Accounting Tax Multiple Questions and Short Essays

| January 30, 2017

Question
True or False

10. The Tax Code provides criminal penalties for tax professionals that include prison time.

11. Taxpayers are allowed to take the larger of their itemized deductions or the standard deduction.

12. If no one person contributes more than half the support of a dependent, the exemption may never be claimed by anyone.

13. To qualify as a student for federal income tax purposes, the child must be a full-time student for at least some part of each five calendar months of the calendar year.

14. To qualify as an abandoned spouse, the taxpayer must furnish more than half the support of a household that is the principal abode of a dependent child.

15. The standard deduction is an example of tax laws enacted for administrative convenience

16. A scholarship received by a student that represents compensation for past, present, or future services is includible in gross income.

17. Advance rent must be included in rental income in the year received regardless of the period covered or the accounting method used.

18. Gross income is a taxpayer’s total income less exclusions

19. All interest on United States savings bonds is tax-exempt.

20. Interest was credited to Jane’s savings account on December 31, 2013. As long as Jane leaves the interest in the account and does not withdraw it, the interest is not taxable to her.

Multiple choice

11. Mr. and Mrs. Twig are both under 65 years of age and have no dependents. Their only income for the year was his salary of $15,500. During the year they made only a nominal amount of disbursements of the type that qualify as itemized deductions. What is their standard deduction on a 2013 joint return?

a. $3,900

b. $12,200

c. $6,100

d. $8,950

e. None of the above

12. What is the amount of standard deduction for Abigale Abrams in 2013, a divorced parent, who fully supports her fi e-year-old daughter?

a. $6,100

b. $8,950

c. $12,200

d. $7,800

e. None of the above

13. A self-employed person is subject to the self-employment tax if self- employment taxable income is at least:

a. $100

b. $400

c. $600

d. $1,000

e. None of the above

14. Which of the following is considered to be net earnings from self- employment?

a. Capital gains

b. Wages received by an employee

c. Winning lottery ticket

d. Interest income from personal savings account

e. None of the above

15. The primary distinction between deductions for AGI and deductions from AGI is that the latter are primarily:

a. nonbusiness deductions.

b. business deductions.

c. standard deductions.

d. None of the above

16. All of the following are considered “constructive receipt” of income, except:

a. Lori was informed her check for services rendered was available but she did not pick it up.

b. Pierre earned income that was received by his agent but was not received by Pierre.

c. Jacque bought a 9-month certificate of deposit in November 2013. It earned $200 interest in 2013. She can withdraw the principal and interest in 2013 if she pays a penalty of one month’s interest ($100).

d. A payment on a sale of real property place in escrow pending settlement at which time title would convey.

17. Which of the following statements is correct?

a. Stock dividends are distributions made by a corporation of another corporation’s stock.

b. In computing basis for new stock received as a result of a nontaxable dividend, it is immaterial whether the stock received is identical or not to the old stock.

c. If a stock dividend is taxable, the basis of the old stock does not change.

d. If you receive nontaxable stock rights and allow them to expire you have a tax deductible loss.

18. With regard to stock dividends, all of the following statements are correct except:

a. Stock dividends are distributions made by a corporation of its own stock.

b. In computing basis for new stock received as a result of a non-taxable dividend, it is immaterial whether the stock received is identical or not to the old stock.

c. If a stock dividend is taxable, the basis of the old stock does not change.

d. If a stock dividend is not taxable, a division must be made in the basis between the old and new stock.

19. Which of the following items is not taxable?

a. Interest on U.S. Treasury bills, notes, and bonds issued by an agency of the United States

b. Interest on federal income tax refund

c. Interest on New York State bonds

d. Discount income in installment payments received on notes bought at a discount

e. Amount received from a condemning authority to compensate for a delay in paying an award

20. All of the following are included in gross income for federal tax purposes, except:

a. Interest from School District Bonds

b. Illegal income

c. Alimony

d. Christmas Bonus

critical short essays 1 para max

1. If the current U.S. deficit remains high, what options are available to Congress and the President?

2. What factors should a taxpayer consider in deciding whether to litigate a case and where to litigate?

3. Betty Brewster received the following interest:

Luggage gift for purchasing a four-year certificate of deposit (fair market value) $50

Interest on passbook savings account 15

Interest on certificate of deposit 200

Dividends on share account savings in credit union 150

Interest on State of Mississippi bonds issued to finance state highway construction 300

What is the amount of interest income to be included in income?

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