Income Tax Fundamentals (38th Edition) – Test Bank for Federal Taxation Exam Preparation

TEST BANK: INCOME
TAX
FUNDAMENTALS,
38TH EDITION,
GERALD E.
WHITTENBURG,
MARTHA ALTUS-
BULLER, STEVEN
GILL

,Chapter 1: The Individual Income Tax Return Y5 Y5 Y5 Y5 Y5 Y5




1. A corporation is a reporting entity but not a tax-paying entity.
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True False
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2. Partnership capital gains and losses are allocated separately to each of the
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partners. True False
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3. Married taxpayers may double their standard deduction amount by filing separate
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returns.
Y5



True False



4. An item is not included in gross income unless the tax law specifies that the item
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is subject to taxation.
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True False



5. For taxpayers who do not itemize deductions, the standard deduction amount is
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subtracted from the taxpayer's adjusted gross income.
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True False



6. A taxpayer with self-employment income of $600 must file a tax
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return. True False
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7. A dependent child with earned income in excess of the available standard
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deduction amount must file a tax return.
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True False



8. A single taxpayer, who is not blind and who is under age 65, with income of
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$8,750 must file a tax return.
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True False

,9. If a taxpayer is due a refund, it will be mailed to the taxpayer regardless of whether
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he or she files a tax return.
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True False



10. Taxpayers with self-employment income of $400 or more must file a tax
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return. True False
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11. If your spouse dies during the tax year and you do not remarry, you must file as
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single for the year of death.
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True False



12. Taxpayers who do not qualify for married, head of household, or qualifying widow
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or widower filing status must file as single.
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True False



13. If an unmarried taxpayer paid more than half the cost of keeping a home which is
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the principal place of residence of a nephew, who is not her dependent, she may use
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the head of household filing status.
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True False



14. The maximum official individual income tax rate for 2012 is 35
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percent. True False
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15. All taxpayers may use the tax rate schedule to determine their tax
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liability. True False
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16. The head of household tax rates are higher than the rates for a single
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taxpayer. True
Y5 False Y5




17. Most states are community property states.
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True False
Y5

, 18. If taxpayers are married and living together at the end of the year, they must file
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a joint tax return.
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True False



19. A taxpayer who maintains a household with an unmarried child may qualify to file
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as head of household even if the child is not the taxpayer's dependent.
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True False



20. A married person with a dependent child may choose to file as head of household if
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it reduces his or her tax liability.
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True False



21. A taxpayer who is living alone and is legally separated from his or her spouse under a
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separate maintenance decree at year-end should file as single.
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True False



22. An individual, age 22, enrolled on a full-time basis at a trade school, is considered
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a student for purposes of determining whether a dependency exemption is permitted.
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True False
Y5




23. A dependency exemption may be claimed by the supporting taxpayer in the year of
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death of a dependent.
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True False



24. For 2012, personal and dependency exemptions are $3,800 each.
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True False
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25. Scholarships received by a student may be excluded for purposes of the support test
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for determining the availability of the dependency exemption.
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True False