HR BLOCK (TKA EXAM PREP) STUDY GUIDE EXAM
COMPREHENSIVE MULTIPLE-CHOICE QUESTIONS WITH 100%
RATED CORRECT ANSWERS 2025 LATEST UPDATED GET IT
CORRECT
Question 1
What does the acronym "IRC" stand for in the context of tax law?
A) International Revenue Collection
B) Internal Regulatory Compliance
C) Income Reporting Committee
D) Internal Revenue Code
E) Investment Research Council
Correct Answer: D) Internal Revenue Code
Rationale: IRC stands for "Internal Revenue Code," which is the statutory basis of all
federal tax law in the United States.
Question 2
Which type of deduction is a fixed amount set by statute and is used in calculating "Below-the-
Line" deductions for Taxable Income?
A) Itemized Deduction
B) Standard Deduction
C) Above-the-Line Deduction
D) Capital Deduction
E) Business Deduction
Correct Answer: B) Standard Deduction
Rationale: The Standard Deduction is a set amount by statute that taxpayers can choose to
subtract from their Adjusted Gross Income (AGI) instead of itemizing deductions, to arrive
at Taxable Income.
Question 3
Which type of deduction is a sum of allowable deductions chosen by the taxpayer to calculate
"Below-the-Line" deductions for Taxable Income, as an alternative to the Standard Deduction?
A) Standard Deduction
B) Itemized Deduction
C) Above-the-Line Deduction
D) Capital Deduction
E) Business Deduction
Correct Answer: B) Itemized Deduction
Rationale: Itemized Deductions are a collection of specific expenses (e.g., medical expenses,
state and local taxes, mortgage interest) that taxpayers can choose to deduct if their total
exceeds the Standard Deduction amount.
,[Type here]
Question 4
What is the general tax rate range for individuals on ordinary income?
A) 0% - 15%
B) 10% - 37%
C) 20% - 28%
D) 26% - 28%
E) A flat 21%
Correct Answer: B) 10% - 37%
Rationale: Ordinary income for individuals is taxed at progressive rates, which currently
range from 10% to 37% as per the provided information.
Question 5
What is the general tax rate range for individuals on net gains and qualified dividends?
A) 10% - 37%
B) 0% - 20% (sometimes) 20% - 28% (usually)
C) 26% - 28%
D) A flat 21%
E) 15% - 30%
Correct Answer: B) 0% - 20% (sometimes) 20% - 28% (usually)
Rationale: Net capital gains and qualified dividends often receive preferential tax treatment.
The rates can be 0%, 15%, or 20% depending on the taxpayer's ordinary income bracket.
The provided range captures this with "0% - 20% (sometimes) 20% - 28% (usually)."
Question 6
What is the Alternative Minimum Tax (AMT) rate range?
A) 10% - 37%
B) 0% - 20%
C) 21%
D) 26% - 28%
E) 15% - 35%
Correct Answer: D) 26% - 28%
Rationale: The Alternative Minimum Tax (AMT) is a separate tax computation designed to
ensure that high-income taxpayers pay at least a minimum amount of tax. Its rates are
26% and 28%.
Question 7
What is defined as the profit (or loss) from the sale of property or investments, which often
receives preferential tax rates compared to ordinary income?
A) Ordinary Income
B) Business Income
,[Type here]
C) Capital Gains
D) Compensation Income
E) Imputed Income
Correct Answer: C) Capital Gains
Rationale: Capital Gains (or losses) result from the sale of capital assets (e.g., stocks, bonds,
real estate) and are typically taxed at lower, preferential rates than ordinary income.
Question 8
How is Adjusted Gross Income (AGI) calculated?
A) Gross Income + Deductions
B) Gross Income - Deductions (Above-the-line)
C) Taxable Income - Credits
D) AGI - (Standard or Itemized Deduction)
E) Tentative Tax - Credits
Correct Answer: B) Gross Income - Deductions
Rationale: Adjusted Gross Income (AGI) is calculated by taking an individual's gross
income and subtracting certain allowable deductions, often referred to as "Above-the-
Line" deductions.
Question 9
How is Taxable Income calculated?
A) Gross Income - Deductions
B) AGI - (Larger of Standard or Itemized Deduction)
C) Tentative Tax - Credits
D) AGI + Exclusions
E) Gross Income - Credits
Correct Answer: B) AGI - (Larger of Standard or Itemized Deduction)
Rationale: Taxable Income is derived by subtracting the larger of either the Standard
Deduction or the total Itemized Deductions from the Adjusted Gross Income (AGI).
Question 10
How is Tentative Tax calculated?
A) AGI multiplied by the tax rate.
B) Taxable Income multiplied by the tax rate.
C) Gross Income minus deductions.
D) Taxable Income minus credits.
E) Tentative Tax minus credits.
Correct Answer: B) Taxable Income (x) Tax Rate
Rationale: Tentative Tax is determined by multiplying the Taxable Income by the applicable
tax rate(s) (e.g., ordinary income rates, capital gains rates).
, [Type here]
Question 11
How are "Taxes Due" or "Refund" determined?
A) Tentative Tax + Credits.
B) Tentative Tax - Credits.
C) Taxable Income + Credits.
D) AGI - Credits.
E) Gross Income - Credits.
Correct Answer: B) Tentative Tax - Credits
Rationale: Once the tentative tax is calculated, tax credits are applied to reduce the tax
liability. The difference determines the final amount of taxes due or the refund amount.
Question 12
What type of tax credit allows a taxpayer to receive money back even if their tax liability is
reduced to $0?
A) Nonrefundable Tax Credit
B) Preferential Tax Credit
C) Investment Tax Credit
D) Refundable Tax Credit
E) Education Tax Credit
Correct Answer: D) Refundable Tax Credit
Rationale: Refundable tax credits are beneficial because if the credit amount exceeds the
taxpayer's tax liability, the taxpayer receives the difference back as a refund.
Question 13
Which type of tax credit can reduce a taxpayer's tax liability to $0, but no money will be
refunded if the credit exceeds the tax owed?
A) Refundable Tax Credit
B) Child Tax Credit
C) Earned Income Tax Credit
D) Nonrefundable Tax Credit
E) Education Tax Credit
Correct Answer: D) Nonrefundable Tax Credit
Rationale: Nonrefundable tax credits can reduce tax owed down to zero, but any remaining
credit amount after the tax liability is eliminated is not refunded to the taxpayer.
Question 14
What is Title 26 (U.S. Code)?
A) The collection of all state tax laws.
B) The statutory basis of all federal tax law.
C) Regulations governing the IRS audit process.
COMPREHENSIVE MULTIPLE-CHOICE QUESTIONS WITH 100%
RATED CORRECT ANSWERS 2025 LATEST UPDATED GET IT
CORRECT
Question 1
What does the acronym "IRC" stand for in the context of tax law?
A) International Revenue Collection
B) Internal Regulatory Compliance
C) Income Reporting Committee
D) Internal Revenue Code
E) Investment Research Council
Correct Answer: D) Internal Revenue Code
Rationale: IRC stands for "Internal Revenue Code," which is the statutory basis of all
federal tax law in the United States.
Question 2
Which type of deduction is a fixed amount set by statute and is used in calculating "Below-the-
Line" deductions for Taxable Income?
A) Itemized Deduction
B) Standard Deduction
C) Above-the-Line Deduction
D) Capital Deduction
E) Business Deduction
Correct Answer: B) Standard Deduction
Rationale: The Standard Deduction is a set amount by statute that taxpayers can choose to
subtract from their Adjusted Gross Income (AGI) instead of itemizing deductions, to arrive
at Taxable Income.
Question 3
Which type of deduction is a sum of allowable deductions chosen by the taxpayer to calculate
"Below-the-Line" deductions for Taxable Income, as an alternative to the Standard Deduction?
A) Standard Deduction
B) Itemized Deduction
C) Above-the-Line Deduction
D) Capital Deduction
E) Business Deduction
Correct Answer: B) Itemized Deduction
Rationale: Itemized Deductions are a collection of specific expenses (e.g., medical expenses,
state and local taxes, mortgage interest) that taxpayers can choose to deduct if their total
exceeds the Standard Deduction amount.
,[Type here]
Question 4
What is the general tax rate range for individuals on ordinary income?
A) 0% - 15%
B) 10% - 37%
C) 20% - 28%
D) 26% - 28%
E) A flat 21%
Correct Answer: B) 10% - 37%
Rationale: Ordinary income for individuals is taxed at progressive rates, which currently
range from 10% to 37% as per the provided information.
Question 5
What is the general tax rate range for individuals on net gains and qualified dividends?
A) 10% - 37%
B) 0% - 20% (sometimes) 20% - 28% (usually)
C) 26% - 28%
D) A flat 21%
E) 15% - 30%
Correct Answer: B) 0% - 20% (sometimes) 20% - 28% (usually)
Rationale: Net capital gains and qualified dividends often receive preferential tax treatment.
The rates can be 0%, 15%, or 20% depending on the taxpayer's ordinary income bracket.
The provided range captures this with "0% - 20% (sometimes) 20% - 28% (usually)."
Question 6
What is the Alternative Minimum Tax (AMT) rate range?
A) 10% - 37%
B) 0% - 20%
C) 21%
D) 26% - 28%
E) 15% - 35%
Correct Answer: D) 26% - 28%
Rationale: The Alternative Minimum Tax (AMT) is a separate tax computation designed to
ensure that high-income taxpayers pay at least a minimum amount of tax. Its rates are
26% and 28%.
Question 7
What is defined as the profit (or loss) from the sale of property or investments, which often
receives preferential tax rates compared to ordinary income?
A) Ordinary Income
B) Business Income
,[Type here]
C) Capital Gains
D) Compensation Income
E) Imputed Income
Correct Answer: C) Capital Gains
Rationale: Capital Gains (or losses) result from the sale of capital assets (e.g., stocks, bonds,
real estate) and are typically taxed at lower, preferential rates than ordinary income.
Question 8
How is Adjusted Gross Income (AGI) calculated?
A) Gross Income + Deductions
B) Gross Income - Deductions (Above-the-line)
C) Taxable Income - Credits
D) AGI - (Standard or Itemized Deduction)
E) Tentative Tax - Credits
Correct Answer: B) Gross Income - Deductions
Rationale: Adjusted Gross Income (AGI) is calculated by taking an individual's gross
income and subtracting certain allowable deductions, often referred to as "Above-the-
Line" deductions.
Question 9
How is Taxable Income calculated?
A) Gross Income - Deductions
B) AGI - (Larger of Standard or Itemized Deduction)
C) Tentative Tax - Credits
D) AGI + Exclusions
E) Gross Income - Credits
Correct Answer: B) AGI - (Larger of Standard or Itemized Deduction)
Rationale: Taxable Income is derived by subtracting the larger of either the Standard
Deduction or the total Itemized Deductions from the Adjusted Gross Income (AGI).
Question 10
How is Tentative Tax calculated?
A) AGI multiplied by the tax rate.
B) Taxable Income multiplied by the tax rate.
C) Gross Income minus deductions.
D) Taxable Income minus credits.
E) Tentative Tax minus credits.
Correct Answer: B) Taxable Income (x) Tax Rate
Rationale: Tentative Tax is determined by multiplying the Taxable Income by the applicable
tax rate(s) (e.g., ordinary income rates, capital gains rates).
, [Type here]
Question 11
How are "Taxes Due" or "Refund" determined?
A) Tentative Tax + Credits.
B) Tentative Tax - Credits.
C) Taxable Income + Credits.
D) AGI - Credits.
E) Gross Income - Credits.
Correct Answer: B) Tentative Tax - Credits
Rationale: Once the tentative tax is calculated, tax credits are applied to reduce the tax
liability. The difference determines the final amount of taxes due or the refund amount.
Question 12
What type of tax credit allows a taxpayer to receive money back even if their tax liability is
reduced to $0?
A) Nonrefundable Tax Credit
B) Preferential Tax Credit
C) Investment Tax Credit
D) Refundable Tax Credit
E) Education Tax Credit
Correct Answer: D) Refundable Tax Credit
Rationale: Refundable tax credits are beneficial because if the credit amount exceeds the
taxpayer's tax liability, the taxpayer receives the difference back as a refund.
Question 13
Which type of tax credit can reduce a taxpayer's tax liability to $0, but no money will be
refunded if the credit exceeds the tax owed?
A) Refundable Tax Credit
B) Child Tax Credit
C) Earned Income Tax Credit
D) Nonrefundable Tax Credit
E) Education Tax Credit
Correct Answer: D) Nonrefundable Tax Credit
Rationale: Nonrefundable tax credits can reduce tax owed down to zero, but any remaining
credit amount after the tax liability is eliminated is not refunded to the taxpayer.
Question 14
What is Title 26 (U.S. Code)?
A) The collection of all state tax laws.
B) The statutory basis of all federal tax law.
C) Regulations governing the IRS audit process.
