ACC - Federal income tax for Individual and business MCQs 27185

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21 A taxpayer works in a foreign country beginning April 1, 2012 through May15,
2013. If the tax payers foreign earned income for 2012 is $77900, his foreign earned
income exclusion for 2012 is
A 71455 B 34818 C 0 D95100 E 77900
22 Nondeductible taxes include all of the following except
A federal gift taxes
B real estate tax paid on behalf of the taxpayers son
C Social security taxes
D All of these are nondeductible taxes
E Gasoline taxes
23 Supporting evidence to justify a casualty loss deduction includes all the following
A the cost to repair the property to its pre-incident condition
B all of these provide supporting evidence to justify a casualty loss deduction
C the FMV immediately before and after the loss
D pictures taken before and after the casualty
E appraisal of the property before and after the casualty
24A maximum deduction limitation of 30% of AGI applies to charitable contributions
to public charities of which one of the following types of properties.
A appreciated capital gains property that is not reduced by any amount of
B cash or property other than appreciated capital gains property
C contributions of inventory
D none of the other choices
E Cash contributions
25A tornado damaged Angelas home. Prior to the storm, her living expenses were
$1200 a month, Angela had to move out of her home for three months while it was
being fix. During that time, her living expenses increased by $800 a month. The
insurance company reimbursed Angela $1000 a month during the three months to
cover her living expenses. The amount that Angela must include in gross income is
A 2400 B 3000 C 0 D600 E none of the other choices
26Which of the following is not a factor considered in determining whether an
activity is a business or a hobby
A relative amount of pleasure derived from the activity
B time and effort devoted to the activity
C all of these are factors considered in determining whether all activity is a
business or a hobby.
D extent of dependence on the activity for financial support
E Locating the activity in the taxpayers home
27a tax attorney uses a country club to entertain clients and spends the following
amounts : annual dues, $1000; personal meals, $1500; business meals,$2500 . He
uses the country club 30% for business. What is the deductible expenses?
A 750 B 1550 C 375 D 1250 E none of the other choices

28what is the standard mileage rate for computing the deductible cost of operating a
car for business purposes during 2012.
A 0.555 B 0.23 C 0.14 D 0.19 E 0.50
29A taxpayer reports $35000 as net profit on schedule C. the taxpayer also report
wage income of $15000. The taxpayers deduction for AGI for the employers share
of the self-employment tax in 2012 is
A none of the other choices B2677 C 2472 D 2150 E4229
30the maximum amount that a 54-year-old sole proprietor can contribute to his simple
plan in 2012 is
A 14000 B5000 C 17000 D 11500 E 22500
31the maximum number of employees that an employer can have to be able to offer a
simple plan is
A 50 B25 C 200 D none of the other choices E 100
32If a 45-year-old employee contribute $11500 to his employers 401k plan during
2012. How much can be contribute to his employers ROTH 401k
A 11500 B5500 C 0 D 11000 E 17000
33In the year a child is born, exemption for the newborn child must prorated
A True Bfalse
34An abandoned spouse is someone who is married on the last day of the year but
qualifies to file as a single taxpayer and uses the single tax rates ( instead of the
married filling separately rates) to compute tax liability
A True B false
35under the abandoned spouse rules if one spouse qualifies an abandoned spouse then
the other spouse must file as single
A true B false
36the initial child tax credit equals $1000 for each dependent child under the age 17
A True B false
37when a married taxpayer with $80000 of taxable income files a separate income tax
return, he will have a larger tax liability than another taxpayer with the same taxable
income who files as a single taxpayer
A true Bfalse
38the tax table is more difficult to use than the tax rate schedules
A True B false
39for purposes of the child and dependent care credit, a dependent child who is not
incapacitated must be under age13
A True B False
40 only distributions from a corporations earning and profit( E&P) produce ordinary
A true B false

41taxpayers with less than $1500 of dividend income can file form1040EZ
A true B false
42 In a compensation-related loan, the lender is taxed on the amount of imputed
interest, but the amount of taxable interest income is offset by a deduction for wage
A true B false
43 the discrimination rules do not apply to on-promise athletic facilities
A true B false
44 a penalty charged by a commercial bank on the early withdrawal of money from a
certificate of deposit account can be deducted for adjusted gross income
A true B false
45 self-employed taxpayers deduct qualified moving expenses for AGI assuming they
pass the distance and employment tests.
A True B false
46 when taxpayer are charged an early withdrawal penalty they reduce the amount of
interest they include in gross income
A True B false
47 Deductible interest includes interest paid on a qualified home equity loan
A True B False
48 A taxpayer is allowed to take an itemized deduction for a loss resulting from
damage to the taxpayers automobile caused by a collision, even if the taxpayer was at
Atrue B false
49 To be deductible as an itemized deduction. Personal property taxes must be ad
valorum taxes
A ture B false
50 When an activity ( excluding horse activities) shows a profit in any three of five
consecutive years, it is assumed to be a business rather than a hobby
A true B false
51 If a taxpayers business expense does not exceed $100, the taxpayer will not be
required to keep supporting documents to verify the deductions claimed.
A true B false
52 When employees drive their personal cars from one job to a second job, they can
take a deduction for the mileage driven between the two jobs.
A True B false
53 taxpayers can deduct costs they pay to tax professional to help them contest
income taxes assessed by the IRS
A true B false

54 cash method taxpayers who prepay expenses to be incurred in a subsequent tax
year are allowed to deduct the expense in the year of payment
A true B false
55 An accrual basis taxpayer in a qualified service business is required to accrue
service revenue that has been earned but not yet collected, even if , based on
experience, it is probably not collectible.
A true Bfalse
56 If a self-employed taxpayer has employees he can establish a SEP plan for himself
without offering the plan to all full-time( eligible employees)
A True B false
57 sole proprietors deduct amount paid to workers classified as independent
contractors as wage expense on schedule C.
A True B false
    • 9 years ago