? - Ans✔✔-60
Andy has a traditional IRA account. His IRA can invest in which of the following
as an allowable investment? - Ans✔✔-One-ounce silver coins minted by the U.
S. Treasury Department
A taxpayer can make contributions to a traditional IRA at any time during the
year, but at the latest by: - Ans✔✔-April 15 - the due date for filing the return
Adam did not receive the required minimum distribution from his qualified
retirement plan. Which form is he required to fill out? - Ans✔✔-Form 5329
Charles, age 65, Kathleen, age 63 are married and file a joint return. Charles is
covered by a retirement plan at work and his salary is $106,000. Kathleen's
income was $10,800 of social security. Their joint return for year 2019 had
MAGI of $130,000. They both have IRAs and would like to contribute to both.
Which of the following will provide them the greatest allowable tax benefit? -
Ans✔✔-They may contribute $7,000 to each IRA, but only take a deduction for
the $7,000 to Kathleen's IRA
Which funds cannot be transferred to a taxpayer's traditional IRA without tax
consequence? - Ans✔✔-Funds from a traditional IRA that the taxpayer
inherited from his brother
John Small put $1,000 into a Roth individual retirement account (IRA) when he
was 48 years old. When he turned 62, he took the entire amount of $1,900 out.
The extra $900 had been earned over the years. Which of the following
,statements is true - Ans✔✔-The entire $1,900 is tax free when removed from
the Roth IRA.
Which one of the following is not an adjustment to total income in arriving at
adjusted gross income? - Ans✔✔-Contributions to a Roth IRA
Which of the following is compensation for the purpose of contributions to
individual retirement accounts? - Ans✔✔-Taxable alimony and separate
maintenance paid under the terms of a divorce decree finalized before 2019
A distribution from a traditional IRA that changes the characteristics of the
account to a Roth IRA is best described as a: - Ans✔✔-Conversion
Bob Slate Jr.'s mother passed away and he inherited half of her traditional IRA
account. What can he do? - Ans✔✔-He can treat himself as the beneficiary of
the IRA
Luis is an ordained minister and common-law employee of a church. His
earnings and parsonage allowance are treated as self-employment income on
which he pays self-employment tax. The church has no retirement plan
covering Luis. Which of the following is Luis permitted to establish for himself?
- Ans✔✔-Traditional IRA
Pedro borrows money to pay for his junior year at State University. Pedro may
be able to deduct the interest he pays on the loan if he obtains the loan from
which of the following sources? - Ans✔✔-A loan he obtains from a federal post-
secondary education loan program
, Jacob's return is missing information regarding his IRA contribution. Which of
the following sections of his tax return should have included this content? -
Ans✔✔-Adjustments to Income
Ben has a filing status of single. He has only one traditional IRA and his basis is
$8,800. On December 31, he converts $44,000 of the $88,000 IRA value to a
Roth IRA account. Ben's AGI before considering the conversion is $62,000.
What amount of income is added to Ben's tax return as a result of the IRA
conversion? - Ans✔✔-$39,600
Tom Johnson has an IRA account. He wants to expand his IRA's portfolio into
other sorts of investments. What can he use his IRA funds to purchase without
penalty? - Ans✔✔-Gold bullion
Regarding retirement plans, prohibited transactions are transactions between
the plan and a disqualified person. Which of the following is not exempt from
the prohibited transaction rules? - Ans✔✔-An employer whose employees are
covered by the plan
George age 60, a single taxpayer, has W-2 income of $31,000 and self-
employment income of $3,000. During the 2019 tax year he contributed $6,000
to his IRA (traditional). George has excess contributions of how much? -
Ans✔✔-$-0-
Barry reached age 50 in 2019. Which of the following is an allowable catch-up
contribution for Barry to a retirement plan? - Ans✔✔-$6,000 for a 401(k) plan
$3,000 for a SIMPLE plan
$1,000 for a traditional IRA
All of the above
