Federal Income Tax for Individual

21 A taxpayer works in a foreign country beginning April 1, 2012 through May15, 2013. If the tax payer’s 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 taxpayer’s 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 except

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 appreciation

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 Angela’s 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 taxpayer’s 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 taxpayer’s deduction for AGI for the employer’s 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 employer’s 401k plan during 2012. How much can be contribute to his employer’s 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 corporation’s earning and profit( E&P) produce ordinary dividends

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 expense.

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 taxpayer’s automobile caused by a collision, even if the taxpayer was at fault

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 taxpayer’s 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