H&R Block Income Tax Course
Questions with Accurate Answers
$2,000,000 Limitation correct answer If the cost of all property eligible for the 179
deduction during the year exceeds $2,000,000, the deduction is reduced dollar for
dollar by the amount in excess of $2,000,000.
179 Expense Deduction correct answer An election to expense up to $500,000 of
the cost of certain property in the year it is placed in service instead of recovering
that amount under MACRS.
179 Restrictions correct answer $2,000,000 Limitation; Business Income
Limitation
2 Requirements for Moving Expenses correct answer (1) Distance
(2) Work time
401(k) Plan correct answer Deferred compensation plan available through a wide
range of employers. Contributions to a 401(k) plan are tax deferred to the
employee. Distributions from the plan are taxed as ordinary income to the
recipient when received.
403(b) Plan correct answer Deferred compensation plan available to employees of
many public educational institutions and non-profit organizations.
403(b) Plans correct answer A tax-advantaged retirement savings plan available
for employees of: public education organizations; some non-profit organizations;
cooperative hospital service organizations.
,457 Plan correct answer Deferred compensation plan available to employees of
many government entities.
A 1988 US Series EE Bond, cashed in this year. Election to report interest annually
has not been made. Taxable? correct answer Yes
Accelerated Cost Recovery System (ACRS) correct answer The system of
depreciation in effect from 1981 through 1986.
Acquisition Debt correct answer Debt incurred to acquire, construct, or improve
the taxpayer's principal or secondary residence.
Active Income and Losses correct answer Those for which a taxpayer performs
services.
Adjusted Basis correct answer The cost or other original basis of property reduced
by adjustments such as depreciation allowed or allowable and increased by
capital improvements and other adjustments.
Adjusted Basis correct answer The cost or other original basis of property reduced
by adjustments such as depreciation allowed or allowable and increased by
capital improvements and other adjustments.
Adjusted Basis correct answer The cost or other original basis of property reduced
by adjustments such as depreciation allowed or allowable and increased by
capital improvements and other adjustments.
,Adjusted Basis correct answer The original basis PLUS the cost of improvements;
the cost of restoration after a casualty; assessments for local improvements
MINUS any discount, rebate, or reimbursement of any portion of the purchase
price; insurance reimbursements for property damages; the amount of casualty
or other losses deducted on the return for any year; depletion or depreciation
allowed or allowable; any gain that is not reported in the year realized.
Adjusted Basis correct answer Usually the original cost plus the cost of capital
improvements and the cost of restoring the property, minus any reimbursement
or deduction of previous casualty losses and depreciation taken.
Adjusted Gross Income correct answer Equals gross income less reductions that
are allowable, regardless of whether personal deductions are itemized.
Adoption Credit correct answer A nonrefundable credit for qualified adoption
expenses incurred for each eligible child. The credit cannot exceed $13,360 per
child. The limit is a per-child limit, not an annual limit, and can be carried forward
for up to five years or until used.
Age of a Qualifying Child correct answer Under 19 at the end of the year and
younger than the taxpayer; A full-time student under 24 at the end of the year
and younger than the taxpayer; Permanently and totally disabled.
Age Test for QC correct answer (1) Under 19 and younger than taxpayer. (2) Full-
time student under 24 and younger than taxpayer. (3) Permanently and totally
disabled.
AGI Limitation of Most Miscellaneous Itemized Deductions correct answer 2%
, Alimony and separate maintenance payments included in gross income? correct
answer Yes
Alimony Payments correct answer Payments made by one spouse to the other
spouse or former spouse under a written separation or divorce instrument.
Alternative Straight-Line Depreciation System correct answer A MACRS system of
depreciation using the straight-line method over an alternative recovery period.
Amended Return correct answer A tax return filed on Form 1040X after the
original return has been filed.
American Opportunity Credit (AOC) correct answer Credit for qualifying education
expenses available for tax years 2009 through 2012. The AOC may be partially
refundable.
Amount of Adoption Credit correct answer Up to $13,360 per eligible child.
Amount of Child Tax Credit correct answer $1,000 per child.
Amount of the Homebuyer Credit correct answer The smaller of $8,000 or 10% of
the purchase price of the home.
Amount of the Lifetime Learning Credit correct answer 20% of the total qualified
expenses for all eligible students on the tax return.
Questions with Accurate Answers
$2,000,000 Limitation correct answer If the cost of all property eligible for the 179
deduction during the year exceeds $2,000,000, the deduction is reduced dollar for
dollar by the amount in excess of $2,000,000.
179 Expense Deduction correct answer An election to expense up to $500,000 of
the cost of certain property in the year it is placed in service instead of recovering
that amount under MACRS.
179 Restrictions correct answer $2,000,000 Limitation; Business Income
Limitation
2 Requirements for Moving Expenses correct answer (1) Distance
(2) Work time
401(k) Plan correct answer Deferred compensation plan available through a wide
range of employers. Contributions to a 401(k) plan are tax deferred to the
employee. Distributions from the plan are taxed as ordinary income to the
recipient when received.
403(b) Plan correct answer Deferred compensation plan available to employees of
many public educational institutions and non-profit organizations.
403(b) Plans correct answer A tax-advantaged retirement savings plan available
for employees of: public education organizations; some non-profit organizations;
cooperative hospital service organizations.
,457 Plan correct answer Deferred compensation plan available to employees of
many government entities.
A 1988 US Series EE Bond, cashed in this year. Election to report interest annually
has not been made. Taxable? correct answer Yes
Accelerated Cost Recovery System (ACRS) correct answer The system of
depreciation in effect from 1981 through 1986.
Acquisition Debt correct answer Debt incurred to acquire, construct, or improve
the taxpayer's principal or secondary residence.
Active Income and Losses correct answer Those for which a taxpayer performs
services.
Adjusted Basis correct answer The cost or other original basis of property reduced
by adjustments such as depreciation allowed or allowable and increased by
capital improvements and other adjustments.
Adjusted Basis correct answer The cost or other original basis of property reduced
by adjustments such as depreciation allowed or allowable and increased by
capital improvements and other adjustments.
Adjusted Basis correct answer The cost or other original basis of property reduced
by adjustments such as depreciation allowed or allowable and increased by
capital improvements and other adjustments.
,Adjusted Basis correct answer The original basis PLUS the cost of improvements;
the cost of restoration after a casualty; assessments for local improvements
MINUS any discount, rebate, or reimbursement of any portion of the purchase
price; insurance reimbursements for property damages; the amount of casualty
or other losses deducted on the return for any year; depletion or depreciation
allowed or allowable; any gain that is not reported in the year realized.
Adjusted Basis correct answer Usually the original cost plus the cost of capital
improvements and the cost of restoring the property, minus any reimbursement
or deduction of previous casualty losses and depreciation taken.
Adjusted Gross Income correct answer Equals gross income less reductions that
are allowable, regardless of whether personal deductions are itemized.
Adoption Credit correct answer A nonrefundable credit for qualified adoption
expenses incurred for each eligible child. The credit cannot exceed $13,360 per
child. The limit is a per-child limit, not an annual limit, and can be carried forward
for up to five years or until used.
Age of a Qualifying Child correct answer Under 19 at the end of the year and
younger than the taxpayer; A full-time student under 24 at the end of the year
and younger than the taxpayer; Permanently and totally disabled.
Age Test for QC correct answer (1) Under 19 and younger than taxpayer. (2) Full-
time student under 24 and younger than taxpayer. (3) Permanently and totally
disabled.
AGI Limitation of Most Miscellaneous Itemized Deductions correct answer 2%
, Alimony and separate maintenance payments included in gross income? correct
answer Yes
Alimony Payments correct answer Payments made by one spouse to the other
spouse or former spouse under a written separation or divorce instrument.
Alternative Straight-Line Depreciation System correct answer A MACRS system of
depreciation using the straight-line method over an alternative recovery period.
Amended Return correct answer A tax return filed on Form 1040X after the
original return has been filed.
American Opportunity Credit (AOC) correct answer Credit for qualifying education
expenses available for tax years 2009 through 2012. The AOC may be partially
refundable.
Amount of Adoption Credit correct answer Up to $13,360 per eligible child.
Amount of Child Tax Credit correct answer $1,000 per child.
Amount of the Homebuyer Credit correct answer The smaller of $8,000 or 10% of
the purchase price of the home.
Amount of the Lifetime Learning Credit correct answer 20% of the total qualified
expenses for all eligible students on the tax return.
