Personal Financial Planning 14th Edition by Billingsley - Test Bank

1. The federal personal income tax is a progressive tax. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 2. The federal personal income tax is a flat tax. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 3. Tax avoidance is legal, tax evasion is illegal. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-5 - LO: 3-5 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 4. One's marginal tax rate is typically lower than one's average tax rate. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 5. One's average tax rate is typically lower than one's marginal tax rate. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 6. If you have any earned income, you are required to file a tax return. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 7. The main objective of tax planning is to maximize the amount of money you keep by minimizing the amount of taxes you pay. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-6 - LO: 3-6 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Understanding 8. If you are eligible to receive a tax refund, you will have to file a tax return to get the refund. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 9. Income tax refunds are automatically sent to those who qualify for refunds no later than April 15. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 10. As a single taxpayer with no dependents, one is generally eligible to file as "head of household." a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 11. Russ and Lois got married December 30. Although they were single for most of the year, they can legally file as married taxpayers in the year of the wedding. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 12. Dwayne and Gayle were divorced September 29, have not remarried, and have no dependents. Their filing status for the year will each be "married" since they were married for more than half of the year. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 13. If you are married, you can legally file a single tax return. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 14. A spouse and spouse is the only couple combination that can file a joint return. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 15. The tax brackets (rates) and payments for married couples filing separately are now typically close to the same as for joint filers. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 16. The Internal Revenue Service is responsible for making changes to the federal income tax codes. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 17. Congress considers tax law changes throughout the year. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 18. Social security taxes are deducted from all wages and salaries earned in a year. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 19. Social security taxes are paid on earned income but not on investment income. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 20. There is no limit on the amount of social security tax withheld annually. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 21. The Medicare portion of the FICA tax is paid on 100% of earnings. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 22. Your marital status will affect the amount of social security you must pay in a year. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 23. Child support received is included in gross income. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 24. Alimony received is included in gross income for the receiver and deducted from gross income for the payer. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 25. Gifts received from family and friends are included in gross income. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 26. Gross income minus tax exempt income equals adjusted gross income. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 27. Dividends received from the stock you own will be taxable income. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 28. Qualified dividends are taxed at the same rates as long-term capital gains. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 29. Portfolio-related expenses can be written off against passive income. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 30. A short-term capital gain would be taxed at the same rate as your salary. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 31. A long-term capital gain is taxed at the same rate as ordinary income. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 32. The sale of your home will rarely result in a taxable capital gain. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 33. An investment must be owned over one year in order to qualify for long-term capital gains treatment. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 34. An investment must be owned over two years in order to qualify for long-term capital gains treatment. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 35. To receive the most favorable capital gains treatment, a taxpayer must own and occupy a home for at least two of the five years prior to its sale. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 36. Adjustments to income will decrease your taxable income. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 37. Itemized deductions could include certain taxes, medical expenditures, and home mortgage interest. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Applying 38. You should itemize deductions when total itemized deductions exceed the standard deduction. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 39. You should itemize deductions when total itemized deductions are less than the standard deduction. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 40. Mortgage interest and paid home property taxes are both itemized deduction items. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 41. State income taxes and real estate taxes are both itemized deduction items. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 42. A tax deduction is more valuable than a tax credit. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-3 - LO: 3-3 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 43. Federal income taxes paid can be deducted the following year. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 44. Personal exemptions are deductions from AGI based on the number of persons supported by the taxpayer's income. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 45. The personal exemption for a student can be taken both by the parent and by the child. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 46. When a child qualifies as a dependent on her parent's return, the child cannot take a personal exemption for herself. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 47. The alternative minimum tax is designed to ensure that individuals with many deductions and tax-shelter investments are paying their fair share of taxes. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-3 - LO: 3-3 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 48. Tax credits are dollar-for-dollar reductions in taxes due. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-3 - LO: 3-3 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 49. Estimated tax payments must be made by those who do not have taxes deducted from their earnings. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-3 - LO: 3-3 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 50. A person with a significant amount of investment income would have a high probability of needing to make estimated tax payments. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-3 - LO: 3-3 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Applying 51. All taxpayers have an equal probability of having their tax returns audited. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-4 - LO: 3-4 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 52. You have up to three years after mailing your tax return to file an amended tax return (1040X). a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-4 - LO: 3-4 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 53. If your AGI is less than $100,000 and you do not itemize deductions, the IRS will compute your taxes for you. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-4 - LO: 3-4 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 54. A married couple filing a joint return has Ms. Cindy Cook, a CPA, complete their return. The IRS will hold only Ms. Cook responsible for any errors on the return. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-4 - LO: 3-4 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 55. Marginal tax and average tax rate refer to the same thing. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 56. If you earn less than $15,000, you probably pay more in social security taxes than in federal income taxes. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes 57. Opening a traditional IRA would allow you to defer taxes on the earnings. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-6 - LO: 3-6 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 58. Opening a traditional IRA would allow you to take advantage of tax-free earnings. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-6 - LO: 3-6 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 59. Tax-deferred income is better than tax-free income. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-6 - LO: 3-6 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 60. Municipal bond investments typically provide tax-free interest income. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-6 - LO: 3-6 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 61. Most any wage earner can open an IRA and contribute up to $7,500 of tax-deferred income each year to the account. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 62. Tax avoidance is a legal means to minimize tax liabilities. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-6 - LO: 3-6 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 63. Tax evasion is a legal means to avoid tax liabilities. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-6 - LO: 3-6 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 64. Persons who work for more than one employer in any year will owe more social security taxes than if all their income was earned from a single employer. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 65. A taxpayer claiming himself and one dependent had personal exemptions in 2014 amounting to $7,900. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 66. The regular income tax filing deadline is April 1 of each year. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-4 - LO: 3-4 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 67. By filing a tax extension, one does not have to pay his income tax liability until October 15. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-4 - LO: 3-4 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 68. Income shifting refers to the process of transferring income from the taxpayer to the IRS. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-6 - LO: 3-6 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 69. The standard deduction in 2014 for a single filer was $6,500 and for married persons filing jointly was $13,000. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 70. Most major software providers have free online versions for preparing federal taxes for all taxpayers. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-5 - LO: 3-5 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows KEYWORDS: Bloom's: Remembering 71. You are more likely to have your tax return audited if you have large deductions for meals, travel, and entertainment. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-4 - LO: 3-4 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows KEYWORDS: Bloom's: Remembering 72. The tax year corresponds to the April 15 filing deadline, with a new tax year beginning April 16th. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-4 - LO: 3-4 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows KEYWORDS: Bloom's: Remembering 73. The alternative minimum tax calculation includes in taxable income certain types of deductions otherwise allowed, such as state and local income and property taxes. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows KEYWORDS: Bloom's: Remembering 74. The federal government gets the majority of its revenue from the ____ tax. a. sales b. property c. excise d. income e. estate ANSWER: d POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 75. The federal income tax is a. integrative. b. regressive. c. progressive. d. flat rate. e. none of the above. ANSWER: c POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 76. A progressive tax system is one in which higher-income people pay ____ than lower-income people. a. a higher dollar amount in taxes b. tax at a higher rate c. a lower dollar amount in taxes d. tax at a lower rate e. tax at the same rate ANSWER: b POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 77. Henry is married to Lillian, and they have two dependent children. Henry can legally file using which of the following filing statuses? a. Single b. Married filing jointly c. Head of household d. Qualifying widow e. Any of the above ANSWER: b POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Applying 78. Pete and Pam are married with four dependent children. Pete and Pam can legally file using which of the following filing statuses? a. married filing separately b. married filing jointly c. head of household d. a or b e. a, b, or c ANSWER: d POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Applying 79. Mandi and Thomas were married and had one child, age 7. Mandi died in 2013 leaving Thomas a single parent. In 2014, the most favorable filing status for Thomas would be a. single. b. married filing separately. c. head of household. d. qualifying widow(er). e. any of the above. ANSWER: d POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 80. Molly and Jason were married. Their only "dependent" was Spot, their black standard poodle. Jason died in 2013. Assuming she does not remarry, in 2014 the only legal filing status for Molly would be a. single. b. married filing separately. c. head of household. d. qualifying widow(er). e. any of the above. ANSWER: a POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 81. For tax purposes, head of household refers to a. the person with the larger income when a couple is filing a joint return. b. a single individual with dependents. c. a single individual who owns a home. d. the spouse who has the only income for a couple filing a joint return. e. a widow(er) with no dependents but with debts from death of spouse three years earlier. ANSWER: b POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 82. Your take-home pay is what you are left with after subtracting withholdings from your a. gross earnings. b. net earnings. c. taxable income. d. adjusted gross income. e. tax exempt income. ANSWER: a POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 83. ____ income is gross income less tax deductions and payments for insurance and retirement savings. a. Take-home b. EBIT c. Adjusted gross d. Taxable e. Tax-exempt ANSWER: a POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 84. Your income tax withholding is dependent on a. income level and deductions. b. deductions and age. c. income level and number of withholding allowances. d. number of withholding allowances and deductions. e. number of withholding allowances and dependents. ANSWER: c POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 85. The standard deduction is a blanket deduction that depends on the taxpayers a. filing status b. age c. vision d. all of the above. ANSWER: d POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 86. In 2014, the total social security tax was a. 2.9%. b. 6.2%. c. 7.65%. d. 12.4%. e. 15.3%. ANSWER: e POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-1 - LO: 3-1 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 87. Which of the following is not one of the three basic categories for individual income? a. active income b. passive income c. gross income d. portfolio income ANSWER: c POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 88. Ben and Jack both earned $60,000 this year. Ben (age 30) is married with two children, and Jack (age 61) is single with no dependents. Which of the following is true regarding the amount of Social Security taxes they will pay? a. They will pay the same amount of Social Security taxes. b. Ben will pay less Social Security taxes because he is married. c. Ben will pay less Social Security taxes because he has children. d. Jack will pay less Social Security taxes because he is single. e. Jack will pay less Social Security taxes because he is over age 60. ANSWER: a POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Evaluating 89. ____ income is subject to federal taxes. a. Gross b. Adjusted gross c. Net d. Take-home e. Taxable ANSWER: e POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 90. You would typically not include ____ in your gross income. a. wages and salaries b. life insurance death benefit payments c. interest and dividends d. pension income e. gambling winnings ANSWER: b POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Understanding 91. ____ would be considered taxable income. a. An inheritance from your grandmother's estate b. A gift from your aunt c. Child support payments d. Alimony received e. A tuition scholarship ANSWER: d POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Applying 92. ____ would not be considered taxable income. a. Child support payments b. Proceeds from an employer retirement plan c. Dividend income d. a and b e. a, b, and c ANSWER: a POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 93. A capital gain is the result of a. selling an asset for less than its purchase price. b. holding an asset that has appreciated. c. selling an asset at the same price of purchase. d. selling an asset for more than its purchase price. e. none of these. ANSWER: d POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 94. The tax rate on capital gains for most people is a. the same as on regular income. b. dependent on the time the asset was owned. c. dependent on the amount of profit earned. d. higher than the rate on regular income. e. none of these. ANSWER: b POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 95. Tom sold mutual fund shares he had owned 3 years so that he could use the proceeds to return to college. Tom is in the 15% marginal tax bracket and his capital gains from this sale were $11,000. How much tax would Tom owe on those gains? a. $11,000 b. $3,080 c. $1,650 d. $1,100 e. $0 ANSWER: e POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 96. Diana sold mutual fund shares she had owned 4 years so that she could use the proceeds to travel across Europe with her son. Diana is in the 35% marginal tax bracket and her capital gains from this sale were $30,000. How much tax would Diana owe on those gains? a. $10,500 b. $8,400 c. $6,000 d. $4,500 e. $1,500 ANSWER: d POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 97. You have owned and lived in your home for 8 years. Now you have received an excellent promotion, but you will have to sell your home and move to another community. You expect to realize a capital gain of $100,000 on the home's sale. The capital gain will a. be taxable as ordinary income. b. be taxable at the 15% tax bracket. c. be taxable at the appropriate long-term capital gains rate. d. not be taxable because the home was your principal residence. e. not be taxable because this is a job-related move. ANSWER: d POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Applying 98. Murray (age 68, single) just sold his home of 35 years so that he could relocate nearer to his grandchildren. He realized a $400,000 capital gain on the home. On how much of this gain will Murray have to pay taxes? a. $400,000 b. $300,000 c. $250,000 d. $150,000 e. $0 ANSWER: d POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Evaluating 99. Maria and Ed just sold their home of 20 years so that they could purchase a smaller home. They realized a $400,000 capital gain on the home. On how much of this gain will Maria and Ed have to pay taxes? a. $400,000 b. $300,000 c. $250,000 d. $100,000 e. $0 ANSWER: e POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Evaluating 100. Which of the following can be adjustment(s) to gross income on the 1040 form? a. Health insurance premiums paid by self-employed individuals b. Alimony paid c. Moving expenses d. a and b only e. a, b, and c ANSWER: e POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-3 - LO: 3-3 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 101. Which of the following cannot be adjustment(s) to gross income on the 1040 form? a. Health insurance premiums paid by self-employed individuals b. Alimony paid c. Moving expenses d. Traditional IRA contributions e. Child care deductions ANSWER: e POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-3 - LO: 3-3 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 102. Mike and Mandy are considering contributing $5,000 to their favorite tax-deductible charity. This contribution will bring their total itemized deductions to $20,000. Assuming they are in the 28% marginal tax bracket, how much will they save in taxes by contributing this $5,000 to charity? (Hint: Consider the amount of the standard deduction.) a. $0 b. $784 c. $1,400 d. $2,000 e. $5,000 ANSWER: b POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-3 - LO: 3-3 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 103. Pat and Joy are considering contributing $5,000 to their church. This contribution will bring their total itemized deductions to $10,000. Assuming they are in the 15% marginal tax bracket, how much will they save in taxes by contributing this $5,000 to their church? a. $0 b. $150 c. $300 d. $500 e. $1,000 ANSWER: a POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-3 - LO: 3-3 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 104. For those under the age of 65, medical and dental expenses may be included as itemized deductions a. when they exceed 5% of adjusted gross income. b. up to a maximum of $7,500 per individual per tax year. c. only if they do not exceed 7% of gross income. d. only in the amount in excess of 10% of adjusted gross income. e. under all circumstances. ANSWER: d POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 105. Mr. and Mrs. Gonzalez have three children ages 3, 6, and 13. Their financial matters for 2014 are as follows: Adjusted gross income $75,000 Unreimbursed medical expenses 6,000 How much would the Gonzalezes' medical expenses contribute to their total itemized deductions? a. $0 b. $450 c. $1,500 d. $3,000 e. $6,000 ANSWER: a POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 106. Mr. and Mrs. Cho are under age 65 and have had several medical problems. Their financial matters for 2014 are as follows: Adjusted gross income $55,000 Unreimbursed medical expenses 14,500 How much would the medical expenses contribute to their total itemized deductions? a. $0 b. $4,875 c. $7,500 d. $9,000 e. $14,500 ANSWER: d POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 107. Barney Smith has only one itemized deduction item, the $4,400 he gave to his church. His standard deduction this year is $6,200, and he is in the 15% marginal tax bracket. How much will his contribution to the church save Barney in taxes this year? a. $4,400 b. $3,000 c. $660 d. $450 e. $0 ANSWER: e POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 108. Itemized nonbusiness expenses do not include a. charitable contributions. b. state income taxes. c. residential mortgage interest. d. medical expenses. e. life insurance premiums. ANSWER: e POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 109. If you do not wish to itemize deductions, you can use the a. pay-as-you-go amount. b. bracket deduction. c. standard deduction. d. exemption. e. withholding allowance. ANSWER: c POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 110. Mike is a 19-year-old college student who earned $10,000 and spent it all on his support during the year. His parents may claim him as a tax dependent as long as a. they contribute more than half of his support for the year. b. he is under 21. c. he makes under $12,000. d. he lives at home. e. all these things are true. ANSWER: a POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Evaluating 111. Jackson is a 25-year-old college student whose parents contribute to his support. His parents may claim him as a tax dependent in 2014 as long as a. they contribute more than half of his support for the year. b. he is under 30. c. he makes under $5,000. d. a and c. e. a, b, and c. ANSWER: a POINTS: 1 DIFFICULTY: Challenging LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Evaluating 112. For 2014, each personal exemption reduced taxable income by a. $2,800. b. $3,000. c. $3,700. d. $3,950. e. $4,000. ANSWER: d POINTS: 1 DIFFICULTY: Easy LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 113. Tax credits reduce your a. tax liability. b. adjusted gross income. c. tax refund. d. tax withholding. e. taxable income. ANSWER: a POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-3 - LO: 3-3 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Analyzing 114. You have no employer provided pension plan; your IRA contributions are treated as a. an adjustment to gross income. b. an additional personal exemption. c. part of the standard deduction. d. an itemized deduction. e. a tax credit. ANSWER: a POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 115. A ____ would be most likely to have to pay estimated taxes. a. school teacher b. manager for a major industrial firm c. self-employed plumber d. union worker e. corporate attorney ANSWER: c POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-4 - LO: 3-4 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Applying 116. On which of the following types of income would you normally have income tax withheld? a. Tips b. Interest c. Dividends d. Capital gains e. Self-employment income ANSWER: a POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-2 - LO: 3-2 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Applying 117. A declaration of estimated taxes is made by filing a. Schedule B. b. Form 1040 EZ. c. Schedule Z. d. Form 1040 ES. e. Form 1040 A. ANSWER: d POINTS: 1 DIFFICULTY: Moderate LEARNING OBJECTIVES: PFIN.BILL.17.3-4 - LO: 3-4 NATIONAL STANDARDS: United States - BUSPROG: Analytic skills - BUSPROG: Analytical skills STATE STANDARDS: United States - KS - DISC: Financial Analysis and Cas - DISC: Financial Analysis and Cash Flows United States - AK - DISC: Taxes KEYWORDS: Bloom's: Remembering 118. You made an error when you filed your tax return last year. You can correct this error by f