HR BLOCK FINAL TEST LATEST
REVIEW (ITC )QUESTIONS
AND ANSWERS 2026 - 2027
On what form are social security benefits reported to the recipient? -
ANSWERS-Form SSA-1099.
When the taxpayer has contributed after-tax money to the cost and has
not yet recovered it. - ANSWERS-Form 1099-R.
Under what circumstances would a pension be partly taxable? -
ANSWERS-When the taxpayer has contributed after-tax money to the
cost and has not yet recovered it.
What are the two methods used to calculate the taxable amount of a
partly taxable pension distribution? When is each used? - ANSWERS-
The simplified method and the general rule.
The simplified method is required to be used to compute the taxable
portion of a pension or annuity with a starting date after November 18,
1996, where the taxpayer has after-tax contributions in the plan.
The general rule for calculating the excludible portion of pension and
annuity payments may be used if a taxpayer started receiving payments
before November 19, 1996.
END OF
PAGE
1
, HR BLOCK FINAL TEST LATEST
REVIEW (ITC )QUESTIONS
AND ANSWERS 2026 - 2027
Taxpayers with an annuity date starting after July 1, 1986, and before
November 19, 1996, generally could have chosen to use the simplified
method or the general rule.
Where is income tax withheld from a retirement account or IRA
distribution reported on the tax return? - ANSWERS-Amounts withheld
and reported to the taxpayer on Form 1099-R are included on Form 1040
or Form 1040-SR, line 25b.
How do you determine the taxable portion of a social security
distribution? - ANSWERS-The amount of a taxpayer's social security or
tier 1 railroad retirement benefits subject to federal tax varies from zero
to 85%, depending upon filing status and income. The level of taxability
is based on MAGI increased by one-half of the net benefits received by
the taxpayer (and spouse, if MFJ).
The taxable portion is calculated using the Social Security Taxable
Benefits Worksheet.
When is an asset held long-term? - ANSWERS-In general, assets held
for more than one year are long-term. Assets held for one year or less are
short-term.
END OF
PAGE
2
, HR BLOCK FINAL TEST LATEST
REVIEW (ITC )QUESTIONS
AND ANSWERS 2026 - 2027
Define basis. - ANSWERS-Basis is a measure of the taxpayer's
investment in property, which is used to determine gain or loss for tax
purposes
What is the cost basis of purchased property? - ANSWERS-The basis of
property acquired by purchase is generally the cost, which includes cash
paid, the fair market value (FMV) of services rendered, and the FMV of
property traded in exchange for the property. It also includes certain
closing costs, such as commissions paid by the purchaser, legal and
recording fees, and state transfer taxes on real estate.
On what schedule do you report the gain or loss from the sale of a
capital asset? - ANSWERS-Schedule D, Capital Gains and Losses.
What are the long-term capital gain tax rates? - ANSWERS-Long-term
capital gains are taxed at lower rates than ordinary income and short-
term capital gains.
For 2021, the maximum tax rates for most long-term capital gains are:
END OF
PAGE
3
, HR BLOCK FINAL TEST LATEST
REVIEW (ITC )QUESTIONS
AND ANSWERS 2026 - 2027
0% on taxable income less than $80,800 MFJ/QW, $54,100 HH, and
$40,400 S/MFS that otherwise would be taxed at higher tax rates.
15% on taxable income greater than the amounts listed above and below
$501,600 MFJ/QW, $473,750 HH, $445,850 S, and $250,800 MFS.
20% on any amount above the maximum 15% rate amount.
What income is taxed at the 28% maximum rate? - ANSWERS-Long-
term gain from the sale of collectibles and certain gain from the sale of
qualified small business stock.
What is the maximum net capital loss that a taxpayer may deduct in one
year? - ANSWERS-Capital losses may be used to offset capital gains
from the sale of other property. If a taxpayer's capital losses exceed their
capital gains, they can use up to $3,000 of the excess loss to offset
ordinary income each year. For taxpayers using the MFS filing status,
the amount that can be used to offset ordinary income is limited to
$1,500 each year.
What does Form 1099-B report? What about Form 1099-S? -
ANSWERS-Form 1099-B is used by brokers to report the proceeds from
the sale of shares of stock, mutual funds, bonds, commodities, futures
contracts, foreign currency contracts, and other securities.
END OF
PAGE
4
REVIEW (ITC )QUESTIONS
AND ANSWERS 2026 - 2027
On what form are social security benefits reported to the recipient? -
ANSWERS-Form SSA-1099.
When the taxpayer has contributed after-tax money to the cost and has
not yet recovered it. - ANSWERS-Form 1099-R.
Under what circumstances would a pension be partly taxable? -
ANSWERS-When the taxpayer has contributed after-tax money to the
cost and has not yet recovered it.
What are the two methods used to calculate the taxable amount of a
partly taxable pension distribution? When is each used? - ANSWERS-
The simplified method and the general rule.
The simplified method is required to be used to compute the taxable
portion of a pension or annuity with a starting date after November 18,
1996, where the taxpayer has after-tax contributions in the plan.
The general rule for calculating the excludible portion of pension and
annuity payments may be used if a taxpayer started receiving payments
before November 19, 1996.
END OF
PAGE
1
, HR BLOCK FINAL TEST LATEST
REVIEW (ITC )QUESTIONS
AND ANSWERS 2026 - 2027
Taxpayers with an annuity date starting after July 1, 1986, and before
November 19, 1996, generally could have chosen to use the simplified
method or the general rule.
Where is income tax withheld from a retirement account or IRA
distribution reported on the tax return? - ANSWERS-Amounts withheld
and reported to the taxpayer on Form 1099-R are included on Form 1040
or Form 1040-SR, line 25b.
How do you determine the taxable portion of a social security
distribution? - ANSWERS-The amount of a taxpayer's social security or
tier 1 railroad retirement benefits subject to federal tax varies from zero
to 85%, depending upon filing status and income. The level of taxability
is based on MAGI increased by one-half of the net benefits received by
the taxpayer (and spouse, if MFJ).
The taxable portion is calculated using the Social Security Taxable
Benefits Worksheet.
When is an asset held long-term? - ANSWERS-In general, assets held
for more than one year are long-term. Assets held for one year or less are
short-term.
END OF
PAGE
2
, HR BLOCK FINAL TEST LATEST
REVIEW (ITC )QUESTIONS
AND ANSWERS 2026 - 2027
Define basis. - ANSWERS-Basis is a measure of the taxpayer's
investment in property, which is used to determine gain or loss for tax
purposes
What is the cost basis of purchased property? - ANSWERS-The basis of
property acquired by purchase is generally the cost, which includes cash
paid, the fair market value (FMV) of services rendered, and the FMV of
property traded in exchange for the property. It also includes certain
closing costs, such as commissions paid by the purchaser, legal and
recording fees, and state transfer taxes on real estate.
On what schedule do you report the gain or loss from the sale of a
capital asset? - ANSWERS-Schedule D, Capital Gains and Losses.
What are the long-term capital gain tax rates? - ANSWERS-Long-term
capital gains are taxed at lower rates than ordinary income and short-
term capital gains.
For 2021, the maximum tax rates for most long-term capital gains are:
END OF
PAGE
3
, HR BLOCK FINAL TEST LATEST
REVIEW (ITC )QUESTIONS
AND ANSWERS 2026 - 2027
0% on taxable income less than $80,800 MFJ/QW, $54,100 HH, and
$40,400 S/MFS that otherwise would be taxed at higher tax rates.
15% on taxable income greater than the amounts listed above and below
$501,600 MFJ/QW, $473,750 HH, $445,850 S, and $250,800 MFS.
20% on any amount above the maximum 15% rate amount.
What income is taxed at the 28% maximum rate? - ANSWERS-Long-
term gain from the sale of collectibles and certain gain from the sale of
qualified small business stock.
What is the maximum net capital loss that a taxpayer may deduct in one
year? - ANSWERS-Capital losses may be used to offset capital gains
from the sale of other property. If a taxpayer's capital losses exceed their
capital gains, they can use up to $3,000 of the excess loss to offset
ordinary income each year. For taxpayers using the MFS filing status,
the amount that can be used to offset ordinary income is limited to
$1,500 each year.
What does Form 1099-B report? What about Form 1099-S? -
ANSWERS-Form 1099-B is used by brokers to report the proceeds from
the sale of shares of stock, mutual funds, bonds, commodities, futures
contracts, foreign currency contracts, and other securities.
END OF
PAGE
4
