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TABLE OF CONTENTS
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1. The Individual Income Tax Return.
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2. Gross Income and Exclusions.
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3. Business Income and Expenses, Part I.
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4. Business Income and Expenses, Part II.
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5. Itemized Deductions and Other Incentives.
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6. Credits and Special Taxes.
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7. Accounting Periods and Methods and Depreciation.
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8. Capital Gains and Losses.
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9. Withholding, Estimated Payments, and Payroll Taxes.
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10. Partnership Taxation.
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11. The Corporate Income Tax.
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12. Tax Administration and Tax Planning.
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aa
Chapter 1: The Individual Income Tax Return
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1. A corporation is a reporting entity but not a tax-paying entity. aa
RF RF RF RF RF RF RF RF RF RF
FALSE aa
aa
aa
aa
2. Partnership R aa aa
F capital R aa aa
F gains aa and R F R aa aaF losses aa are aa allocated
R F R F R aa aa
F separately aa to
R F R aa aa
F eachR aa aa
F of aa the
R F R aa
F
aapartners. aa
, TRUE aa
aa
aa
aa
3.
Married aa aataxpayers R F R aa aaF may R aa aa F double R aa aaF their R aa aa
F standard R aa aaF deduction R aa aa F amount aa aaby R F R aa aa
F filing R aa F
aaseparate returns. aa RF
FALSE aa
aa
aa
aa
4.
An aa item aa aais aa aanot aaincluded aa in
R F R F R F RF R F R aa aa F gross aa income aa unless R F R F R aa aa
F the aa tax R F R aa aaF law R aa aa
F specifies R aa aa
F that R aa aa
F the R
aa item aa aais subject aa to aataxation. aa
F R F RF RF RF
FALSE aa
aa
aa
aa
5.
For aa aataxpayers aa aawho aa aado aa aanot aa aaitemize aa aadeductions, aa aa the
R F R F R F R F R F R F R F R aa aa
F standard R aa aa F deduction R aa aa
F amount R aa F
aais subtract aaed from the taxpayer's adjusted gross income. aa
RF RF RF RF RF RF RF
TRUE aa
aa
aa
aa
6. A taxpayer aa with self-employment aa aa income
RF R F RF R F R aa aa
F of $600 RF R aa aa
F must aa file a tax return. aa R F RF RF RF
TRUE aa
aa
aa
aa
7.
A aa dependent aa aa aachild aa aawith aa aaearned aa aaincome
R F R F R F R F R F R aa aa F in aa excess
R F R aa aa
F of R aa aa
F the R aa aaF available R aa aaF standard R aa
F
aadeduction amount m aaust file a tax return. aa RF RF RF RF RF RF
TRUE aa
aa
aa
aa
8.
A aa aasingle aa taxpayer, aa aawho aa aais aa aanot aa aablind aa aaand aa aawho aa aais aa aaunder aa aaage aa aa65, aa aawith
R F R F R F R F R F R F R F R F R F R F R F R F R F R aa F
aaincome aa aaof aa aa$8,750 must file aaa tax return. aa
R F R F RF RF RF RF RF
FALSE aa
9. If a taxpayer is due a refund, it will be mailed to the taxpayer regardless of whether he or she files a
RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF R
aa tax return. aa
F RF
FALSE aa
10. Taxpayers with self-employment aa income of $400 or more must aa file a tax return. aa
RF RF RF RF RF RF RF RF R F RF RF RF
TRUE aa
aa
aa
aa
11. If aa aayour aa aaspouse aa aadies aa aaduring aa aathe aa aatax
R F R F R F R F R F R F R aa aa
F year R aa aa F and R aa aa
F you R aa aa F do R aa aa F not R aa aa F remarry, R aa aaF you R aa
F
aamust aa aafile aa aaas single fo aar the year of death. aa
R F R F RF RF RF RF RF RF
FALSE aa
aa
aa
aa
, 12. Taxpayers who do not aa qualify for married, head of household, aa or qualifying widow or widower f
RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF
aailing status must file as single. aa
RF RF RF RF RF
TRUE aa
aa
aa
aa
13. If aa an aa unmarried aa aa taxpayer aa paid aa aamore aa than aa aahalf aa the aa aacost aaof aa aakeeping aa aaa aa home aa aawhich
R F R F R F R F R F R F R F R F R F RF R F R F R F R F R
aa aais aa aathe principal aa p aalace aa of aa aaresidence aa aaof aa a nephew, aa aa aawho aa aais aa aanot aa aaher aa aadependent, aa aa
F R F RF R F RF R F R F R F RF R F R F R F R F R F R F
aashe aa aamay aa use aa the head of household aa filing sta aatus. aa
R F R F R F RF RF RF RF RF
FALSE aa
aa
aa
aa
14. The R aa aa
F maximum R aa aa F official individual aa income aa tax aarate aa for aa2012 aa is aa35 aa percent. aa
RF R F R F RF R F RF R F RF R F
TRUE aa
aa
aa
aa
15. All taxpayers may use the tax rate schedule to determine their tax liability. aa
RF RF RF RF RF RF RF RF RF RF RF RF
FALSE aa
aa
aa
aa
16. The aa aahead R F R aa aa F of aahousehold aa tax
RF R F R aa aaF rates R aa aa F are R aa aa
F higher aa than R F R aa aaF the R aa aaF rates R aa aa
F for aa a R F R aa aa F single R
aa taxpayer. aa
F
FALSE aa
aa
aa
aa
17. Most aa aastates aa aaare aa aacommunity aa aaproperty aa aastates. aa
R F R F R F R F R F
FALSE aa
18. If taxpayers are married and aaliving together at the end of the year, they must file a joint tax re aaturn. aa
RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF
FALSE aa
19. A R aa aaF taxpayer aa aawho aa aamaintains aa aaa aa aahousehold aa aa aawith aa aaan aa unmarried aa aa aachild
R F R F R F R F R F R F R F R F R aa aaF may R aa aa
F qualify R
toaa aa
F R aa aafile aa aaas head of h aaousehold even if the child is not the taxpayer's dependent. aa
F R F RF RF RF RF RF RF RF RF RF RF RF RF
FALSE aa
aa
aa
aa
20. A R aa aaF married aa person aa with aa a aa dependent aa R F R F R F R F R aa aaF child R aa aaF may aa choose aa to R F R F R aa aa
F file as aahead aaof RF RF RF R aa aa
F household
aa aa aa
R F if aa aait reduces his aa or her tax liability. aa
R F RF RF RF RF RF RF
FALSE aa
aa
aa
aa
21. A aa aataxpayer aa aawho aa aais aa aaliving aa aaalone aa aaand aa aais aa aalegally aa aaseparated aa aafrom
R F R F R F R F R F R F R F R F R F R F R aa aaF his R aa aa
F or R aa aa
F her R aa F
aaspouse aa aaunder aa aaa separate aa maintenance decree at year-end should aa file as single. aa
R F R F RF R F RF RF RF RF RF RF RF
TRUE aa
aa
aa
aa
aa aa
, aa
TABLE OF CONTENTS
aa
RF aa
RF RF aa
aa
1. The Individual Income Tax Return.
RF RF RF RF RF aa
2. Gross Income and Exclusions.
RF RF RF RF aa
3. Business Income and Expenses, Part I.
RF RF RF RF RF RF aa
4. Business Income and Expenses, Part II.
RF RF RF RF RF RF aa
5. Itemized Deductions and Other Incentives.
RF RF RF RF RF aa
6. Credits and Special Taxes.
RF RF RF RF aa
7. Accounting Periods and Methods and Depreciation.
RF RF RF RF RF RF aa
8. Capital Gains and Losses.
RF RF RF RF aa
9. Withholding, Estimated Payments, and Payroll Taxes.
RF RF RF RF RF RF aa
10. Partnership Taxation.
RF RF aa
11. The Corporate Income Tax.
RF RF RF RF aa
12. Tax Administration and Tax Planning.
RF RF RF RF RF aa aa
aa
Chapter 1: The Individual Income Tax Return
RF RF RF RF RF RF aa
aa
aa
1. A corporation is a reporting entity but not a tax-paying entity. aa
RF RF RF RF RF RF RF RF RF RF
FALSE aa
aa
aa
aa
2. Partnership R aa aa
F capital R aa aa
F gains aa and R F R aa aaF losses aa are aa allocated
R F R F R aa aa
F separately aa to
R F R aa aa
F eachR aa aa
F of aa the
R F R aa
F
aapartners. aa
, TRUE aa
aa
aa
aa
3.
Married aa aataxpayers R F R aa aaF may R aa aa F double R aa aaF their R aa aa
F standard R aa aaF deduction R aa aa F amount aa aaby R F R aa aa
F filing R aa F
aaseparate returns. aa RF
FALSE aa
aa
aa
aa
4.
An aa item aa aais aa aanot aaincluded aa in
R F R F R F RF R F R aa aa F gross aa income aa unless R F R F R aa aa
F the aa tax R F R aa aaF law R aa aa
F specifies R aa aa
F that R aa aa
F the R
aa item aa aais subject aa to aataxation. aa
F R F RF RF RF
FALSE aa
aa
aa
aa
5.
For aa aataxpayers aa aawho aa aado aa aanot aa aaitemize aa aadeductions, aa aa the
R F R F R F R F R F R F R F R aa aa
F standard R aa aa F deduction R aa aa
F amount R aa F
aais subtract aaed from the taxpayer's adjusted gross income. aa
RF RF RF RF RF RF RF
TRUE aa
aa
aa
aa
6. A taxpayer aa with self-employment aa aa income
RF R F RF R F R aa aa
F of $600 RF R aa aa
F must aa file a tax return. aa R F RF RF RF
TRUE aa
aa
aa
aa
7.
A aa dependent aa aa aachild aa aawith aa aaearned aa aaincome
R F R F R F R F R F R aa aa F in aa excess
R F R aa aa
F of R aa aa
F the R aa aaF available R aa aaF standard R aa
F
aadeduction amount m aaust file a tax return. aa RF RF RF RF RF RF
TRUE aa
aa
aa
aa
8.
A aa aasingle aa taxpayer, aa aawho aa aais aa aanot aa aablind aa aaand aa aawho aa aais aa aaunder aa aaage aa aa65, aa aawith
R F R F R F R F R F R F R F R F R F R F R F R F R F R aa F
aaincome aa aaof aa aa$8,750 must file aaa tax return. aa
R F R F RF RF RF RF RF
FALSE aa
9. If a taxpayer is due a refund, it will be mailed to the taxpayer regardless of whether he or she files a
RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF R
aa tax return. aa
F RF
FALSE aa
10. Taxpayers with self-employment aa income of $400 or more must aa file a tax return. aa
RF RF RF RF RF RF RF RF R F RF RF RF
TRUE aa
aa
aa
aa
11. If aa aayour aa aaspouse aa aadies aa aaduring aa aathe aa aatax
R F R F R F R F R F R F R aa aa
F year R aa aa F and R aa aa
F you R aa aa F do R aa aa F not R aa aa F remarry, R aa aaF you R aa
F
aamust aa aafile aa aaas single fo aar the year of death. aa
R F R F RF RF RF RF RF RF
FALSE aa
aa
aa
aa
, 12. Taxpayers who do not aa qualify for married, head of household, aa or qualifying widow or widower f
RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF
aailing status must file as single. aa
RF RF RF RF RF
TRUE aa
aa
aa
aa
13. If aa an aa unmarried aa aa taxpayer aa paid aa aamore aa than aa aahalf aa the aa aacost aaof aa aakeeping aa aaa aa home aa aawhich
R F R F R F R F R F R F R F R F R F RF R F R F R F R F R
aa aais aa aathe principal aa p aalace aa of aa aaresidence aa aaof aa a nephew, aa aa aawho aa aais aa aanot aa aaher aa aadependent, aa aa
F R F RF R F RF R F R F R F RF R F R F R F R F R F R F
aashe aa aamay aa use aa the head of household aa filing sta aatus. aa
R F R F R F RF RF RF RF RF
FALSE aa
aa
aa
aa
14. The R aa aa
F maximum R aa aa F official individual aa income aa tax aarate aa for aa2012 aa is aa35 aa percent. aa
RF R F R F RF R F RF R F RF R F
TRUE aa
aa
aa
aa
15. All taxpayers may use the tax rate schedule to determine their tax liability. aa
RF RF RF RF RF RF RF RF RF RF RF RF
FALSE aa
aa
aa
aa
16. The aa aahead R F R aa aa F of aahousehold aa tax
RF R F R aa aaF rates R aa aa F are R aa aa
F higher aa than R F R aa aaF the R aa aaF rates R aa aa
F for aa a R F R aa aa F single R
aa taxpayer. aa
F
FALSE aa
aa
aa
aa
17. Most aa aastates aa aaare aa aacommunity aa aaproperty aa aastates. aa
R F R F R F R F R F
FALSE aa
18. If taxpayers are married and aaliving together at the end of the year, they must file a joint tax re aaturn. aa
RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF RF
FALSE aa
19. A R aa aaF taxpayer aa aawho aa aamaintains aa aaa aa aahousehold aa aa aawith aa aaan aa unmarried aa aa aachild
R F R F R F R F R F R F R F R F R aa aaF may R aa aa
F qualify R
toaa aa
F R aa aafile aa aaas head of h aaousehold even if the child is not the taxpayer's dependent. aa
F R F RF RF RF RF RF RF RF RF RF RF RF RF
FALSE aa
aa
aa
aa
20. A R aa aaF married aa person aa with aa a aa dependent aa R F R F R F R F R aa aaF child R aa aaF may aa choose aa to R F R F R aa aa
F file as aahead aaof RF RF RF R aa aa
F household
aa aa aa
R F if aa aait reduces his aa or her tax liability. aa
R F RF RF RF RF RF RF
FALSE aa
aa
aa
aa
21. A aa aataxpayer aa aawho aa aais aa aaliving aa aaalone aa aaand aa aais aa aalegally aa aaseparated aa aafrom
R F R F R F R F R F R F R F R F R F R F R aa aaF his R aa aa
F or R aa aa
F her R aa F
aaspouse aa aaunder aa aaa separate aa maintenance decree at year-end should aa file as single. aa
R F R F RF R F RF RF RF RF RF RF RF
TRUE aa
aa
aa
aa
