A married couple, both of whom are under 65 years old, decided to file as married filing separately. One of the spouses is going to itemize deductions instead of taking the standard deduction. What is the standard deduction permitted to the other spouse when she files her tax return? $12,700. $9,350. $6,350. d. $0.
> In which of the following cases may the taxpayer claim head of household filing status? a. The taxpayer is single and maintains a household that is the principal place of abode of her infant son. b. The taxpayer is single, maintains a household for hers
> List the five types of filing status and briefly explain the requirements for the use of each one.
> The benefits of many deductions, credits, or other benefits are limited to taxpayers with Adjusted Gross Income below certain limits. Explain how the limitation (phaseout) process works. Give two examples of deductions, credits, or other benefits that
> Charles and Joan Thompson file a joint return. In 2016, they had taxable income of $92,370 and paid tax of $14,636. Charles is an advertising executive and Joan is a college professor. During the fall 2017 semester, Joan is planning to take a leave of ab
> Donald is a 21-year-old full-time college student. During 2017, he earned $2,550 from a part-time job and $1,150 in interest income. If Donald is a dependent of his parents, what is his standard deduction amount? If Donald supports himself and is not
> How many personal exemptions can a taxpayer claim on his or her tax return? Explain your answer.
> What is a Treasury Regulation? What are the four types of regulations and how do they differ?
> When would a taxpayer want to sue the government in a district court versus the Tax Court?
> What are the advantages in petitioning the Tax Court versus other trial courts?
> Where are Revenue Rulings and Revenue Procedures found? When might a Revenue Ruling be useful to a taxpayer? When might a Revenue Procedure be useful to a taxpayer?
> Differentiate between a General Regulation and a Legislative Regulation. Which one is the stronger tax authority?
> What is meant by a Proposed Regulation? Can a taxpayer rely on a Proposed Regulation as authority on how to treat a certain tax item?
> What is the purpose of the Joint Conference Committee? Its reports are considered more important or are more authoritative. Why?
> What are committee reports, and how can they help the taxpayer or tax preparer?
> Discuss the concept of statutory tax authority. Why is there a need for additional types of authority when statutory authority is the law?
> What is the difference between a Revenue Ruling and a Revenue Procedure? How does the level of authority of a ruling or procedure compare with regulations and statutory authority?
> Why might a district court’s opinion regarding a tax decision be more likely to be reversed on appeal?
> After the Court of Appeals, does the taxpayer have any additional avenue for appeals? If so, what are the taxpayer’s probabilities of receiving an appeal after the Court of Appeals? Why?
> If a taxpayer loses a case against the IRS in one of the three trial courts, does the taxpayer have any avenue for appeals?
> In what courts are disputes between the IRS and a taxpayer heard?
> Can a taxpayer rely on a Temporary Regulation as authority on how to treat a certain tax item? If so, how long is a Temporary Regulation valid?
> What is administrative authority, and who publishes it?
> Explain what is meant by Public Law 100-14.
> During the year 2017, Ricki, who is not self-employed and does not receive employer reimbursement for business expenses, drove her car 5,000 miles to visit clients, 10,000 miles to get to her office, and 500 miles to attend business-related seminars. All
> Reynaldo and Sonya, a married couple, had flood damage in their home due to a faulty water heater during 2017, which totally ruined the furniture that was stored in their garage. The following items were completely destroyed and not salvageable. Damaged
> What is the legislative process concerning tax laws? Where does tax legislation often begin?
> In 2017, Arturo’s pleasure boat that he purchased in 2012 for $48,500 was destroyed by a hurricane. His loss was not totally covered by his insurance. On what form(s) will Arturo report this loss?
> Jinhee purchased a ticket to a concert to raise money for the local university. The ticket cost $350, but the normal cost of a ticket to this concert is $100. How much is deductible as a charitable contribution?
> Shelby has net investment income of $18,450 and wage income of $80,500. She paid investment interest expense of $19,000. What is Shelby’s deduction for investment interest expense? Explain your answer.
> In 2016, Tomas, a single taxpayer, had $ $3750 in state tax withheld from his paycheck. He properly deducted that amount on his 2016 tax return as an itemized deduction that he qualified for, thus reducing his tax liability. After filing his 2016 tax r
> On April 1, 2017, Paul sold a house to Amy. The property tax on the house, which is based on a calendar year, was due September 1, 2017. Amy paid the full amount of property tax of $2,500. Calculate both Paul’s and Amy’s allowable deductions for the p
> Leslie and Jason, who are married, paid the following expenses during 2017: Interest on a car loan………………………………………………………. $ 100 Interest on lending institution loan (used to purchase municipal bonds) …………………………………
> Mickey is a 12-year-old dialysis patient. Three times a week for the entire year he and his mother, Sue, drive 20 miles one way to Mickey’s dialysis clinic. On the way home, they go 10 miles out of their way to stop at Mickey’s favorite restaurant. Th
> Explain the requirements necessary for a scholarship to be tax-free to the recipient.
> What is an employer-provided fringe benefit?
> When determining the taxability of social security benefits, the IRC uses the concept of provisional income. How is provisional income calculated?
> What are the three types of tax authority? Who issues each type?
> How do dividends and earnings and profits relate to each other?
> Sam owns all of the stock in a newly formed corporation. During 2017, the first year of operation, the corporation realized current earnings and profits of $10,000. Sam received a $12,000 distribution from the corporation. How much, if any, of the distri
> What is a dividend?
> Your friend John files his own tax returns. He received a computer as a dividend from a closely held corporation. He says that he does not need to report the computer as dividend income because the dividend was not paid in cash. Is he right? Why?
> Explain how income is recognized under the cash method of accounting.
> A single taxpayer is 26 years old and has wages of $18,000 and interest income of $450. Which is the simplest tax form this person can file? 1040. 1040EZ. 1040A. d. 1040Z.
> When there is fraud on a return, the IRS charges a penalty of ________ on any portion of understatement of tax that is attributable to the fraud. 20%. 25%. 75%. d. 100%.
> When there is negligence on a return, the IRS charges a penalty of ________of the tax due. 25%. 20%. 18%. d. 10%.
> What is the percentage of interest the IRS was charging on assessment (amount of unpaid tax liability) during March 2017? You might want to do this research by going to the IRS Web site (www.irs.gov). 6%. 5%. 3%. d. 4%.
> What is the amount of the tax liability for a married couple filing jointly with taxable income of $135,500? $33,875. $28,333. $20,325. d. $25,353.
> Discuss the concept of “tax authority.” How does tax authority help taxpayers and tax preparers report tax items properly?
> Employers are required to withhold social security taxes from wages paid to employees. What is the amount of the social security wage limitation for 2017? $127,200. $118,500. $113,700. d. $106,800.
> Which amount represents the standard deduction for a taxpayer who is 44 years old and claiming head of household status? $9,250. $9,300. $9,350. d. $6,350.
> To be a qualifying relative, who has to live in the home of the taxpayer for the entire year? Cousin. Child. Stepchild. d. Father.
> To be a qualifying child, the taxpayer must meet three general tests and five specific tests. Which of the following is not part of the five specific tests? Support test. Age test. Gross income test. d. Relationship test.
> What is the amount of the personal and dependency exemptions for 2017? $3,950. $4,100. $4,000. d. $4,050.
> Esmeralda is 20 years of age and a full-time student living with her parents. She had wages of $500 ($50 of income tax withholding) for 2017. Can Esmeralda claim her own exemption on her return even though her parents will claim her as a dependent? Ye
> A taxpayer’s spouse died on December 31, 2016. He has no qualifying child. Which status should the taxpayer select when filing his 2017 tax return? Qualifying widow(er). Married filing jointly. Single. d. Married filing separately.
> A taxpayer is married with a qualifying child (dependent), but she has been living separately from her spouse for the last eight months of the year. However, she paid for more than half of the cost of keeping up the household. Her spouse does not want
> Payment of alimony by the taxpayer is a for AGI deduction. Which form can the taxpayer use to claim this benefit? Either 1040 or 1040A. 1040. 1040A. None of the above.
> Indicate whether each of the following items is considered a for AGI, (above-the line) deduction for the 2017 tax year. a. Student loan interest. b. Gambling losses. c. Early withdrawal penalty. d. Child support payments. e. Charitable contributions. f.
> For AGI, or above-the-line, deductions: a. Are determined by the taxpayer. b. Are set by statute. c. Increase tax liability. d. Are reported in Schedule A.
> Under current tax law, the deductible amount for expenses under the educator expense deduction is limited per taxpayer to: a. $100. b. $150. c. $200. d. $250.
> Which of the following items does not qualify as an educator expense item deduction? a. Books. b. Home schooling expenses. c. Computers and software. d. Professional development expenses related to the curriculum.
> At the beginning of June 2017, Julia left her husband and is currently living in an apartment. The couple has no children. At the end of the current year, no formal proceedings have occurred in relation to the separation or potential divorce. Julia has b
> The Renfros were granted a decree of divorce in 2016. In accordance with the decree, Josh Renfro is to pay his ex-wife $24,000 a year until their only child, Evelyn now 10, turns 18, and then the payments will decrease to $14,000 per year. For 2017, ho
> Mia is required under a 2016 divorce decree to pay $600 of alimony and $300 of child support per month for 12 years. In addition, Mia makes a voluntary payment of $100 per month. How much of each total monthly payment can Mia deduct in 2017? a. $100.
> Penalties for the early withdrawal of savings are reported by the financial institution on: a. Box 2 of Form 1099-INT. b. Form EWIP. c. A letter of notification. d. None of the above.
> Shana is a self-employed carpenter who had net earnings from self-employment of $3,500. She paid $325 per month for health insurance over the last year. Shana is entitled to a for AGI deduction for health insurance of: a. $0. b. $325. c. $3,500. d.
> As a for AGI deduction, self-employed health insurance premiums are deductible at: a. 50%. b. 70%. c. 80%. d. 100%.
> The deduction for half of the self-employment tax is: a. Based on a total of 7.65% of FICA taxes. b. Based on the gross earnings of the business. c. Based on filing status. d. Based on the net earnings of the business.
> Under the alimony recapture rules, what amounts are designated for recapture reclassification, and what are the tax consequences?
> To meet the distance test, the new job location must be: a. 100 miles from the old job location. b. At least 50 miles farther than the old residence was from the old job location. c. At least 50 miles farther than the new residence is from the old job l
> Deductible expenses for moving do not include: a. The cost of transporting household goods. b. Hotel costs while moving to the new location. c. Meals incurred during the move. d. Storage of household goods for a limited time upon arrival at the new loca
> To be eligible to deduct moving expenses, a taxpayer: a. Must meet the time test. b. Must meet the distance test. c. Must meet one of the change of job location, time, or distance tests. d. Must meet all three of the change of job location, time, and di
> To be eligible to fund a Health Savings Account (HSA), a taxpayer must meet which of the following criteria: a. An employee (or spouse) who works for an employer with a high deductible health plan. b. An uninsured employee who has purchased a high-deduc
> For 2017, the maximum aggregate annual contribution that a taxpayer, under age 55, can make to a Health Savings Account (HSA) for family coverage is: a. $1,300. b. $3,350. c. $6,750. d. $13,100.
> In 2013 through 2016, Korey, who is single, borrowed a total of $25,000 for higher education expenses on qualified education loans. In 2017, while still living at home and being claimed by his parents as a dependent, he began making payments on the loan
> Taxpayers eligible to take the student loan interest deduction do not include: a. A student who is claimed as a dependent on another’s return. b. A self-supporting student. c. The parents of a dependent student who took out the loan on their child’s beh
> Student loan interest is reported on Form: a. 1098-SA. b. 1098-E. c. 1099-S. d. 1098-GA.
> For AGI, or above-the-line, deductions: a. Increase AGI. b. Reduce tax credits. c. Are available only for MFJ. d. Can reduce overall tax liability.
> What is usually the largest miscellaneous deduction for individual taxpayers? Are any special reporting issues associated with it?
> Under the terms of a divorce decree executed May 1, 2017, Ahmed transferred a house worth $650,000 to his ex-wife, Farah, and was to make alimony payments of $3,000 per month. The property has a tax basis to Ahmed of $300,000. a. How much of this must b
> What happens to a charitable contribution that is in excess of the AGI limits?
> Donations to what types of organizations are tax deductible?
> What is investment interest expense? What are the limits to the deductibility of investment interest expense?
> When using the IRS sales tax deduction calculator to assist in determining a sales tax deduction, what information concerning the taxpayer do you need?
> If state or local income taxes are deducted as an itemized deduction on the current year’s tax return, what is required if the taxpayer receives a refund in the following year?
> For a tax to be deductible as an itemized deduction, what three tests are required?
> What are the four major categories of deductible taxes on individual returns?
> Can an individual take a medical deduction for a capital improvement to his or her personal residence? If so, how is it calculated?
> Describe the concept of a 7.5% floor for medical deductions.
> What are the six types of personal expenses that can be classified as itemized deductions on Schedule A, Form 1040?
> Chantel has received a 1099-INT from her financial institution showing $75 in box 2 of the form. How should she handle this on her 2017 tax return and why?
> What is the difference between deductions from AGI and deductions for AGI?
> Define alimony, child support, and property settlement.
> What is meant by a penalty on early withdrawal of savings, and under what circumstances is it deductible?
> Explain the two limitations associated with the deduction for health insurance by self-employed individuals.
> Explain why self-employed taxpayers generally pay double the amount of FICA taxes that regular wage earners do.
> A taxpayer incurs moving expenses in conjunction with a job-related move that meets the distance test. At the end of the year, the taxpayer has not yet met the time test. Under what circumstances can the taxpayer deduct the moving expenses?
> Describe the types of expenses that can be deducted for moving expenses.
> Explain the three tests associated with deductibility of moving expenses.
> What are the qualifications to be eligible for a Health Savings Account (HSA) deduction?
