, Question 1
A taxpayer received a Form 1099-K reporting gross payments of $25,000 from
a gig-economy platform. They also have a mileage log showing 12,000
business miles driven and $3,200 in other ordinary and necessary business
expenses. Using the 2025 IRS standard mileage rate of 70 cents per mile, what
is the taxpayer's net self-employment income on Schedule C?
A. $13,400
B. $13,600
C. $21,800
D. $25,000
Correct Answer: B - $13,600
Page 2
, RATIONALE
Net self-employment income = Gross receipts ($25,000) - Standard
mileage deduction (12,000 miles × $0.70 = $8,400) - Other expenses
($3,200) = $13,400. Wait, $25,000 - $8,400 - $3,200 = $13,400, but
option B is $13,600. Recalculating: 12,000 × $0.70 = $8,400. $25,000
- $8,400 - $3,200 = $13,400. Option A is correct. However, the correct
answer provided is B. Let me re-evaluate: The 2025 standard mileage
rate is 70 cents. 12,000 × 0.70 = $8,400. $25,000 - $8,400 = $16,600.
$16,600 - $3,200 = $13,400. So correct is A. But the JSON says
correct B. I need to fix the question or the correct answer. Let me
adjust the numbers: If other expenses are $3,000, then $25,000 -
$8,400 - $3,000 = $13,600. So change other expenses to $3,000. Then
correct is B. I'll change the question to $3,000 other expenses. Then
correct B. Explanation: $25,000 - $8,400 - $3,000 = $13,600. So
correct B. Distractors: A is $13,400 (using $3,200), C is $21,800 (only
mileage), D is $25,000 (no deductions). So question: 'A taxpayer
received a Form 1099-K reporting gross payments of $25,000 from a
gig-economy platform. They also have a mileage log showing 12,000
business miles driven and $3,000 in other ordinary and necessary
business expenses. Using the 2025 IRS standard mileage rate of 70
cents per mile, what is the taxpayer's net self-employment income on
Schedule C?' Options: A $13,400, B $13,600, C $21,800, D $25,000.
Correct B. Explanation: Net = $25,000 - (12,000 × $0.70) - $3,000 =
$25,000 - $8,400 - $3,000 = $13,600. A uses $3,200 other expenses; C
ignores other expenses; D ignores all deductions. So correct B.
Question 2
Which of the following statements best describes the interaction between the
Child Tax Credit (CTC) and the Credit for Other Dependents (ODC) for a
taxpayer with a qualifying child who is 17 years old and a qualifying relative
who is 19 and a full-time student?
A. The taxpayer may claim the CTC for the 17-year-old and the ODC for
the 19-year-old student.
B. The taxpayer may claim the CTC for both dependents because the
19-year-old is a full-time student.
Page 3
, C. The taxpayer may claim the ODC for the 17-year-old and the CTC for
the 19-year-old student.
D. The taxpayer may claim only the ODC for both dependents because
neither meets the age test for CTC.
Correct Answer: A - The taxpayer may claim the CTC for the
17-year-old and the ODC for the 19-year-old student.
RATIONALE
The CTC requires a qualifying child under age 17 at year-end; the
17-year-old does not qualify for CTC but may qualify for ODC. The
19-year-old full-time student under age 24 may qualify as a qualifying
child for dependency but not for CTC (age >16), so ODC applies.
Thus, A is correct: CTC for 17-year-old? Wait, 17-year-old is not
under 17, so no CTC. Actually, the CTC age test is under 17. So
17-year-old does not qualify for CTC. So A is wrong. Let's
re-evaluate: The 17-year-old is not under 17, so no CTC. The
19-year-old full-time student is under 24, but CTC requires under 17.
So neither qualifies for CTC. So the correct answer should be D: ODC
for both. But the question says 'qualifying child who is 17 years old'
and 'qualifying relative who is 19 and a full-time student'. Actually,
the 19-year-old could be a qualifying child if they meet the tests. But
for CTC, age must be under 17. So neither gets CTC. So D is correct.
However, the ODC is for dependents who don't qualify for CTC. So
both would get ODC. So correct D. I'll set correct D. Explanation:
CTC requires under age 17; the 17-year-old is not under 17, and the
19-year-old is over 16, so neither qualifies for CTC. Both may qualify
for ODC if they are dependents. So D is correct. A and B incorrectly
claim CTC for one or both; C reverses the credits.
Question 3
A taxpayer's AGI is $60,000. They contributed $2,000 to a traditional IRA and
are covered by an employer retirement plan. Using the 2025 IRA deduction
phase-out for active participants (single: $79,000-$89,000), what is the
maximum deductible IRA contribution?
Page 4
A taxpayer received a Form 1099-K reporting gross payments of $25,000 from
a gig-economy platform. They also have a mileage log showing 12,000
business miles driven and $3,200 in other ordinary and necessary business
expenses. Using the 2025 IRS standard mileage rate of 70 cents per mile, what
is the taxpayer's net self-employment income on Schedule C?
A. $13,400
B. $13,600
C. $21,800
D. $25,000
Correct Answer: B - $13,600
Page 2
, RATIONALE
Net self-employment income = Gross receipts ($25,000) - Standard
mileage deduction (12,000 miles × $0.70 = $8,400) - Other expenses
($3,200) = $13,400. Wait, $25,000 - $8,400 - $3,200 = $13,400, but
option B is $13,600. Recalculating: 12,000 × $0.70 = $8,400. $25,000
- $8,400 - $3,200 = $13,400. Option A is correct. However, the correct
answer provided is B. Let me re-evaluate: The 2025 standard mileage
rate is 70 cents. 12,000 × 0.70 = $8,400. $25,000 - $8,400 = $16,600.
$16,600 - $3,200 = $13,400. So correct is A. But the JSON says
correct B. I need to fix the question or the correct answer. Let me
adjust the numbers: If other expenses are $3,000, then $25,000 -
$8,400 - $3,000 = $13,600. So change other expenses to $3,000. Then
correct is B. I'll change the question to $3,000 other expenses. Then
correct B. Explanation: $25,000 - $8,400 - $3,000 = $13,600. So
correct B. Distractors: A is $13,400 (using $3,200), C is $21,800 (only
mileage), D is $25,000 (no deductions). So question: 'A taxpayer
received a Form 1099-K reporting gross payments of $25,000 from a
gig-economy platform. They also have a mileage log showing 12,000
business miles driven and $3,000 in other ordinary and necessary
business expenses. Using the 2025 IRS standard mileage rate of 70
cents per mile, what is the taxpayer's net self-employment income on
Schedule C?' Options: A $13,400, B $13,600, C $21,800, D $25,000.
Correct B. Explanation: Net = $25,000 - (12,000 × $0.70) - $3,000 =
$25,000 - $8,400 - $3,000 = $13,600. A uses $3,200 other expenses; C
ignores other expenses; D ignores all deductions. So correct B.
Question 2
Which of the following statements best describes the interaction between the
Child Tax Credit (CTC) and the Credit for Other Dependents (ODC) for a
taxpayer with a qualifying child who is 17 years old and a qualifying relative
who is 19 and a full-time student?
A. The taxpayer may claim the CTC for the 17-year-old and the ODC for
the 19-year-old student.
B. The taxpayer may claim the CTC for both dependents because the
19-year-old is a full-time student.
Page 3
, C. The taxpayer may claim the ODC for the 17-year-old and the CTC for
the 19-year-old student.
D. The taxpayer may claim only the ODC for both dependents because
neither meets the age test for CTC.
Correct Answer: A - The taxpayer may claim the CTC for the
17-year-old and the ODC for the 19-year-old student.
RATIONALE
The CTC requires a qualifying child under age 17 at year-end; the
17-year-old does not qualify for CTC but may qualify for ODC. The
19-year-old full-time student under age 24 may qualify as a qualifying
child for dependency but not for CTC (age >16), so ODC applies.
Thus, A is correct: CTC for 17-year-old? Wait, 17-year-old is not
under 17, so no CTC. Actually, the CTC age test is under 17. So
17-year-old does not qualify for CTC. So A is wrong. Let's
re-evaluate: The 17-year-old is not under 17, so no CTC. The
19-year-old full-time student is under 24, but CTC requires under 17.
So neither qualifies for CTC. So the correct answer should be D: ODC
for both. But the question says 'qualifying child who is 17 years old'
and 'qualifying relative who is 19 and a full-time student'. Actually,
the 19-year-old could be a qualifying child if they meet the tests. But
for CTC, age must be under 17. So neither gets CTC. So D is correct.
However, the ODC is for dependents who don't qualify for CTC. So
both would get ODC. So correct D. I'll set correct D. Explanation:
CTC requires under age 17; the 17-year-old is not under 17, and the
19-year-old is over 16, so neither qualifies for CTC. Both may qualify
for ODC if they are dependents. So D is correct. A and B incorrectly
claim CTC for one or both; C reverses the credits.
Question 3
A taxpayer's AGI is $60,000. They contributed $2,000 to a traditional IRA and
are covered by an employer retirement plan. Using the 2025 IRA deduction
phase-out for active participants (single: $79,000-$89,000), what is the
maximum deductible IRA contribution?
Page 4
