Question: Are there circumstances in which income is

> If an employer contributes to an HSA on behalf of an employee, a. Is the contribution deductible by the employee? b. Is the payment considered income to the employee?

> Margaret earned $15,000 and paid $1,500 of income tax; Mike earned $50,000 and paid $5,000 of income tax. The tax rate structure they are subject to is: Progressive. Proportional. Regressive. d. Recessive.

> Jake earned $15,000 and paid $1,500 of income tax; Jill earned $40,000 and paid $3,500 of income tax. The tax rate structure they are subject to is: Progressive. Proportional. Regressive. Recessive.

> Cameron is single and has taxable income of $84,192. Determine his tax liability using the Tax Tables and using the Tax Rate Schedule. Why is there a difference between the two amounts?

> When taxpayers file a tax return, they will either pay an additional amount or receive a refund of excess taxes paid. Briefly explain how this “settling up” process works. Why might a taxpayer pay too much during the year?

> What six criteria must a taxpayer meet in order to file Form 1040EZ?

> What is the Income Tax Formula, in simplified form?

> Xavier and his wife Maria have total W-2 income of $91,932. They will file their tax return married filing jointly. They had a total of $10,149 withheld from their paychecks for federal income tax purposes. Using the tax tables, determine the amount o

> What is the amount of the permitted deduction for single and married taxpayers who use Form 1040EZ?

> Explain why unemployment compensation is taxable.

> What federal tax forms do taxpayers normally receive to inform them of the amount of wages and interest they earned during the year?

> Discuss the characteristics of an eligible educational institution as it relates to the deductibility of student loan interest.

> What is the definition of interest?

> What is meant by compensation for services? Give some examples.

> What type of tax rate structure is the U.S. federal income tax? Explain your answer.

> What is the definition of tax base, and how does it affect the amount of tax levied?

> Name the three types of tax rate structures and give an example of each.

> For tax year 2015 what proportion of individual income tax returns was filed on a Form 1040EZ, Form 1040A and Form 1040? What proportion was electronically filed?

> What is the most common way taxpayers pay their income tax liability during the year?

> Who must obtain a preparer tax identification number?

> IRS rules for paid tax preparers apply to what types of tax professionals?

> Define and compare these terms: average tax rate and marginal tax rate.

> Explain what is meant by regressive tax. Why the social security tax is considered a regressive tax?

> What type of tax is a sales tax? Explain your answer.

> What is a progressive tax? Why do you think the government believes it is a more equitable tax than, say, regressive tax or proportional tax?

> Give a brief history of the income tax in the United States

> Explain how to calculate the shared responsibility payment under the Affordable Care Act.

> List at least five items that paid preparers must do to comply with Circular 230.

> List at least five items that paid preparers must not do to comply with Circular 230.

> In the case of a joint return, what is the treatment of educator expenses?

> What expenses qualify as deductible educator expenses?

> Why is it important to distinguish between a property settlement and alimony?

> Refer to Question 15. How does the tax code attempt to remedy this seeming inequity? Data from question 15: Explain why self-employed taxpayers generally pay double the amount of FICA taxes that regular wage earners do.

> In January 2017, Tran incurred $1,200 of moving expenses when he moved from Des Moines, IA, to Detroit, MI. When he moved, he had no job but found one a week after moving. He stayed on that job for two months, changed to another job for four months, and

> Rica quit her job in Austin TX and moved to Seattle WA, incurring $1,500 of moving expenses, none of which was reimbursed by her employer. Upon arriving in Seattle, she sought employment and found a position three weeks later. Without regard to the time

> What are the consequences of an employer contribution to an employee’s HSA?

> Explain the purpose of a health savings account (HSA).

> In 2013, Chara incurred a loan to pay for qualified higher education expenses for her 20-year-old daughter who was a dependent. In 2017, her granddaughter graduated from college, moved away to start a new job, and ceased to be a dependent on Chara’s tax

> For purposes of the student loan interest deduction, what is an eligible educational institution?

> For purposes of the student loan interest deduction, what is modified AGI, and how is it determined?

> What are qualified education expenses for purposes of the student loan interest deduction?

> What is a qualified education loan for purposes of the student loan interest deduction?

> Congress has chosen to exempt certain income from taxation, such as scholarships, gifts, life insurance proceeds, municipal bond interest, and employee fringe benefits. Given that one of the primary purposes of the IRC is to raise revenue for the governm

> Under what circumstances are social security benefits taxable to a single taxpayer?

> Under what circumstances is a state or local income tax refund included in the taxable income of a taxpayer?

> Under what circumstances is a dividend nontaxable to a shareholder recipient?

> How are dividends taxed?

> Interest on corporate bonds is taxable to the recipient whereas interest on municipal bonds is tax-free. Would you expect that the interest rate on a corporate bond would be higher or lower than the rate on a municipal bond of comparable quality and term

> What is meant by the concept of constructive receipt?

> Define and give examples of a de minimis employee fringe benefit.

> Give three examples of miscellaneous itemized deductions. How are miscellaneous itemized deductions limited?

> How is a personal casualty loss calculated? Include in your discussion how the determination of the loss is made and limits or floors placed on personal casualties, and any exceptions to those limits.

> Define personal casualty loss. Include in your discussion the concepts of sudden, unexpected, and unusual.

> Distinguish between the tax treatment for donations to charitable organizations of cash, ordinary income property, and capital gain property.

> What is a home equity loan? Is the interest tax deductible? Are there any limits to the deductibility of home equity loan interest?

> What is qualified residence interest? Are there any limits to the deductibility of acquisition loan interest?

> What options does the taxpayer who paid foreign taxes have when considering his or her tax treatment? Which option is usually more tax beneficial?

> For 2017, how can the amount of the sales tax deduction be determined?

> Can a taxpayer take a deduction for premiums paid for health insurance? How do reimbursements from health insurance policies affect the amount of the medical deduction? What happens if an insurance reimbursement for medical expenses is received in a subs

> What is the proper tax treatment for prescription drugs obtained outside the United States, such as Canada?

> When are travel costs deductible as medical costs? How are medical travel costs calculated?

> What are the general requirements for a medical expense to be considered deductible?

> Explain the treatment of itemized deduction limitations for high-income taxpayers in 2017.

> In May 2017, Regina graduated from USC with a degree in accounting and moved to Portland to look for work. Shortly after arriving in Portland, she obtained work as a staff accountant in a local CPA firm. In her move to Portland, Regina incurred the follo

> Zach attended Champion University during 2012-2016. He lived at home and was claimed by his parents as a deduction during the entire duration of his education. He incurred education expenses of $10,000 during college of which $2,000 was paid for by schol

> What are some of the limitations concerning deductibility of student loan interest? Be specific and comprehensive.

> Three types of payments are associated with a decree of separation or a divorce a. What are those three payments? b. Which one has a tax consequence? c. What is the timing rule regarding the “recapture” period of those payments?

> Adrian contributed an antique vase she had owned for 25 years to a museum. At the time of the donation, the vase had a value of $35,000. The museum displayed this vase in the art gallery. a. Assume that Adrian’s AGI is $80,000, and her basis in the

> Jaylen made a charitable contribution to his church in the current year. He donated common stock valued at $33,000 (acquired as an investment in 1998 for $14,000). Jaylen’s AGI in the current year is $75,000. What is his allowable charitable contribut

> Tyrone and Akira, who are married, incurred and paid the following amounts of interest during 2017: Home acquisition debt interest…………………. $15,000 Credit card interest………………………………………5,000 Home equity loan interest……………………………. 6,500 Investment interest e

> Steve purchased a personal residence from Adam. To sell the residence, Adam agreed to pay $4,500 in points related to Steve’s mortgage. Discuss the tax consequences from the perspective of both Steve and Adam.

> Dante and Rosa, both under 65 and married, have a combined AGI of $45,000 in year 2017. Due to certain heart issues, Dante has been prescribed Lipitor® by a physician. For year 2017, Dante spent a total of $3,100 on the medication and $750 on doctor’s

> Reggie, who is 55, had AGI of $32,000 in 2017. During the year, he paid the following medical expenses: Drugs (prescribed by physicians) $200  Marijuana (prescribed by physicians) 1,400  Health insurance premiums –after taxes 850  Doctors’ fees

> Hortencia is employed as an accountant for a large firm in San Diego. During 2017, she paid the following miscellaneous expenses: Unreimbursed employee business expenses…………………………. $520 AICPA dues…………………………………………………………………………..400 Investment journal subs

> Accountants recognize revenue when it is both realized and a. Recorded. b. Accumulated. c. Collected. d. Earned.

> An example of nontaxable income is a. Wages. b. Dividend income. c. Alimony payment. d. Child support payment.

> Employers can pay (or reimburse) employees for up to _________ per year of educational assistance, whether or not the education is job-related. a. $5,250. b. $5,150. c. $5,000. d. $2,500.

> Payments to employees under written dependent care assistance plans are tax-free. The exclusion cannot exceed the earned income of the lesser earning spouse and cannot exceed ________ for an individual filing as married filing jointly. a. $2,500. b. $5

> Which of the following fringe benefits provided by the employer is not taxable to the employee? a. Sick pay. b. Vacation pay. c. Bonus. d. 10% discount on products sold by the business; the gross profit percentage for the business is 20%.

> Items that must be reported on line 21 (other income) of Form 1040 include. a. Dividend income. b. Capital gains. c. Interest income. d. Jury duty pay.

> Frank, who is single, received $7,000 of social security benefits. His AGI before the social security benefits was $15,000. He also had $100 of tax-exempt interest. What is the amount of taxable social security benefits? a. $18,600. b. $7,000. c. $0

> Provisional income is calculated by starting with Adjusted Gross Income (AGI) before social security benefits and adding back specific items. One of these items is a. Employer-provided adoption benefits. b. Taxable interest income. c. Wages earned. d

> Graciela, who is single, reported itemized deductions of $6,400 on her 2016 tax return. Her itemized deductions included $200 of state taxes paid. In 22017, she received a $150 refund of state taxes paid in 2016. What is the amount that Graciela needs

> When an individual’s marginal ordinary income tax rate is 25%, the tax rate on qualified dividends is a. 0%. b. 15%. c. 25%. d. 5%.

> The basis of the property received as a dividend by a shareholder of a corporation is a. The book value at the date of distribution. b. The original cost at the date of purchase. c. The accounting value at the date of distribution. d. The fair market va

> An individual must complete Schedule B (Forms 1040A or 1040) if the following situation occurs: a. Receives child support payments of $1,600. b. Receives interest income over $1,500. c. Receives qualified dividends of $1,050. d. Receives interest inc

> When filing their tax returns, almost all individuals use a. The cash receipts and disbursements method. b. The accrual method. c. The recognition method. d. The hybrid method.

> Income may be realized in the form of a. Money or services. b. Only money. c. Money, services, or property. d. None of the above.

> For tax purposes, one of the requirements to recognize income is that a. There must be an economic benefit. b. The income must be tax-exempt. c. The transaction must occur but completion of the transaction is not necessary. d. There must be a cash tran

> Determine the tax liability, marginal tax rate, and average tax rate (rounded to two decimal places) in each of the following cases. Use the Form 1040EZ Tax Tables to determine tax liability. Married taxpayers, taxable income of $33,862. Single taxpay

> Determine the tax liability, marginal tax rate, and average tax rate (rounded to two decimal places) in each of the following cases. Use the Form 1040EZ Tax Tables to determine tax liability. a. Married taxpayers, taxable income of $83,877. b. Married

> Determine the tax liability, marginal tax rate, and average tax rate (rounded to two decimal places) in each of the following cases. Use the Form 1040EZ Tax Tables to determine tax liability Single taxpayer, taxable income of $33,862. b. Single taxpa

> Havel and Petra are married, will file a joint tax return, and meet the requirements to file a Form 1040EZ. Havel has W-2 income of $46,152 and Petra has W-2 income of $47,289. What is their tax liability? Determine their tax liability using both the

> Sheniqua, a single taxpayer, had taxable income of $93,678. Her employer withheld $19,003 in federal income taxes from her paychecks throughout the year. Using the tax tables, would Sheniqua receive a refund or would she be required to pay additional t

> The W-2 incomes of Betty and her husband Ronald were $48,466 and $45,128, respectively. If Betty and Ronald use a filing status of married filing jointly, determine their tax liability using the tax tables.

> The W-2 income of Sandra, a single taxpayer, was $98,793. Using the tax tables, determine Sandra’s tax liability.

> Use the Tax Rate Schedules to determine tax liability for each of the cases in problems 46, 47, and 48, above. Data from question 46: Determine the tax liability, marginal tax rate, and average tax rate (rounded to two decimal places) in each of the fo

> Sean, who is single, received social security benefits of $8,000, dividend income of $13,000, and interest income of $2,000. Except as noted, those income items are reasonably consistent from year to year. At the end of 2017, Sean is considering selling

> Carl and Karina file a joint return. Karina earned a salary of $38,000 and received dividends of $3,000, taxable interest income of $2,000, and nontaxable interest of $1,000. Carl received $9,000 of social security benefits and a gift of $6,000 from his

> A married couple received $10,000 of social security benefits. Calculate the taxable amount of those benefits if the couple’s provisional income is (a) $20,000, (b) $41,000, and (c) $63,000.