HS 321 EXAM QUESTIONS WITH CORRECT
ANSWERS
Gross Income Equation - CORRECT ANSWER✔✔-Income minus
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exclusions
Adjusted Gross Income Equation - CORRECT ANSWER✔✔-Gross Income
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minus Deductions for AGI or above the line deductions
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Taxable Income Equation - CORRECT ANSWER✔✔-AGI minus (greater of
| | | | | | | |
itemized or standard deduction) minus personal and dependency
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exemptions minus 20% Qualified business income deduction
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Tax Liability Equation - CORRECT ANSWER✔✔-Taxable income times
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applicable tax rates minus tax credits | | | | |
13 Items included in Gross Income - CORRECT ANSWER✔✔-1.
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Compensation for services | |
2. Income from life insurance and endowment contracts
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3. Income derived from business
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4. Pensions
|
5. Gains derived from dealings in property
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,6. Discharge of indebtedness
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7. Interest and dividends
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8. Distributive share of partnership gross income
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9. Rents and royalties
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10. Income in respect of a decedent
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11. Alimony and separate maintenance payments required by a divorce
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decree entered into before 12/31/18
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12. Income from an interest in an estate or trust
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13. Annuity payments
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Exclusions definition - CORRECT ANSWER✔✔-Income not classified as
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taxable
List of exclusions from gross income (12) - CORRECT ANSWER✔✔-1.
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Interest income from municipal bonds
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2. Cash or property received by a gift
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3. Child support payments received from a former spouse
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4. Deferral contributions to certain retirement plans
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5. Cash or property received by inheritance
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6. Gain on the sale of a principal residence
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7. Specified employee fringe benefits
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8. Scholarship or fellowship
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, 9. Qualifying distributions from a Roth IRA during retirement
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10. Life insurance proceeds received because of the death of the
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insured
11. Alimony from post 2018 divorce
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12. Cash or property received by a gift
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10 Deductions for AGI (Above the line) - CORRECT ANSWER✔✔-1.
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Alimony paid |
2. Business expenses
| |
3. Deductible contributions to Traditional IRAs
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4. Rental or royalty income expenses
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5. Tuition expenses for higher education
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6. Losses from the sale of business property
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7. Interest paid on student loans (only first 2500)
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8. Moving expenses (on hold from 2018 to 2025)
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9. Health savings account (HSA) contributions
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10. Contributions to SEP, SIMPLE or qualified plan
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3 types of deductions from AGI (below the line) - CORRECT
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ANSWER✔✔-1. Standard deduction | |
2. Itemized deductions
| |
3. 20% QBI Deduction
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ANSWERS
Gross Income Equation - CORRECT ANSWER✔✔-Income minus
| | | | | | |
exclusions
Adjusted Gross Income Equation - CORRECT ANSWER✔✔-Gross Income
| | | | | | | |
minus Deductions for AGI or above the line deductions
| | | | | | | |
Taxable Income Equation - CORRECT ANSWER✔✔-AGI minus (greater of
| | | | | | | |
itemized or standard deduction) minus personal and dependency
| | | | | | | | |
exemptions minus 20% Qualified business income deduction
| | | | | |
Tax Liability Equation - CORRECT ANSWER✔✔-Taxable income times
| | | | | | | |
applicable tax rates minus tax credits | | | | |
13 Items included in Gross Income - CORRECT ANSWER✔✔-1.
| | | | | | | | |
Compensation for services | |
2. Income from life insurance and endowment contracts
| | | | | | |
3. Income derived from business
| | | |
4. Pensions
|
5. Gains derived from dealings in property
| | | | | |
,6. Discharge of indebtedness
| | |
7. Interest and dividends
| | |
8. Distributive share of partnership gross income
| | | | | |
9. Rents and royalties
| | |
10. Income in respect of a decedent
| | | | | |
11. Alimony and separate maintenance payments required by a divorce
| | | | | | | | | |
decree entered into before 12/31/18
| | | |
12. Income from an interest in an estate or trust
| | | | | | | | |
13. Annuity payments
| |
Exclusions definition - CORRECT ANSWER✔✔-Income not classified as
| | | | | | | |
taxable
List of exclusions from gross income (12) - CORRECT ANSWER✔✔-1.
| | | | | | | | | |
Interest income from municipal bonds
| | | |
2. Cash or property received by a gift
| | | | | | |
3. Child support payments received from a former spouse
| | | | | | | |
4. Deferral contributions to certain retirement plans
| | | | | |
5. Cash or property received by inheritance
| | | | | |
6. Gain on the sale of a principal residence
| | | | | | | |
7. Specified employee fringe benefits
| | | |
8. Scholarship or fellowship
| | |
, 9. Qualifying distributions from a Roth IRA during retirement
| | | | | | | |
10. Life insurance proceeds received because of the death of the
| | | | | | | | | | |
insured
11. Alimony from post 2018 divorce
| | | | |
12. Cash or property received by a gift
| | | | | | |
10 Deductions for AGI (Above the line) - CORRECT ANSWER✔✔-1.
| | | | | | | | | |
Alimony paid |
2. Business expenses
| |
3. Deductible contributions to Traditional IRAs
| | | | |
4. Rental or royalty income expenses
| | | | |
5. Tuition expenses for higher education
| | | | |
6. Losses from the sale of business property
| | | | | | |
7. Interest paid on student loans (only first 2500)
| | | | | | | |
8. Moving expenses (on hold from 2018 to 2025)
| | | | | | | |
9. Health savings account (HSA) contributions
| | | | |
10. Contributions to SEP, SIMPLE or qualified plan
| | | | | | |
3 types of deductions from AGI (below the line) - CORRECT
| | | | | | | | | | |
ANSWER✔✔-1. Standard deduction | |
2. Itemized deductions
| |
3. 20% QBI Deduction
| | |
