Accredited Test Bank Solution For Fundamentals of
Taxation 2024 Edition By Ana Cruz Michael
Deschamps Frederick Niswander Debra Prendergast
and Dan Schisler5
[All Lessons Included]
Complete Chapter Solution Manual
are Included (Ch.1 to Ch. 15)
• Rapid Download
• Quick Turnaround
• Complete Chapters Provided
, Table of Contents are Given Below
• Chapter 1 – Introduction to Taxation, the Income Tax Formula, and Form 1040
• Chapter 2 – Expanded Tax Formula, Form 1040, and Basic Concepts
• Chapter 3 – Gross Income: Inclusions and Exclusions
• Chapter 4 – Adjustments for Adjusted Gross Income
• Chapter 5 – Itemized Deductions
• Chapter 6 – Self-Employed Business Income (Line 3 of Schedule 1 and Schedule C)
• Chapter 7 – Capital Gains and Other Sales of Property (Schedule D and Form 4797)
• Chapter 8 – Rental Property, Royalties, and Income from Flow-Through Entities (Line 5, Schedule 1,
and Schedule E)
• Chapter 9 – Tax Credits (Form 1040, Lines 19, 20, 27–29, and 31; Schedule 3, Lines 1–14)
• Chapter 10 – Payroll Taxes
• Chapter 11 – Retirement and Other Tax-Deferred Plans and Annuities
• Chapter 12 – Special Property Transactions
• Chapter 13 – At-Risk/Passive Activity Loss Rules and the Individual Alternative Minimum Tax
• Chapter 14 – Partnership Taxation
• Chapter 15 – Corporate Taxation
PAGE 1
, Question 1. Which form is primarily used to report individual income tax returns for most taxpayers?
A) Form 1065
B) Form 1120
C) Form 1040
D) Schedule C
Answer: C
Explanation: Form 1040 is the standard IRS form used by individuals to file their annual income tax
returns.
Question 2. What is the fundamental income tax formula?
A) Gross Income minus Deductions equals Taxable Income
B) Income minus Adjustments equals Gross Income
C) Gross Income minus Adjustments equals Adjusted Gross Income
D) Taxable Income multiplied by Tax Rate equals Tax Liability
Answer: C
Explanation: The core formula is Gross Income minus Adjustments equals Adjusted Gross Income (AGI),
which is the starting point for calculating taxable income.
Question 3. Which of the following is considered gross income?
A) Life insurance proceeds paid due to the death of the insured
B) Municipal bond interest
C) Wages and salaries
D) Inheritances received
Answer: C
Explanation: Wages and salaries are considered gross income and are taxable unless specifically excluded
by law.
PAGE 2
, Question 4. Which of the following is an exclusion from gross income?
A) Wages earned from self-employment
B) Municipal bond interest
C) Rental income from property
D) Stock dividends
Answer: B
Explanation: Municipal bond interest is generally tax-exempt and excluded from gross income.
Question 5. What is the purpose of adjustments to gross income?
A) To calculate gross income
B) To determine taxable income
C) To compute taxable wages
D) To allocate income among different entities
Answer: B
Explanation: Adjustments are subtracted from gross income to arrive at Adjusted Gross Income (AGI),
which is used to determine taxable income.
Question 6. Which of the following is an example of an adjustment to income?
A) Standard deduction
B) Student loan interest deduction
C) Itemized deduction for medical expenses
D) Personal exemption
Answer: B
Explanation: Student loan interest paid is an adjustment that reduces gross income to calculate AGI.
Question 7. Which schedule is used to report self-employment income on a Form 1040?
A) Schedule A
B) Schedule C
PAGE 3
Taxation 2024 Edition By Ana Cruz Michael
Deschamps Frederick Niswander Debra Prendergast
and Dan Schisler5
[All Lessons Included]
Complete Chapter Solution Manual
are Included (Ch.1 to Ch. 15)
• Rapid Download
• Quick Turnaround
• Complete Chapters Provided
, Table of Contents are Given Below
• Chapter 1 – Introduction to Taxation, the Income Tax Formula, and Form 1040
• Chapter 2 – Expanded Tax Formula, Form 1040, and Basic Concepts
• Chapter 3 – Gross Income: Inclusions and Exclusions
• Chapter 4 – Adjustments for Adjusted Gross Income
• Chapter 5 – Itemized Deductions
• Chapter 6 – Self-Employed Business Income (Line 3 of Schedule 1 and Schedule C)
• Chapter 7 – Capital Gains and Other Sales of Property (Schedule D and Form 4797)
• Chapter 8 – Rental Property, Royalties, and Income from Flow-Through Entities (Line 5, Schedule 1,
and Schedule E)
• Chapter 9 – Tax Credits (Form 1040, Lines 19, 20, 27–29, and 31; Schedule 3, Lines 1–14)
• Chapter 10 – Payroll Taxes
• Chapter 11 – Retirement and Other Tax-Deferred Plans and Annuities
• Chapter 12 – Special Property Transactions
• Chapter 13 – At-Risk/Passive Activity Loss Rules and the Individual Alternative Minimum Tax
• Chapter 14 – Partnership Taxation
• Chapter 15 – Corporate Taxation
PAGE 1
, Question 1. Which form is primarily used to report individual income tax returns for most taxpayers?
A) Form 1065
B) Form 1120
C) Form 1040
D) Schedule C
Answer: C
Explanation: Form 1040 is the standard IRS form used by individuals to file their annual income tax
returns.
Question 2. What is the fundamental income tax formula?
A) Gross Income minus Deductions equals Taxable Income
B) Income minus Adjustments equals Gross Income
C) Gross Income minus Adjustments equals Adjusted Gross Income
D) Taxable Income multiplied by Tax Rate equals Tax Liability
Answer: C
Explanation: The core formula is Gross Income minus Adjustments equals Adjusted Gross Income (AGI),
which is the starting point for calculating taxable income.
Question 3. Which of the following is considered gross income?
A) Life insurance proceeds paid due to the death of the insured
B) Municipal bond interest
C) Wages and salaries
D) Inheritances received
Answer: C
Explanation: Wages and salaries are considered gross income and are taxable unless specifically excluded
by law.
PAGE 2
, Question 4. Which of the following is an exclusion from gross income?
A) Wages earned from self-employment
B) Municipal bond interest
C) Rental income from property
D) Stock dividends
Answer: B
Explanation: Municipal bond interest is generally tax-exempt and excluded from gross income.
Question 5. What is the purpose of adjustments to gross income?
A) To calculate gross income
B) To determine taxable income
C) To compute taxable wages
D) To allocate income among different entities
Answer: B
Explanation: Adjustments are subtracted from gross income to arrive at Adjusted Gross Income (AGI),
which is used to determine taxable income.
Question 6. Which of the following is an example of an adjustment to income?
A) Standard deduction
B) Student loan interest deduction
C) Itemized deduction for medical expenses
D) Personal exemption
Answer: B
Explanation: Student loan interest paid is an adjustment that reduces gross income to calculate AGI.
Question 7. Which schedule is used to report self-employment income on a Form 1040?
A) Schedule A
B) Schedule C
PAGE 3
