Question 1

A tax credit of $100 for a person in a 24 percent tax bracket would reduce a person's taxes owed by:

Accepted Answer

A)  $10
B)  $28
C)  $76
D)  $100
E)  $24F) A) and E)
G) C) and E)

Question 2

Earned income is money received from:

Accepted Answer

A)  dividends.
B)  interest.
C)  wages.
D)  rent from investments.
E)  real estate investments.F) C) and D)
G) B) and E)

Question 3

Elaine's Embroidery Emporium which is run out of Elaine's home is visited by an IRS agent who wants to verify the office expenses Elaine claims are valid.What type of IRS audit is this?

Accepted Answer

A)  Correspondence audit
B)  Office audit
C)  Field audit
D)  Detailed audit
E)  Research auditF) A) and B)
G) A) and C)

Question 4

For tax years prior to 2018,a deduction from adjusted gross income for yourself,your spouse,and qualified dependents was termed:

Accepted Answer

A)  the standard deduction.
B)  a tax credit.
C)  an itemized deduction.
D)  an exclusion.
E)  an exemption.F) A) and B)
G) A) and E)

Question 5

State and local governments may impose a personal property tax on the value of automobiles.

Accepted Answer

A) True 
 B)False

Question 6

The principal purpose of taxes is to control economic conditions.

Accepted Answer

A) True 
 B)False

Question 7

Mary Watson bought 20 shares of stock two years ago.She recently sold her stock making a profit of $1,400.Long-term capital gain rates are 15% for her income level.She is in the 22% tax bracket.Her tax on this investment is:

Accepted Answer

A)  $98.
B)  $210.
C)  $308.
D)  $392.
E)  $0.F) A) and B)
G) None of the above

Question 8

A person has $5,000 in medical expenses and an adjusted gross income of $33,000.If taxpayers are allowed to deduct the amount of medical expenses that exceed 7.5 percent of adjusted gross income,what would be the amount of the deduction in this situation?

Accepted Answer

A)  $375
B)  $2,525
C)  $2,475
D)  $5,000
E)  $3,000F) B) and D)
G) C) and E)

Question 9

Capital gains refer to:

Accepted Answer

A)  tax-exempt investments.
B)  portfolio income
C)  profits from the sale of a capital asset.
D)  earnings from investments such as dividends or interest.
E)  earnings from passive activities.F) A) and B)
G) A) and E)

Question 10

Which of the following would not be included in gross income?

Accepted Answer

A)  Portfolio income
B)  Investment income
C)  Exclusions
D)  Passive income
E)  Earned incomeF) B) and D)
G) A) and E)

Question 11

Ms.Nelson is a single mom with three children who live at home.She earned less than $40,000 in 2018.What is the maximum amount of earned income tax credit that she may qualify for?

Accepted Answer

A)  $2,798
B)  $3,242
C)  $6,431
D)  $0E) B) and C)
F) A) and D)

Question 12

Taxpayers with high incomes and high amounts of certain deductions may be subject to an additional tax referred to as the ________ tax.

Accepted Answer

A)  deferred
B)  bonus
C)  excess
D)  capital gains
E)  alternative minimumF) All of the above
G) A) and D)

Question 13

The Tax Cuts and Jobs Act allows owners of a sole proprietor or partnership to deduct up to ________ percent of the income earned by the business from their individual return to arrive at taxable income beginning in 2018.

Accepted Answer

A)  0
B)  5
C)  10
D)  15
E)  20F) A) and C)
G) A) and E)

Question 14

Real estate property taxes are the major source of revenue for local government.

Accepted Answer

A) True 
 B)False

Question 15

Drew Davis earns $4,500 per month from his job at Cisco Systems; $900 is withheld from this amount each month for taxes.What type of tax is this most likely to be?

Accepted Answer

A)  General sales tax
B)  Excise tax
C)  Personal property tax
D)  Income tax
E)  Estate taxF) B) and C)
G) A) and D)

Question 16

Personal property taxes may tax the value of:

Accepted Answer

A)  automobiles.
B)  boats.
C)  farm equipment.
D)  All of these
E)  None of theseF) C) and E)
G) B) and D)

Question 17

Which one of the following is included in gross income?

Accepted Answer

A)  Tax credit
B)  Exemption
C)  Exclusion
D)  Earned income
E)  Tax deductionF) B) and E)
G) A) and B)

Question 18

Tax-deferred retirement plans are a type of:

Accepted Answer

A)  exemption.
B)  itemized deduction.
C)  passive income.
D)  tax shelter.
E)  tax credit.F) A) and E)
G) A) and D)

Question 19

Taxable income is a result of subtracting adjustments to income and standard (or itemized)deductions from gross income.

Accepted Answer

A) True 
 B)False

Question 20

What type of tax is imposed on the value of an individual's property at the time of his or her death?

Accepted Answer

A)  Inheritance
B)  Excise
C)  Gift
D)  Personal property
E)  EstateF) B) and D)
G) A) and B)

Exam 4: Planning Your Tax Strategy

Taxpayers with high incomes and high amounts of certain deductions may be subject to an additional tax referred to as the ________ tax.

Correct AnswerverifiedShow Answer

Ms.Nelson is a single mom with three children who live at home.She earned less than $40,000 in 2018.What is the maximum amount of earned income tax credit that she may qualify for?

Correct AnswerverifiedShow Answer

A tax credit of $100 for a person in a 24 percent tax bracket would reduce a person's taxes owed by:

Correct AnswerverifiedShow Answer

Earned income is money received from:

Correct AnswerverifiedShow Answer

A person has $5,000 in medical expenses and an adjusted gross income of $33,000.If taxpayers are allowed to deduct the amount of medical expenses that exceed 7.5 percent of adjusted gross income,what would be the amount of the deduction in this situation?

Correct AnswerverifiedShow Answer

Which of the following would not be included in gross income?

Correct AnswerverifiedShow Answer

The Tax Cuts and Jobs Act allows owners of a sole proprietor or partnership to deduct up to ________ percent of the income earned by the business from their individual return to arrive at taxable income beginning in 2018.

Correct AnswerverifiedShow Answer

For tax years prior to 2018,a deduction from adjusted gross income for yourself,your spouse,and qualified dependents was termed:

Correct AnswerverifiedShow Answer

Tax-deferred retirement plans are a type of:

Correct AnswerverifiedShow Answer

Drew Davis earns $4,500 per month from his job at Cisco Systems; $900 is withheld from this amount each month for taxes.What type of tax is this most likely to be?

Correct AnswerverifiedShow Answer

State and local governments may impose a personal property tax on the value of automobiles.

Correct AnswerverifiedShow Answer

Personal property taxes may tax the value of:

Correct AnswerverifiedShow Answer

The principal purpose of taxes is to control economic conditions.

Correct AnswerverifiedShow Answer

Mary Watson bought 20 shares of stock two years ago.She recently sold her stock making a profit of $1,400.Long-term capital gain rates are 15% for her income level.She is in the 22% tax bracket.Her tax on this investment is:

Correct AnswerverifiedShow Answer

Capital gains refer to:

Correct AnswerverifiedShow Answer

What type of tax is imposed on the value of an individual's property at the time of his or her death?

Correct AnswerverifiedShow Answer

Real estate property taxes are the major source of revenue for local government.

Correct AnswerverifiedShow Answer

Which one of the following is included in gross income?

Correct AnswerverifiedShow Answer

Taxable income is a result of subtracting adjustments to income and standard (or itemized)deductions from gross income.

Correct AnswerverifiedShow Answer

Elaine's Embroidery Emporium which is run out of Elaine's home is visited by an IRS agent who wants to verify the office expenses Elaine claims are valid.What type of IRS audit is this?

Correct AnswerverifiedShow Answer

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