Tax Exam 1 Test Prep Questions and
answers rated A+
In 2021, Steve worked as a tech supervisor for a computer company. In
September of 2021, he was laid off. He was paid unemployment
compensation for the rest of the year totaling $7,000. Which of the following is
true? - correct answer Steve will have to report all $7,000 of the
unemployment compensation as income.
In 2021, all of the following amounts are taxable income to the recipient
except: - correct answer Inheritances
Kendra is a self-employed taxpayer working exclusively from her home office.
Before the home office deduction, Kendra has $6,000 of net income. Her
allocable home expenses are $10,000 in total. How are the home office
expenses treated on her current year tax return? - correct answer Only
$6,000 home office expenses may be deducted, resulting in net business
income of zero. The remaining $4,000 of home office expenses may be
carried forward and deducted in a future year against business income.
In the tax law, the definition of gross income is: - correct answer All income
from whatever source derived
In determining whether an activity should be classified as a hobby, the tax law
provides a rebuttable presumption with regard to the profits or losses of an
activity. Which of the following statements describes the profit/loss test which
must be satisfied in order to meet the presumption that the activity is not a
hobby? - correct answer The activity shows a profit for 3 of the 5 previous
years.
Which of the following is generally excluded from gross income? - correct
answer Life insurance proceeds paid to the beneficiary
, The IRS: - correct answer has an app for mobile phones.
Robert works for American Motors. American Motors pays a $1,200 premium
on Robert's health insurance in 2021. Robert has an operation on his big toe
in 2021 that cost $7,200. The insurance company paid for $6,800 of it. Which
one of the following is true for 2021? - correct answer None of these events
are taxable on his 2021 return.
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Eugene and Velma are married. For 2021, Eugene earned $25,000 and
Velma earned $30,000. They have decided to file separate returns. They have
no deductions for adjusted gross income. Velma's itemized deductions are
$14,200 so she is going to itemize. Eugene's itemized deductions are $4,000.
Assuming Eugene and Velma do not live in a community property state, what
is Eugene's taxable income? - correct answer $21,000
John, 45 years old and unmarried, contributed $1,000 monthly in 2021 to the
support of his parents' household. The parents lived alone and their income
for 2021 consisted of $500 from dividends and interest. What is John's filing
status and how many dependents should he claim on his 2021 tax return? -
correct answer Head of household and 2 dependents
Which of the following taxpayers may not use the standard mileage method of
calculating transportation costs? - correct answer A taxpayer who has a fleet
of 10 business automobiles.
During 2021, Murray, who is 60 years old and unmarried, provided all of the
support of his elderly mother. His mother was a resident of a home for the
aged for the entire year and had no income. What is Murray's filing status for
2021, and how many dependents should he report on his tax return? - correct
answer Head of household and 1 dependent
answers rated A+
In 2021, Steve worked as a tech supervisor for a computer company. In
September of 2021, he was laid off. He was paid unemployment
compensation for the rest of the year totaling $7,000. Which of the following is
true? - correct answer Steve will have to report all $7,000 of the
unemployment compensation as income.
In 2021, all of the following amounts are taxable income to the recipient
except: - correct answer Inheritances
Kendra is a self-employed taxpayer working exclusively from her home office.
Before the home office deduction, Kendra has $6,000 of net income. Her
allocable home expenses are $10,000 in total. How are the home office
expenses treated on her current year tax return? - correct answer Only
$6,000 home office expenses may be deducted, resulting in net business
income of zero. The remaining $4,000 of home office expenses may be
carried forward and deducted in a future year against business income.
In the tax law, the definition of gross income is: - correct answer All income
from whatever source derived
In determining whether an activity should be classified as a hobby, the tax law
provides a rebuttable presumption with regard to the profits or losses of an
activity. Which of the following statements describes the profit/loss test which
must be satisfied in order to meet the presumption that the activity is not a
hobby? - correct answer The activity shows a profit for 3 of the 5 previous
years.
Which of the following is generally excluded from gross income? - correct
answer Life insurance proceeds paid to the beneficiary
, The IRS: - correct answer has an app for mobile phones.
Robert works for American Motors. American Motors pays a $1,200 premium
on Robert's health insurance in 2021. Robert has an operation on his big toe
in 2021 that cost $7,200. The insurance company paid for $6,800 of it. Which
one of the following is true for 2021? - correct answer None of these events
are taxable on his 2021 return.
Feedback Area
Eugene and Velma are married. For 2021, Eugene earned $25,000 and
Velma earned $30,000. They have decided to file separate returns. They have
no deductions for adjusted gross income. Velma's itemized deductions are
$14,200 so she is going to itemize. Eugene's itemized deductions are $4,000.
Assuming Eugene and Velma do not live in a community property state, what
is Eugene's taxable income? - correct answer $21,000
John, 45 years old and unmarried, contributed $1,000 monthly in 2021 to the
support of his parents' household. The parents lived alone and their income
for 2021 consisted of $500 from dividends and interest. What is John's filing
status and how many dependents should he claim on his 2021 tax return? -
correct answer Head of household and 2 dependents
Which of the following taxpayers may not use the standard mileage method of
calculating transportation costs? - correct answer A taxpayer who has a fleet
of 10 business automobiles.
During 2021, Murray, who is 60 years old and unmarried, provided all of the
support of his elderly mother. His mother was a resident of a home for the
aged for the entire year and had no income. What is Murray's filing status for
2021, and how many dependents should he report on his tax return? - correct
answer Head of household and 1 dependent
