HRB-27 Final Exam Review
Questions with Accurate Answers
A single self-employed taxpayer estimates that his 2009 tax will be $7,500. His
2008 tax was $7,000. How much must he prepay for 2009 in order to avoid an
underpayment penalty? correct answer $6,750; the lesser of 90% of his 2009 tax
[$7,500 X 90% = $6,750] or 100% of his 2008 tax ($7,000). (24.)
A taxpayer is building a new home and had a solar water heater installed in 2009,
but the home was not ready to be occupied until early 2010. Can they take the
residential energy credit? correct answer Yes, they can take the credit on their
2010 tax return. (8.21)
A taxpayer makes his final 2008 state estimated tax payment on January 15, 2009.
Where should he report this item? correct answer It is included on his 2009
Schedule A, line 5. This payment also should have been included on the estimated
payments line of his 2008 state return.
A taxpayer wants to amend his 2006 return. He filed it April 16, 2007. The return
was examined by the IRS on January 9, 2009 and $280 additional tax was paid that
date. What is the latest date on which an amended return may be filed? correct
answer January 9, 2011
Any refund will be limited to $280 (the tax paid within the two years preceding
the date the amended return was filed). (23.3)
A taxpayer wrote a check for a $500 donation to his mosque. Is his cancelled
check sufficient documentation to support his deduction? correct answer No.
Donations of $250 or more must have written substantiation from the donee.
(12.29)
,A taxpayer's employer paid $500 of a taxpayer's $2,000 child care expenses for
him. How will the employer's assistance affect the child-care credit? correct
answer Total child care expenses must be reduced by any amounts paid by the
employer. (8.11)
An employee has an office where he works, but his work load demands that he
bring home work on evenings and weekends. He uses a room of his home
regularly and exclusively for his work. May he deduct home-office expenses?
correct answer No, the employer provides a work office. (17.23)
Are early distributions from qualified retirement plans always penalized? correct
answer No.
• Does not apply to qualified disaster recovery assistance distributions.
• Does not apply to any recovery of cost or any amount rolled over in a timely
manner.
(22.12,13)
Are scholarships and fellowships taxable? correct answer • If a W-2 is received it
is FULLY taxable.
• Amounts to Non-degree candidates are FULLY taxable and reported on Line 7
marked "SCH"
• Amounts to Degree candidates spent for qualified expenses are NOT taxable.
(18.5)
At what amount must interest income be reported on Form 1040, Schedule B?
correct answer When the total taxable interest exceeds $1,500 (6.2)
, Carol has a home office. When she is not using the office, she lets her children
play video games on an old television she keeps there. Can Carol deduct home-
office expenses? correct answer No. The space must be used exclusively for the
business. (17.21)
Define basis. correct answer A measure of the taxpayer's investment in property
for tax purposes. (20.4)
For MACRS purposes, we need to divide real property into two categories. What
are they? correct answer Residential and Nonresidential (16.7)
For tax purposes, when is a person's marital status determined? correct answer
On the last day of the tax year. (3.2)
Ho do we determine the MACRS recovery period of a piece of personal property?
correct answer By using the Table of Asset Class Lives and Recovery Periods (16.3)
How can a disability pension qualify as earned income for the EIC? We've learned
pensions are not earned income. correct answer Before the taxpayer reaches
minimum retirement age, it's considered earned income (18.11)
How can a married individual meet the joint return test to remain a qualifying
child? correct answer They can meet this test by not filing a joint return with their
spouse, or they can file a joint return with their spouse if they are filing only to
claim a refund of any taxes withheld. (4.4)
How can you determine who paid more than half of the person's support? correct
answer Total support is determined and reduced by the funds received by and for
Questions with Accurate Answers
A single self-employed taxpayer estimates that his 2009 tax will be $7,500. His
2008 tax was $7,000. How much must he prepay for 2009 in order to avoid an
underpayment penalty? correct answer $6,750; the lesser of 90% of his 2009 tax
[$7,500 X 90% = $6,750] or 100% of his 2008 tax ($7,000). (24.)
A taxpayer is building a new home and had a solar water heater installed in 2009,
but the home was not ready to be occupied until early 2010. Can they take the
residential energy credit? correct answer Yes, they can take the credit on their
2010 tax return. (8.21)
A taxpayer makes his final 2008 state estimated tax payment on January 15, 2009.
Where should he report this item? correct answer It is included on his 2009
Schedule A, line 5. This payment also should have been included on the estimated
payments line of his 2008 state return.
A taxpayer wants to amend his 2006 return. He filed it April 16, 2007. The return
was examined by the IRS on January 9, 2009 and $280 additional tax was paid that
date. What is the latest date on which an amended return may be filed? correct
answer January 9, 2011
Any refund will be limited to $280 (the tax paid within the two years preceding
the date the amended return was filed). (23.3)
A taxpayer wrote a check for a $500 donation to his mosque. Is his cancelled
check sufficient documentation to support his deduction? correct answer No.
Donations of $250 or more must have written substantiation from the donee.
(12.29)
,A taxpayer's employer paid $500 of a taxpayer's $2,000 child care expenses for
him. How will the employer's assistance affect the child-care credit? correct
answer Total child care expenses must be reduced by any amounts paid by the
employer. (8.11)
An employee has an office where he works, but his work load demands that he
bring home work on evenings and weekends. He uses a room of his home
regularly and exclusively for his work. May he deduct home-office expenses?
correct answer No, the employer provides a work office. (17.23)
Are early distributions from qualified retirement plans always penalized? correct
answer No.
• Does not apply to qualified disaster recovery assistance distributions.
• Does not apply to any recovery of cost or any amount rolled over in a timely
manner.
(22.12,13)
Are scholarships and fellowships taxable? correct answer • If a W-2 is received it
is FULLY taxable.
• Amounts to Non-degree candidates are FULLY taxable and reported on Line 7
marked "SCH"
• Amounts to Degree candidates spent for qualified expenses are NOT taxable.
(18.5)
At what amount must interest income be reported on Form 1040, Schedule B?
correct answer When the total taxable interest exceeds $1,500 (6.2)
, Carol has a home office. When she is not using the office, she lets her children
play video games on an old television she keeps there. Can Carol deduct home-
office expenses? correct answer No. The space must be used exclusively for the
business. (17.21)
Define basis. correct answer A measure of the taxpayer's investment in property
for tax purposes. (20.4)
For MACRS purposes, we need to divide real property into two categories. What
are they? correct answer Residential and Nonresidential (16.7)
For tax purposes, when is a person's marital status determined? correct answer
On the last day of the tax year. (3.2)
Ho do we determine the MACRS recovery period of a piece of personal property?
correct answer By using the Table of Asset Class Lives and Recovery Periods (16.3)
How can a disability pension qualify as earned income for the EIC? We've learned
pensions are not earned income. correct answer Before the taxpayer reaches
minimum retirement age, it's considered earned income (18.11)
How can a married individual meet the joint return test to remain a qualifying
child? correct answer They can meet this test by not filing a joint return with their
spouse, or they can file a joint return with their spouse if they are filing only to
claim a refund of any taxes withheld. (4.4)
How can you determine who paid more than half of the person's support? correct
answer Total support is determined and reduced by the funds received by and for
