Income tax fundamentals 2024
Income tax fundamentals 2024
Exam based questions and approved answers
For federal income tax purposes, a sole proprietor must prepare a personal income tax Form
1040 U.S. Individual Income Tax Return and report the income or loss from the sole
proprietorship on his or her personal income tax form.
- ✔✔✔ Individual Income Tax Return Form 1040 U.S.
A tax filing status available to widows or widowers for two years after their spouse's death.
To claim this status, the taxpayer must also have a dependent child who lives in the
household and for which the taxpayer pays over half the cost of maintaining the household.
- ✔✔✔A qualifying widower
All assets are capital assets except those specifically excluded by the tax law. Major
categories of noncapital assets include property held for sale in the normal course of business
(i.e., inventory), trade accounts and notes receivable, depreciable property, and real estate
used in a trade or business.
- ✔✔✔capital assets
The gain from the sale or exchange of a capital asset. Gain from a property held 12 months or
less is deemed to be a short-term capital gain. If the property is held more than 12 months, the
gain is deemed to be long-term. See Capital asset and Holding period.
E-filing
- ✔✔✔Capital Gains and Losses
A company or group of people authorized to act as a single entity (legally a person) and
recognized as such in law.
@ pg. 1
Income tax fundamentals 2024
Exam based questions and approved answers
For federal income tax purposes, a sole proprietor must prepare a personal income tax Form
1040 U.S. Individual Income Tax Return and report the income or loss from the sole
proprietorship on his or her personal income tax form.
- ✔✔✔ Individual Income Tax Return Form 1040 U.S.
A tax filing status available to widows or widowers for two years after their spouse's death.
To claim this status, the taxpayer must also have a dependent child who lives in the
household and for which the taxpayer pays over half the cost of maintaining the household.
- ✔✔✔A qualifying widower
All assets are capital assets except those specifically excluded by the tax law. Major
categories of noncapital assets include property held for sale in the normal course of business
(i.e., inventory), trade accounts and notes receivable, depreciable property, and real estate
used in a trade or business.
- ✔✔✔capital assets
The gain from the sale or exchange of a capital asset. Gain from a property held 12 months or
less is deemed to be a short-term capital gain. If the property is held more than 12 months, the
gain is deemed to be long-term. See Capital asset and Holding period.
E-filing
- ✔✔✔Capital Gains and Losses
A company or group of people authorized to act as a single entity (legally a person) and
recognized as such in law.
@ pg. 1
