Federal Income Tax Exam 1 Questions &
Answers 100% Correct!
Bob provides more than half of his mother's support. His mother earns $6,000 per year
as a hairdresser. She lives in an apartment across town. Bob is unmarried and has no
children. What is Bob's most advantageous filing status? - ANSWERSSingle
Jane is 20 years old and is a sophomore at Lake University. She is a full-time student
and does not have any gross income. Jane spends the holidays and summers at home
with her parents. Her total support for the current tax year is $30,000, including a
scholarship for $5,000 to cover her tuition. Jane used $12,000 of her savings, and her
grandparents provided $13,000. Which of the following statements is true regarding
identifying Jane as a dependent? - ANSWERSJane's grandparents cannot claim her as
a dependent because Jane provided more than half of her own support.
In the current tax year, Blake Smith provided more than half of the support for his cousin
Nico, niece Summer, and Marilyn, a close family friend. Blake lives alone and sends a
monthly support check to each person. None of the individuals whom Blake supports
has any income or file a tax return. All three individuals are U.S. citizens. Which of the
three people Blake supports qualifies as a dependent on his Federal income tax return?
- ANSWERSSummer
Which of the following taxpayers may file as a head of household in 2018?
Marco provides all the support for his mother, Sienna, who lives by herself in an
apartment in Fort Lauderdale. Marco pays the rent and other expenses for the
apartment and properly claims his mother as a dependent.
Tammy provides over one-half the support for her 18-year old brother, Dan. Dan earned
$4,200 in 2018 working at a fast food restaurant and is saving his money to attend
college in 2019. Dan lives in Tammy's home.
Juan's wife left him late in December of 2017. No legal action was taken and Juan has
not heard from her in 2018. Juan supported his 6-year-old son, who lived with him
throughout 2018. - ANSWERSMarco, Tammy, and Juan
Jeremy is married to Amy, who abandoned him in 2017. He has not seen or
communicated with her since April of that year. He maintains a household in which their
son, Evan, lives. Evan is age 25 and earns over $6,000 each year. For tax year 2018,
Jeremy's filing status is: - ANSWERSMarried, filing separately.
Kirby is in the 12% tax bracket and had the following capital asset transactions during
2018:
, Long-term gain from the sale of a coin collection $11,000
Long-term gain from the sale of a land investment 10,000
Short-term gain from the sale of a stock investment 2,000
Kirby's tax consequences from these gains are as follows: - ANSWERS(0% × $10,000)
+ (12% × $13,000).
for the current year, David has wages of $80,000 and the following property
transactions:
Stock investment sales—
Long-term capital gain $ 9,000
Short-term capital loss (12,000)
Loss on sale of camper (purchased 4 years ago and used for family vacations) (2,000)
What is David's AGI for the current year? - ANSWERS$77,000.
Which, if any, is not one of Adam Smith's canons (principles) of taxation? -
ANSWERSSimplicity
Which, if any, of the following taxes are proportional (rather than progressive)? -
ANSWERSState general sales tax
Which, if any, of the following is a typical characteristic of an ad valorem tax on
personalty? - ANSWERSThe tax on automobiles sometimes considers the age of the
vehicle.
Burt and Lisa are married and live in a common law state. Burt wants to make gifts to
their four children in 2018. What is the maximum amount of the annual exclusion they
will be allowed for these gifts? - ANSWERS$120,000.
Characteristics of the "Fair Tax" (i.e., national sales tax) include which, if any, of the
following: - ANSWERSAbolition of all Federal income and payroll taxes as well as the
Federal estate and gift taxes.
Which of the following is a characteristic of the audit process? - ANSWERSLess
important issues are handled by means of a correspondence audit.
A characteristic of the fraud penalties is: - ANSWERSCriminal fraud can result in a fine
and a prison sentence.
Regarding proper ethical guidelines, which (if any) of the following is correct? -
ANSWERSThe use of client estimates in preparing a return may be acceptable.
Answers 100% Correct!
Bob provides more than half of his mother's support. His mother earns $6,000 per year
as a hairdresser. She lives in an apartment across town. Bob is unmarried and has no
children. What is Bob's most advantageous filing status? - ANSWERSSingle
Jane is 20 years old and is a sophomore at Lake University. She is a full-time student
and does not have any gross income. Jane spends the holidays and summers at home
with her parents. Her total support for the current tax year is $30,000, including a
scholarship for $5,000 to cover her tuition. Jane used $12,000 of her savings, and her
grandparents provided $13,000. Which of the following statements is true regarding
identifying Jane as a dependent? - ANSWERSJane's grandparents cannot claim her as
a dependent because Jane provided more than half of her own support.
In the current tax year, Blake Smith provided more than half of the support for his cousin
Nico, niece Summer, and Marilyn, a close family friend. Blake lives alone and sends a
monthly support check to each person. None of the individuals whom Blake supports
has any income or file a tax return. All three individuals are U.S. citizens. Which of the
three people Blake supports qualifies as a dependent on his Federal income tax return?
- ANSWERSSummer
Which of the following taxpayers may file as a head of household in 2018?
Marco provides all the support for his mother, Sienna, who lives by herself in an
apartment in Fort Lauderdale. Marco pays the rent and other expenses for the
apartment and properly claims his mother as a dependent.
Tammy provides over one-half the support for her 18-year old brother, Dan. Dan earned
$4,200 in 2018 working at a fast food restaurant and is saving his money to attend
college in 2019. Dan lives in Tammy's home.
Juan's wife left him late in December of 2017. No legal action was taken and Juan has
not heard from her in 2018. Juan supported his 6-year-old son, who lived with him
throughout 2018. - ANSWERSMarco, Tammy, and Juan
Jeremy is married to Amy, who abandoned him in 2017. He has not seen or
communicated with her since April of that year. He maintains a household in which their
son, Evan, lives. Evan is age 25 and earns over $6,000 each year. For tax year 2018,
Jeremy's filing status is: - ANSWERSMarried, filing separately.
Kirby is in the 12% tax bracket and had the following capital asset transactions during
2018:
, Long-term gain from the sale of a coin collection $11,000
Long-term gain from the sale of a land investment 10,000
Short-term gain from the sale of a stock investment 2,000
Kirby's tax consequences from these gains are as follows: - ANSWERS(0% × $10,000)
+ (12% × $13,000).
for the current year, David has wages of $80,000 and the following property
transactions:
Stock investment sales—
Long-term capital gain $ 9,000
Short-term capital loss (12,000)
Loss on sale of camper (purchased 4 years ago and used for family vacations) (2,000)
What is David's AGI for the current year? - ANSWERS$77,000.
Which, if any, is not one of Adam Smith's canons (principles) of taxation? -
ANSWERSSimplicity
Which, if any, of the following taxes are proportional (rather than progressive)? -
ANSWERSState general sales tax
Which, if any, of the following is a typical characteristic of an ad valorem tax on
personalty? - ANSWERSThe tax on automobiles sometimes considers the age of the
vehicle.
Burt and Lisa are married and live in a common law state. Burt wants to make gifts to
their four children in 2018. What is the maximum amount of the annual exclusion they
will be allowed for these gifts? - ANSWERS$120,000.
Characteristics of the "Fair Tax" (i.e., national sales tax) include which, if any, of the
following: - ANSWERSAbolition of all Federal income and payroll taxes as well as the
Federal estate and gift taxes.
Which of the following is a characteristic of the audit process? - ANSWERSLess
important issues are handled by means of a correspondence audit.
A characteristic of the fraud penalties is: - ANSWERSCriminal fraud can result in a fine
and a prison sentence.
Regarding proper ethical guidelines, which (if any) of the following is correct? -
ANSWERSThe use of client estimates in preparing a return may be acceptable.
