HS 321 - 4TH EXAM SET QUESTIONS AND
ANSWERS.
, 1 of 25
Term
All of the following statements are correct except:
A)
Realized income and recognized income are always recorded in the
same tax year.
B)
Realized income is cash or other increase in wealth "in your
pocket." C)
Recognized income is included in the preparation of your tax return.
D)
Income must be realized before it is recognized.
Give this one a try later!
The correct answer is (C).
The location of the asset after it's placed into service is irrelevant to the
calculation. Where the asset was manufactured or produced is also irrelevant. A
defines the useful life of the asset and B defines the original cost or depreciable
basis of the asset. D is correct. MACRS determines the depreciation method(s)
available. Real property = straight line depreciation only. Personal property =
straight line, Section 179 and 150% or 200% declining balance method.
The correct answer is (A).
Automobiles used for business purposes are Section 1245 Depreciable Personal
Property used in a trade or business. As one of the ACID assets, it may be
taxed at capital gains rates, but it is NOT a capital asset. B, C, and D are by
definition
capital assets.
The correct answer is (B).
While student loan interest up to $2,500 annually IS a deduction for AGI, the loan
repayment must be made by the borrower. The borrower may not be a
, dependent of another taxpayer. All of the other items are FOR AGI deductions or
adjustments.
The correctanswer is (A).
For example, if you sell your home at a gain and have lived there two out of
the last five years, IRC Section 121 tells us you may, if you are a married
filing jointly taxpayer, exclude up to $500,000 in gain on the sale. You
have realized income on which you will NEVER pay income taxes
(recognized gain).
Don't know?
2 of 25
Term
Which of the following rules must be followed for long term capital
gains treatment of capital assets:
I. Capital gains on the sale of artwork, baseball cards and classic
cars are taxed at a special rate of 28%
II.To receive long term capital tax treatment, an asset must
be owned for at least one year.
A)
I only
B)
II only
C)
Both I and II D)
Neither I nor II
Give this one a try later!
, The correct answer is (A).
A High Deductible Health Insurance Plan (HDHP) is a requirement for an HSA
participant. An HSA participant may not be a dependent on another person's tax
return.
The correct answer is (A).
II is incorrect. To receive long-term capital gains tax treatment an asset
must be owned for longer than one year. An asset owned for exactly one
year receives short term capital gains tax treatment.
The correct answer is (B).
While student loan interest up to $2,500 annually IS a deduction for AGI, the loan
repayment must be made by the borrower. The borrower may not be a
dependent of another taxpayer. All of the other items are FOR AGI deductions or
adjustments.
The correct answer is (A).
Subject to the 7.5 AGI floor for approved expenses and IRS premium
limitations, Long-Term Care and Hospitalization premiums are approved
deductions.
Disability Insurance premiums are not. Since possession and use of marijuana still
are a violation of Federal law, the costs of weed are not deductible. Expenses to
treat specific illnesses or medical conditions are deductible. Expenses to
improve the patient's general health and well-being are not.
Don't know?
3 of 25
Term
Which of the following interest payments qualify as an itemized
deduction?
A)
Interest payments on a business line of credit.
B)
ANSWERS.
, 1 of 25
Term
All of the following statements are correct except:
A)
Realized income and recognized income are always recorded in the
same tax year.
B)
Realized income is cash or other increase in wealth "in your
pocket." C)
Recognized income is included in the preparation of your tax return.
D)
Income must be realized before it is recognized.
Give this one a try later!
The correct answer is (C).
The location of the asset after it's placed into service is irrelevant to the
calculation. Where the asset was manufactured or produced is also irrelevant. A
defines the useful life of the asset and B defines the original cost or depreciable
basis of the asset. D is correct. MACRS determines the depreciation method(s)
available. Real property = straight line depreciation only. Personal property =
straight line, Section 179 and 150% or 200% declining balance method.
The correct answer is (A).
Automobiles used for business purposes are Section 1245 Depreciable Personal
Property used in a trade or business. As one of the ACID assets, it may be
taxed at capital gains rates, but it is NOT a capital asset. B, C, and D are by
definition
capital assets.
The correct answer is (B).
While student loan interest up to $2,500 annually IS a deduction for AGI, the loan
repayment must be made by the borrower. The borrower may not be a
, dependent of another taxpayer. All of the other items are FOR AGI deductions or
adjustments.
The correctanswer is (A).
For example, if you sell your home at a gain and have lived there two out of
the last five years, IRC Section 121 tells us you may, if you are a married
filing jointly taxpayer, exclude up to $500,000 in gain on the sale. You
have realized income on which you will NEVER pay income taxes
(recognized gain).
Don't know?
2 of 25
Term
Which of the following rules must be followed for long term capital
gains treatment of capital assets:
I. Capital gains on the sale of artwork, baseball cards and classic
cars are taxed at a special rate of 28%
II.To receive long term capital tax treatment, an asset must
be owned for at least one year.
A)
I only
B)
II only
C)
Both I and II D)
Neither I nor II
Give this one a try later!
, The correct answer is (A).
A High Deductible Health Insurance Plan (HDHP) is a requirement for an HSA
participant. An HSA participant may not be a dependent on another person's tax
return.
The correct answer is (A).
II is incorrect. To receive long-term capital gains tax treatment an asset
must be owned for longer than one year. An asset owned for exactly one
year receives short term capital gains tax treatment.
The correct answer is (B).
While student loan interest up to $2,500 annually IS a deduction for AGI, the loan
repayment must be made by the borrower. The borrower may not be a
dependent of another taxpayer. All of the other items are FOR AGI deductions or
adjustments.
The correct answer is (A).
Subject to the 7.5 AGI floor for approved expenses and IRS premium
limitations, Long-Term Care and Hospitalization premiums are approved
deductions.
Disability Insurance premiums are not. Since possession and use of marijuana still
are a violation of Federal law, the costs of weed are not deductible. Expenses to
treat specific illnesses or medical conditions are deductible. Expenses to
improve the patient's general health and well-being are not.
Don't know?
3 of 25
Term
Which of the following interest payments qualify as an itemized
deduction?
A)
Interest payments on a business line of credit.
B)
