Description
Fundamentals of Taxation 2018 Edition 11Th Edition By Ana Cruz – Test Bank
Sample Questions
Instant Download With Answers
Chapter 2 Expanded Tax Formula, Forms 1040A and 1040, and Basic Concepts
1) The federal individual income tax returns are the 1040ES, 1040A and 1040.
Answer: FALSE
Explanation: The three forms are the 1040EZ, 1040A and 1040.
Difficulty: 1 Easy
Topic: Form 1040 and 1040A
Learning Objective: 02-01 Describe the expanded tax formula and the components of the major sections of Form 1040A and Form 1040.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
2) The tax code defines adjusted gross income (AGI) as gross income minus a list of permitted deductions.
Answer: TRUE
Difficulty: 1 Easy
Topic: Form 1040 and 1040A
Learning Objective: 02-01 Describe the expanded tax formula and the components of the major sections of Form 1040A and Form 1040.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
3) The amount of tax liability for a taxpayer depends on many factors, including the filing status of the taxpayer.
Answer: TRUE
Difficulty: 1 Easy
Topic: Filing Status
Learning Objective: 02-02 Determine the proper filing status.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
4) A married couple can file a joint return only if both have earned income.
Answer: FALSE
Explanation: For tax purposes, it does not matter if only one spouse earns all of the income.
Difficulty: 1 Easy
Topic: Filing Status
Learning Objective: 02-02 Determine the proper filing status.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
5) A married couple in the process of obtaining a divorce cannot file a joint tax return.
Answer: FALSE
Explanation: If the taxpayers still are legally married on the last day of the tax year, a joint tax return can be filed.
Difficulty: 1 Easy
Topic: Filing Status
Learning Objective: 02-02 Determine the proper filing status.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
6) A married taxpayer filing separately must show the name, address, and social security number of the spouse on the tax return.
Answer: FALSE
Explanation: The address of the spouse is not required.
Difficulty: 1 Easy
Topic: Filing Status
Learning Objective: 02-02 Determine the proper filing status.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
7) To qualify for head of household status, a taxpayer must maintain a household that is the principal place of abode of a qualifying person for more than half the year.
Answer: TRUE
Difficulty: 1 Easy
Topic: Filing Status
Learning Objective: 02-02 Determine the proper filing status.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
8) A taxpayer can qualify for head of household even though his or her parents are living in a separate household from that of the taxpayer (assume all other requirements are met).
Answer: TRUE
Difficulty: 1 Easy
Topic: Filing Status
Learning Objective: 02-02 Determine the proper filing status.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
9) If a taxpayer’s spouse dies during the tax year, the taxpayer must file as a qualifying widow(er).
Answer: FALSE
Explanation: The year the spouse dies, the surviving taxpayer can file a joint return if the couple was married on the date of death and has not remarried as of December 31 of the tax year.
Difficulty: 1 Easy
Topic: Filing Status
Learning Objective: 02-02 Determine the proper filing status.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
10) The exemption amount is subject to annual adjustment for inflation.
Answer: TRUE
Difficulty: 1 Easy
Topic: Personal Exemptions
Learning Objective: 02-03 Calculate personal exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
11) The personal exemption for 2017 is $4,050.
Answer: TRUE
Difficulty: 1 Easy
Topic: Personal Exemptions
Learning Objective: 02-03 Calculate personal exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
12) A taxpayer can be claimed as a dependent on another return and still he or she can claim a personal exemption on his or her tax return.
Answer: FALSE
Difficulty: 1 Easy
Topic: Dependency Exemptions
Learning Objective: 02-04 Calculate dependency exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
13) To be claimed as a dependent, a person must be a qualifying child or a qualifying relative.
Answer: TRUE
Difficulty: 1 Easy
Topic: Dependency Exemptions
Learning Objective: 02-04 Calculate dependency exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
14) A qualifying child does not have to meet the support test in order to be claimed as a dependent.
Answer: FALSE
Difficulty: 1 Easy
Topic: Dependency Exemptions
Learning Objective: 02-04 Calculate dependency exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
15) A qualifying relative must be related to the taxpayer (as listed by the IRS), or be a member of the taxpayer’s household for the entire year.
Answer: TRUE
Difficulty: 1 Easy
Topic: Dependency Exemptions
Learning Objective: 02-04 Calculate dependency exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
16) A taxpayer who either is 65 or older or blind can claim an additional standard deduction.
Answer: TRUE
Difficulty: 1 Easy
Topic: Standard Deduction
Learning Objective: 02-05 Determine the standard deductions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
17) The standard deduction in 2017 for a married couple, under 65 and not blind, is $12,700.
Answer: TRUE
Difficulty: 1 Easy
Topic: Standard Deduction
Learning Objective: 02-05 Determine the standard deductions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
18) In 2017, the additional standard deduction for a single taxpayer, who is 65 or older and not blind, is $1,200.
Answer: FALSE
Explanation: The additional standard deduction is $1,550.
Difficulty: 1 Easy
Topic: Standard Deduction
Learning Objective: 02-05 Determine the standard deductions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
19) Even if the total of the itemized deductions is lower than the standard deduction, a taxpayer should choose to itemize on his or her tax return.
Answer: FALSE
Difficulty: 1 Easy
Topic: Standard Deduction
Learning Objective: 02-05 Determine the standard deductions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
20) The tax tables stop at taxable income of $115,000.
Answer: FALSE
Explanation: The tables stop at taxable income of less than $100,000.
Difficulty: 1 Easy
Topic: Tax Due to IRS
Learning Objective: 02-06 Compute the amount of tax due to the Internal Revenue Service (IRS).
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
21) Most taxpayers make payments to the IRS through income tax withholdings and quarterly estimated tax payments.
Answer: TRUE
Difficulty: 1 Easy
Topic: Tax Due to IRS
Learning Objective: 02-06 Compute the amount of tax due to the Internal Revenue Service (IRS).
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
22) A taxpayer may request an automatic seven-month extension of time to file his or her tax return.
Answer: FALSE
Explanation: The extension is for six months.
Difficulty: 1 Easy
Topic: Tax Due to IRS
Learning Objective: 02-06 Compute the amount of tax due to the Internal Revenue Service (IRS).
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
23) An extension to file a tax return is an extension of time to file and an extension of time to pay.
Answer: FALSE
Explanation: Extending the time to file the return does not extend the time to pay the applicable tax.
Difficulty: 1 Easy
Topic: Tax Due to IRS; Interest and Penalties
Learning Objective: 02-06 Compute the amount of tax due to the Internal Revenue Service (IRS).; 02-07 Determine what interest and penalties the IRS can assess and in what instances certain penalties are applicable.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
24) The maximum penalty for failure to file a tax return that is not due to fraud is 25%.
Answer: TRUE
Difficulty: 1 Easy
Topic: Interest and Penalties
Learning Objective: 02-07 Determine what interest and penalties the IRS can assess and in what instances certain penalties are applicable.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
25) The IRS can impose a 75% penalty on any portion of understatement of tax that is attributable to negligence.
Answer: FALSE
Explanation: The penalty attributable to negligence is 20%.
Difficulty: 1 Easy
Topic: Interest and Penalties
Learning Objective: 02-07 Determine what interest and penalties the IRS can assess and in what instances certain penalties are applicable.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
26) Taxable income (TI) is computed after subtracting from adjusted gross income (AGI), the standard deduction or itemized deductions and personal and dependency exemptions.
Answer: TRUE
Difficulty: 1 Easy
Topic: Form 1040 and 1040A
Learning Objective: 02-01 Describe the expanded tax formula and the components of the major sections of Form 1040A and Form 1040.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
27) When a taxpayer’s AGI exceeds certain levels, certain tax benefits are reduced or eliminated.
Answer: TRUE
Difficulty: 1 Easy
Topic: Form 1040 and 1040A
Learning Objective: 02-01 Describe the expanded tax formula and the components of the major sections of Form 1040A and Form 1040.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
28) Marital status of a taxpayer is determined on the last day of the tax year.
Answer: TRUE
Difficulty: 1 Easy
Topic: Filing Status
Learning Objective: 02-02 Determine the proper filing status.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
29) A couple who is legally married on the last day of the tax year cannot file married filing separately.
Answer: FALSE
Difficulty: 1 Easy
Topic: Filing Status
Learning Objective: 02-02 Determine the proper filing status.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
30) Even though the taxpayer is claimed as a dependent on another tax return, he or she can still receive an exemption amount for himself or herself when filing his or her tax return.
Answer: FALSE
Difficulty: 2 Medium
Topic: Personal Exemptions
Learning Objective: 02-03 Calculate personal exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
31) In a multiple support agreement, the taxpayer who will receive the exemption must file all the Forms 2120 with his or her tax return.
Answer: TRUE
Difficulty: 2 Medium
Topic: Dependency Exemptions
Learning Objective: 02-04 Calculate dependency exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
32) The taxpayer’s brother must live with the taxpayer for the entire year to meet the relationship or member of household test under qualifying relatives.
Answer: FALSE
Difficulty: 2 Medium
Topic: Dependency Exemptions
Learning Objective: 02-04 Calculate dependency exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
33) If a married couple files separate returns and one of them itemizes, the other spouse must also itemize.
Answer: TRUE
Difficulty: 1 Easy
Topic: Standard Deduction
Learning Objective: 02-05 Determine the standard deductions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
34) A taxpayer who has income that is not subject to withholding is never required to make estimated payments during the year.
Answer: FALSE
Difficulty: 1 Easy
Topic: Tax Due to IRS
Learning Objective: 02-06 Compute the amount of tax due to the Internal Revenue Service (IRS).
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
35) If the taxpayer still owes tax after April 15, the IRS assesses interest based on the remaining amount owed.
Answer: TRUE
Difficulty: 1 Easy
Topic: Interest and Penalties
Learning Objective: 02-07 Determine what interest and penalties the IRS can assess and in what instances certain penalties are applicable.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
36) Many deductions and credits are determined with reference to adjusted gross income (AGI).
Answer: TRUE
Difficulty: 1 Easy
Topic: Form 1040 and 1040A
Learning Objective: 02-01 Describe the expanded tax formula and the components of the major sections of Form 1040A and Form 1040.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
37) A taxpayer must be married to claim Head of Household status.
Answer: FALSE
Difficulty: 1 Easy
Topic: Filing Status
Learning Objective: 02-02 Determine the proper filing status.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
38) Personal exemptions are for the taxpayer and spouse.
Answer: TRUE
Difficulty: 1 Easy
Topic: Personal Exemptions
Learning Objective: 02-03 Calculate personal exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
39) The amount of the standard deduction increases for people who are age 62 and have retired.
Answer: FALSE
Difficulty: 1 Easy
Topic: Standard Deduction
Learning Objective: 02-05 Determine the standard deductions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
40) The accuracy-related penalty applies when negligence or any substantial understatement occurs.
Answer: TRUE
Difficulty: 2 Medium
Topic: Interest and Penalties
Learning Objective: 02-07 Determine what interest and penalties the IRS can assess and in what instances certain penalties are applicable.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
41) A single taxpayer is 43 years old and has wages only of $16,000. Which is the simplest form this person can file?
- A) 1040A.
- B) 1040EZ.
- C) 1040.
- D) 1040ES.
Answer: B
Difficulty: 1 Easy
Topic: Form 1040 and 1040A
Learning Objective: 02-01 Describe the expanded tax formula and the components of the major sections of Form 1040A and Form 1040.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
42) A 36-year-old taxpayer with a dependent child and claiming head of household status has received $29,000 in alimony payments and earned wages of $44,000. Which is the simplest form this person can file?
- A) 1040A.
- B) 1040EZ.
- C) 1040.
- D) 1040ES.
Answer: C
Explanation: Alimony is reported on Form 1040.
Difficulty: 1 Easy
Topic: Form 1040 and 1040A
Learning Objective: 02-01 Describe the expanded tax formula and the components of the major sections of Form 1040A and Form 1040.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
43) A taxpayer is married with a qualifying child (dependent), but she has been living separate from her spouse for the last five months of the year. However, she paid for more than half of the cost of keeping up the household. Her spouse does not want to file jointly. What filing status must she use when filing her tax return? She wants to obtain the maximum legal benefit.
- A) Single.
- B) Married Filing Separately.
- C) Qualifying Widow(er).
- D) Head of Household.
Answer: B
Explanation: The taxpayer must have lived apart from her spouse for at least the last six months of the year to qualify for the Head of Household status.
Difficulty: 1 Easy
Topic: Filing Status
Learning Objective: 02-02 Determine the proper filing status.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
44) The taxpayer’s spouse died at the beginning of 2016. He has no qualifying child. Which status should the taxpayer select when filing his tax return for 2017?
- A) Single.
- B) Married Filing Separately.
- C) Married Filing Jointly.
- D) Qualifying Widow(er).
Answer: A
Explanation: The surviving spouse usually can file a joint return in the year the spouse dies and qualifying widow(er) for the two years following the death of the spouse but only if there is a qualifying child.
Difficulty: 1 Easy
Topic: Filing Status
Learning Objective: 02-02 Determine the proper filing status.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
45) A legally divorced taxpayer maintains a household for himself and maintains a separate household that is the principal place of abode of his dependent widowed mother. What filing status should he use when filing his tax return?
- A) Married Filing Separately.
- B) Single.
- C) Qualifying widow(er).
- D) Head of Household.
Answer: D
Explanation: The taxpayer’s parents can live in a separate household.
Difficulty: 1 Easy
Topic: Filing Status
Learning Objective: 02-02 Determine the proper filing status.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
46) For tax purposes, marital status is determined as of the ________ day of the year.
- A) first
- B) third
- C) last
- D) None of these
Answer: C
Difficulty: 1 Easy
Topic: Filing Status
Learning Objective: 02-02 Determine the proper filing status.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
47) What was the amount of the personal exemption for 2017?
- A) $3,900.
- B) $4,000.
- C) $4,100.
- D) $4,050.
Answer: D
Difficulty: 1 Easy
Topic: Personal Exemptions
Learning Objective: 02-03 Calculate personal exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
48) Elisa is 21 years of age and a full-time student living with her parents. She had wages of $680 ($75 of income tax withholding) for 2017. Can Elisa claim her exemption on her return even though her parents will claim her as a dependent on their tax return?
- A) Elisa and her parents can both claim the exemption.
- B) No one can claim the exemption for Elisa.
- C) Yes, Elisa can claim the exemption.
- D) No, Elisa cannot claim the exemption.
Answer: D
Explanation: Elisa cannot claim the exemption for herself because she is a dependent of her parents.
Difficulty: 2 Medium
Topic: Personal Exemptions
Learning Objective: 02-03 Calculate personal exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
49) A taxpayer can deduct a(an) ________ amount from AGI for each dependent.
- A) Deduction
- B) Exemption
- C) Itemized
- D) Adjustment
Answer: B
Difficulty: 1 Easy
Topic: Dependency Exemptions
Learning Objective: 02-04 Calculate dependency exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
50) Mirtha is 21 years of age and a full-time student living by herself. She had wages of $25,000 for 2017 and provided more than half of her own support. Can Mirtha claim the exemption for herself on her tax return?
- A) Mirtha’s parents can claim the exemption.
- B) Both, Mirtha and her parents can claim the exemption.
- C) Yes, Mirtha can claim the exemption.
- D) No one can claim the exemption for Mirtha.
Answer: C
Explanation: Mirtha can claim the exemption because she provided more than half of her support.
Difficulty: 2 Medium
Topic: Personal Exemptions
Learning Objective: 02-03 Calculate personal exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
51) To be a qualifying child, the taxpayer must meet three general tests and five specific tests. Which one is not part of the five specific tests?
- A) Gross income test.
- B) Relationship test.
- C) Residency test.
- D) Special test for qualifying child of more than one taxpayer.
Answer: A
Difficulty: 1 Easy
Topic: Dependency Exemptions
Learning Objective: 02-04 Calculate dependency exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
52) To be a qualifying child, the taxpayer must meet three general tests and five specific tests. What are the three general tests?
- A) Relationship test, residency test and gross income test.
- B) Support test, age test and relationship test.
- C) Dependent taxpayer test, relationship test and citizen or resident test.
- D) Dependent taxpayer test, joint return test and citizen or resident test.
Answer: D
Difficulty: 1 Easy
Topic: Dependency Exemptions
Learning Objective: 02-04 Calculate dependency exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
53) To be a qualifying relative, the taxpayer must meet three general tests and four specific tests. Which one is not part of the four specific tests?
- A) Relationship test or member of household test.
- B) Age test.
- C) Support test.
- D) Gross income test.
Answer: B
Difficulty: 1 Easy
Topic: Dependency Exemptions
Learning Objective: 02-04 Calculate dependency exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
54) For a qualifying relative to be claimed as a dependent, this person must either be related to the taxpayer, or be a member of the taxpayer’s household for the entire year. Select the relative who must be part of the taxpayer’s household for the entire year.
- A) Mother.
- B) Sister.
- C) Cousin.
- D) Son-in-law.
Answer: C
Explanation: Cousins are not listed as relatives for this IRS section.
Difficulty: 2 Medium
Topic: Dependency Exemptions
Learning Objective: 02-04 Calculate dependency exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
55) The taxpayer must provide over ________ of the qualifying relative’s support to be able to claim a dependency exemption.
- A) 49%
- B) 50%
- C) 51%
- D) 75%
Answer: B
Difficulty: 1 Easy
Topic: Dependency Exemptions
Learning Objective: 02-04 Calculate dependency exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
56) Which of the following items would not be considered as support for a dependency exemption?
- A) medical insurance premiums.
- B) food.
- C) clothing.
- D) life insurance premiums.
Answer: D
Explanation: Life insurance premiums are not considered support under this IRS section.
Difficulty: 1 Easy
Topic: Dependency Exemptions
Learning Objective: 02-04 Calculate dependency exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
57) Robert, Fred and Lucas are supporting their mother who lives in a separate apartment. Their contributions towards her support are 10%, 40% and 50%, respectively. In a multiple support agreement, who would be entitled to claim the mother as a dependent?
- A) Robert.
- B) Fred or Lucas.
- C) Robert, Fred or Lucas.
- D) None of these.
Answer: B
Explanation: Robert is not contributing more than 10% of his mother’s support.
Difficulty: 2 Medium
Topic: Dependency Exemptions
Learning Objective: 02-04 Calculate dependency exemptions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
58) The basic standard deduction in 2017 for a single taxpayer, under 65 and not blind, is:
- A) $6,350.
- B) $4,050.
- C) $9,300.
- D) $6,300.
Answer: A
Difficulty: 1 Easy
Topic: Standard Deduction
Learning Objective: 02-05 Determine the standard deductions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
59) The basic standard deduction in 2017 for a taxpayer, under 65 and not blind, filing marriedfilingjointly is:
- A) $12,400.
- B) $12,600.
- C) $12,700.
- D) $9,350.
Answer: C
Difficulty: 1 Easy
Topic: Standard Deduction
Learning Objective: 02-05 Determine the standard deductions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
60) The basic standard deduction in 2017 for a taxpayer, 67 and not blind, filing headofhousehold is:
- A) $9,300.
- B) $10,900.
- C) $10,850.
- D) $9,350.
Answer: B
Explanation: Standard deduction of $9,350 plus the additional amount of $1,550.
Difficulty: 1 Easy
Topic: Standard Deduction
Learning Objective: 02-05 Determine the standard deductions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
61) When a taxpayer can be claimed as a dependent on the tax return of another individual, the basic standard deduction for the taxpayer is limited to the greater of (a) ________, or (b) the taxpayer’s earned income plus $350, but not more than the amount of the basic standard deduction.
- A) $1,000
- B) $950
- C) $1,050
- D) $350
Answer: C
Difficulty: 1 Easy
Topic: Standard Deduction
Learning Objective: 02-05 Determine the standard deductions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
62) Luisa’s parents can claim her as a dependent on their tax return. In 2017, her only source of income was a part-time job as a medical clerk where she earned $2,600 during the year. What is Luisa’s standard deduction?
- A) $2,600.
- B) $4,050.
- C) $1,050.
- D) $2,950.
Answer: D
Explanation: Earned income of $2,600 plus $350.
Difficulty: 2 Medium
Topic: Standard Deduction
Learning Objective: 02-05 Determine the standard deductions.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
Chapter 4 Adjustments for Adjusted Gross Income
1) Tuition, fees, books, supplies, room, board, and other necessary expenses of attendance are qualified education expenses for purposes of the student loan interest deduction.
Answer: TRUE
Explanation: Qualified education expenses are the costs of attending an eligible educational institution.
Difficulty: 1 Easy
Topic: Qualified Education Expenses; Student Loan Interest
Learning Objective: 04-01 Describe the tax rules for student loan interest.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
2) For 2017, the amount of the student loan interest deduction is limited to $3,500.
Answer: FALSE
Explanation: The total allowed amount is $2,500.
Difficulty: 1 Easy
Topic: Qualified Education Expenses; Student Loan Interest
Learning Objective: 04-01 Describe the tax rules for student loan interest.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
3) The student loan interest deduction may be limited based on the modified AGI of the taxpayer.
Answer: TRUE
Explanation: The deduction for interest on qualified education loans may be limited based on the modified Adjusted Gross Income of the taxpayer. There is a both a “floor” and a “ceiling” with this phase-out.
Difficulty: 1 Easy
Topic: Qualified Education Expenses; Student Loan Interest
Learning Objective: 04-01 Describe the tax rules for student loan interest.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
4) For the interest on a student loan to qualify for the student loan interest deduction, the student must be enrolled full-time.
Answer: FALSE
Explanation: A student only needs to be enrolled half-time in a degree or certificate program.
Difficulty: 1 Easy
Topic: Qualified Education Expenses; Student Loan Interest
Learning Objective: 04-01 Describe the tax rules for student loan interest.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
5) A Health Savings Account (HSA) is a tax-exempt savings account to be used for qualified medical expenses.
Answer: TRUE
Difficulty: 1 Easy
Topic: Health Savings Account Deduction
Learning Objective: 04-02 Be able to determine eligibility requirements and applicable dollar limits related to the Health Savings Account deduction.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
6) To be eligible to fund a Health Savings Account (HSA), a taxpayer must be self-employed, or an employee (or spouse) of an employer who maintains a high deductible health plan, or an employee of a company that offers no health coverage and the employee has purchased a high deductible health plan on his or her own.
Answer: TRUE
Explanation: There are three main criteria that relate to the eligibility for a Health Savings Account.
Difficulty: 2 Medium
Topic: Health Savings Account Deduction
Learning Objective: 04-02 Be able to determine eligibility requirements and applicable dollar limits related to the Health Savings Account deduction.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
7) Distributions from Health Savings Accounts (HSAs) are subject to tax, if they are used to pay for qualified medical expenses.
Answer: FALSE
Explanation: Distributions are tax free if used for qualified medical expenses.
Difficulty: 1 Easy
Topic: Health Savings Account Deduction
Learning Objective: 04-02 Be able to determine eligibility requirements and applicable dollar limits related to the Health Savings Account deduction.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
8) For 2017, unreimbursed qualifying moving expenses are an itemized deduction.
Answer: FALSE
Explanation: Deductible moving expenses are an above the line, or for AGI, deduction.
Difficulty: 1 Easy
Topic: Moving Expenses
Learning Objective: 04-03 Determine the deduction for moving expenses.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
9) Deductible moving expenses may include moving household goods and personal effects from the old residence to the new residence.
Answer: TRUE
Explanation: Moving expenses of persons other than the taxpayer are permitted if the other persons are members of the taxpayer’s household and both the old and new residences are the persons’ principal place of abode.
Difficulty: 2 Medium
Topic: Moving Expenses
Learning Objective: 04-03 Determine the deduction for moving expenses.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
10) There is an employment test, a distance test, and a time test that must be met in order to deduct qualifying moving expenses.
Answer: TRUE
Explanation: All three tests must be met, however not necessarily at the same time, for moving expenses to qualify for deductibility.
Difficulty: 2 Medium
Topic: Moving Expenses
Learning Objective: 04-03 Determine the deduction for moving expenses.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
11) For the moving expense distance test, the new job location must be at least 100 miles farther from the taxpayer’s old residence than was the old job location.
Answer: FALSE
Explanation: The correct distance is at least 50 miles.
Difficulty: 2 Medium
Topic: Moving Expenses
Learning Objective: 04-03 Determine the deduction for moving expenses.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
12) Self-employment tax is calculated on the gross earnings of the business.
Answer: FALSE
Explanation: The S/E tax is based on the net income of the business.
Difficulty: 1 Easy
Topic: Self-Employment Tax Deduction
Learning Objective: 04-04 Explain the deduction for half of self-employment taxes.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
13) Self-employed persons are allowed a for AGI deduction equal to one-half of the self-employment tax imposed.
Answer: TRUE
Difficulty: 1 Easy
Topic: Self-Employment Tax Deduction
Learning Objective: 04-04 Explain the deduction for half of self-employment taxes.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
14) Qualified self-employed taxpayers can deduct, as a for AGI deduction, 80% of health insurance payments for 2017.
Answer: FALSE
Explanation: 100% of self-employed health insurance premiums are deductible if certain conditions are met.
Difficulty: 1 Easy
Topic: Self-Employed Health Insurance Deduction
Learning Objective: 04-05 Discuss the self-employed health insurance deduction.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
15) The self-employed health insurance deduction is also available to a partner in a partnership and to a shareholder in a Subchapter S corporation who owns more than 2% of the stock in the corporation.
Answer: TRUE
Difficulty: 1 Easy
Topic: Self-Employed Health Insurance Deduction
Learning Objective: 04-05 Discuss the self-employed health insurance deduction.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
16) If a taxpayer incurs an early withdrawal of savings penalty, the taxpayer is entitled to report the penalty as a for AGI deduction on Form 1040.
Answer: TRUE
Difficulty: 1 Easy
Topic: Penalty on Early Withdrawal of Savings
Learning Objective: 04-06 Explain the penalty on early withdrawal of savings.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
17) The payment of alimony has tax ramifications. These tax ramifications only affect the payor of the alimony.
Answer: FALSE
Explanation: Alimony has tax implications for both the payor and the payee.
Difficulty: 1 Easy
Topic: Alimony
Learning Objective: 04-07 Be able to calculate the deduction for alimony paid.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
18) Under a divorce agreement executed in 2017, periodic payments of either cash or property must be made at regular intervals to be deductible as alimony.
Answer: FALSE
Explanation: Alimony must be cash, whether directly to the former spouse or to a designated third party.
Difficulty: 1 Easy
Topic: Alimony
Learning Objective: 04-07 Be able to calculate the deduction for alimony paid.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
19) In lieu of making cash payments of alimony directly to a former spouse, payments to a third party on behalf of the former spouse can qualify as alimony.
Answer: TRUE
Explanation: Cash payments made to the payee and cash payments made to a third party on behalf of the payee qualify as alimony, depending on the terms of the separation or divorce agreement.
Difficulty: 2 Medium
Topic: Alimony
Learning Objective: 04-07 Be able to calculate the deduction for alimony paid.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
20) Roberto files his tax return as married filing separately. He has not lived with his wife for over three years. In the current year, by order of the court, he paid her $500 per month for 12 months as separate maintenance. He will be able to deduct $6,000 as alimony for the year.
Answer: TRUE
Explanation: Payments made in regards to a court ordered separation agreement are deductible as alimony.
Difficulty: 2 Medium
Topic: Alimony
Learning Objective: 04-07 Be able to calculate the deduction for alimony paid.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
21) For 2017, eligible educators can deduct up to $250 of qualified educational expenses as an above-the-line deduction.
Answer: TRUE
Difficulty: 1 Easy
Topic: Educator Expense
Learning Objective: 04-08 Determine the deduction for educator expenses.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
22) An eligible educator for the educator expense deduction must work at least 600 hours during the school year.
Answer: FALSE
Explanation: 900 hrs. is the prescribed threshold.
Difficulty: 2 Medium
Topic: Educator Expense
Learning Objective: 04-08 Determine the deduction for educator expenses.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
23) Expenses for home schooling or for non-athletic supplies for health or physical education courses qualify for the education expense deduction.
Answer: FALSE
Explanation: Only tuition and related expenses qualify.
Difficulty: 1 Easy
Topic: Educator Expense
Learning Objective: 04-08 Determine the deduction for educator expenses.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
24) Professional development expenses related to the curriculum are eligible for the Educator Expenses deduction.
Answer: TRUE
Explanation: The Protecting Americans from Tax Hikes (PATH) Act of 2015 further enhanced this deduction by allowing “professional development expenses” to qualify.
Topic: Educator Expense
Learning Objective: 04-08 Determine the deduction for educator expenses.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
25) For 2017, the maximum amount of deductible student loan interest is $2,500.
Answer: TRUE
Explanation: The deduction is limited to $2,500 per year.
Difficulty: 1 Easy
Topic: Qualified Education Expenses; Student Loan Interest
Learning Objective: 04-01 Describe the tax rules for student loan interest.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
26) Qualifying moving expenses are treated as an itemized deduction for 2017.
Answer: FALSE
Explanation: Qualified moving expenses are an “above the line” deduction.
Difficulty: 2 Medium
Topic: Moving Expenses
Learning Objective: 04-03 Determine the deduction for moving expenses.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
27) The deduction for self-employment taxes in2017 is deductible as an above-the-line deduction at a rate of 7.65% based on the employer’s portion of the taxes.
Answer: TRUE
Explanation: Self-employed persons are allowed a for AGI deduction equal to one-half of the total self-employment of 15.3% of net earnings.
Difficulty: 1 Easy
Topic: Self-Employment Tax Deduction
Learning Objective: 04-04 Explain the deduction for half of self-employment taxes.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
28) The cost of self-employed health insurance premiums are deductible above-the line at a rate of 80% of the cost.
Answer: FALSE
Explanation: Self-employed health insurance premiums are deductible up to 100%, subject to some limitations.
Difficulty: 1 Easy
Topic: Self-Employed Health Insurance Deduction
Learning Objective: 04-05 Discuss the self-employed health insurance deduction.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
29) If a divorce agreement executed in 2017 specifies that a portion of the amount of an alimony payment is contingent upon the status of a child, that portion is considered to be a child support payment.
Answer: TRUE
Explanation: Child support is not deductible by the payor.
Difficulty: 2 Medium
Topic: Alimony
Learning Objective: 04-07 Be able to calculate the deduction for alimony paid.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
30) Student loan interest is deductible only by the person who actually attended the educational institution.
Answer: FALSE
Explanation: Only the person who is legally obligated to make the interest payments can take the deduction.
Difficulty: 2 Medium
Topic: Qualified Education Expenses; Student Loan Interest
Learning Objective: 04-01 Describe the tax rules for student loan interest.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
31) With a Health Savings Account (HSA), contributions grow tax free, but distributions used for to pay for medical expenses are taxed.
Answer: FALSE
Explanation: Distributions used to pay for medical expenses are tax exempt; only those distributions used to pay for non-medical expenses are taxed.
Difficulty: 1 Easy
Topic: Health Savings Account Deduction
Learning Objective: 04-02 Be able to determine eligibility requirements and applicable dollar limits related to the Health Savings Account deduction.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
32) Unreimbursed qualifying moving expenses are an above-the-line deduction for 2017.
Answer: TRUE
Explanation: Unreimbursed qualifying moving expenses are not a below-the-line or itemized deduction.
Difficulty: 1 Easy
Topic: Moving Expenses
Learning Objective: 04-03 Determine the deduction for moving expenses.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
33) To qualify for the moving expense deduction, an employee must change job sites, move a required distance, and change employers.
Answer: FALSE
Explanation: A change of employer is not required as long as the site of work has changed and it meets the distance requirement.
Difficulty: 3 Hard
Topic: Moving Expenses
Learning Objective: 04-03 Determine the deduction for moving expenses.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
34) For self-employed taxpayers, ¾ of the amount of self-employment taxes are deductible as an above-the-line deduction.
Answer: FALSE
Explanation: Self-employed persons are allowed a for AGI deduction equal to one-half of the self-employment tax imposed.
Difficulty: 1 Easy
Topic: Self-Employment Tax Deduction
Learning Objective: 04-04 Explain the deduction for half of self-employment taxes.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
35) Under a divorce agreement executed in 2017, periodic payments of either cash or property must be made at regular intervals to be deductible as alimony.
Answer: FALSE
Explanation: To qualify as alimony, the payments must consist of cash.
Difficulty: 2 Medium
Topic: Alimony
Learning Objective: 04-07 Be able to calculate the deduction for alimony paid.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
36) If a divorce agreement executed in 2017 specifies that a portion of the amount of an alimony payment is contingent upon the age or status of a child, that portion is considered to be a child support payment.
Answer: TRUE
Explanation: Alimony is sometimes referred to as spousal support; child support is a different category of payment.
Difficulty: 1 Easy
Topic: Alimony
Learning Objective: 04-07 Be able to calculate the deduction for alimony paid.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
37) Madison is a teacher at a parochial elementary school. If she spends $600 on art supplies for her classes, $250 of this amount can be claimed as a deduction for AGI.
Answer: TRUE
Difficulty: 1 Easy
Topic: Educator Expense
Learning Objective: 04-08 Determine the deduction for educator expenses.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
38) The educator expense deduction is available to community college and university professors.
Answer: FALSE
Explanation: The Educator Expense deduction is only available to education professionals in the K through 12 system.
Difficulty: 2 Medium
Topic: Educator Expense
Learning Objective: 04-08 Determine the deduction for educator expenses.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
39) Sam is a freshman in the UC-Davis degree program in veterinary medicine. In 2017, Sam paid $3,000 in tuition, $500 for books, and $250 for supplies for class. Sam also paid room and board of $3,500. What is the total qualifying education expense for the student loan interest deduction for Sam in 2017?
- A) $3,000.
- B) $3,750.
- C) $7,250.
- D) $3,500.
Answer: C
Explanation: $3,000 + 500 + 250 + 3,500 = $7,250.
Difficulty: 2 Medium
Topic: Qualified Education Expenses; Student Loan Interest
Learning Objective: 04-01 Describe the tax rules for student loan interest.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
40) Rodrigo graduated from the University of Maryland in 2015. In 2017, to take advantage of lower interest rates, he refinanced his qualified education loans with another qualified student loan. He is not a dependent on another person’s tax return. Before AGI limits, what is the maximum deduction available to him for the $3,200 he paid for educational student loan interest in 2017?
- A) $2,000.
- B) $3,000.
- C) $0.
- D) $2,500.
Answer: D
Explanation: The amount of the student loan interest deduction is limited to $2,500 per year.
Difficulty: 1 Easy
Topic: Qualified Education Expenses; Student Loan Interest
Learning Objective: 04-01 Describe the tax rules for student loan interest.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
41) In 2013 through 2016, Shirin borrowed a total of $30,000 for higher education expenses on qualified education loans. In 2017, while still living at home and being claimed by her parents as a dependent, she began making payments on the loan. The first year interest on the loan was reported as $1,750. The amount that Shirin can claim on her tax return is:
- A) $0.
- B) $2,500.
- C) $1,750.
- D) $1,500.
Answer: A
Explanation: A person who is claimed as a dependent on another person’s return cannot claim the student loan interest deduction.
Difficulty: 2 Medium
Topic: Qualified Education Expenses; Student Loan Interest
Learning Objective: 04-01 Describe the tax rules for student loan interest.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
42) Freya, who is single, had a student loan for qualified education expenses on which interest was due. For 2017, the total interest payments were $2,000. Assuming she has AGI under $65,000, how much may she deduct in arriving at adjusted gross income for 2017?
- A) $2,000.
- B) $2,500.
- C) $1,700.
- D) $0.
Answer: A
Explanation: With AGI less than 65K, she is under the phase-out floor; therefore the full amount is deductible.
Difficulty: 1 Easy
Topic: Qualified Education Expenses; Student Loan Interest
Learning Objective: 04-01 Describe the tax rules for student loan interest.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
43) In 2016, Carlos, who is single, received his Bachelor’s degree and started working. In 2017, he began paying interest on qualified education loans and had modified AGI of $70,000. He paid interest of $1,200 in 2017. Which of the following statements is correct?
- A) Due to the phase-out rules, only a portion of the $1,200 will be deductible.
- B) Taxpayers are not allowed a deduction for education loan interest in 2017.
- C) The full $1,200 is deductible in arriving at adjusted gross income.
- D) If his modified AGI had been $75,000, the phase-out rules would have reduced his deductible interest to zero.
Answer: A
Explanation: With AGI greater than 65K, but less than 80K, he is within the phase-out range; therefore a prorated amount of the total interest is deductible.
Difficulty: 2 Medium
Topic: Qualified Education Expenses; Student Loan Interest
Learning Objective: 04-01 Describe the tax rules for student loan interest.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
44) For a taxpayer to be eligible to fund a Health Savings Account (HSA), he or she must be:
- A) An employee of a company that offers no health coverage and the employee has purchased a high deductible health plan on their own.
- B) A self-employed individual.
- C) An employee (or spouse) who works for an employer with a high deductible health plan.
- D) All of these.
Answer: D
Difficulty: 2 Medium
Topic: Health Savings Account Deduction
Learning Objective: 04-02 Be able to determine eligibility requirements and applicable dollar limits related to the Health Savings Account deduction.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
45) If an employer contributes to an employee’s HSA, the payment will:
- A) be deductible by the employee.
- B) not be allowed as a contribution on behalf of the employee.
- C) not be counted as income to the employee.
- D) none of these.
Answer: C
Explanation: While the employer contribution is not income to the employee, it is not a deduction for the employee as well. It is, however, a deduction for the employer.
Difficulty: 3 Hard
Topic: Health Savings Account Deduction
Learning Objective: 04-02 Be able to determine eligibility requirements and applicable dollar limits related to the Health Savings Account deduction.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
46) Taxpayers who contribute to or withdraw from an HSA during the year must:
- A) do nothing.
- B) report it on Schedule A.
- C) file a Form 8889 and attach it to their Form 1040.
- D) attach a written note to their tax return.
Answer: C
Explanation: file a Form 8889 and attach it to their Form 1040.
Difficulty: 1 Easy
Topic: Health Savings Account Deduction
Learning Objective: 04-02 Be able to determine eligibility requirements and applicable dollar limits related to the Health Savings Account deduction.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
47) At the beginning of 2017, Makiba was permanently transferred from her office in New York City to New Jersey. Her office in NYC was 15 miles from her old NY home. For Makiba to meet the distance test for qualifying moving expense deductions, how many miles must the office in New Jersey be from her old home?
- A) 50.
- B) 40.
- C) 35.
- D) 65.
Answer: D
Explanation: The new job location must be at least 50 miles farther from the taxpayer’s old residence than was the old job location.
Difficulty: 2 Medium
Topic: Moving Expenses
Learning Objective: 04-03 Determine the deduction for moving expenses.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
48) Which of the following is not deductible as a moving expense?
- A) The cost of a pre-move house hunting trip.
- B) Travel expenses during the move.
- C) Lodging for household members during the move.
- D) The cost of moving household goods.
Answer: A
Explanation: Only the cost of moving “me and my stuff”, excluding meals, is deductible as a moving expense. Pre-move house hunting trips do not qualify.
Difficulty: 1 Easy
Topic: Moving Expenses
Learning Objective: 04-03 Determine the deduction for moving expenses.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
49) Terri, having moved from Washington State to South Carolina in the current year, met all the requirements to deduct moving expenses. Which of the following expenses that she incurred is not deductible as qualified moving expenses?
- A) Shipping costs for her new Tesla Model S.
- B) Temporary storage costs incurred while her furniture was in transit from Washington to South Carolina.
- C) The cost of an oil change incurred in driving her other car from Washington to South Carolina.
- D) Home improvements to sell her home in Oregon.
Answer: D
Explanation: Nonqualified moving expenses generally include house-hunting costs before the move, costs incurred in buying and selling a home, and temporary living expenses and costs of meals incurred while moving.
Difficulty: 2 Medium
Topic: Moving Expenses
Learning Objective: 04-03 Determine the deduction for moving expenses.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
50) For a taxpayer to be eligible to deduct moving expenses, in addition to the employment test, he or she:
- A) Must meet either the time or distance test.
- B) Must meet the distance test.
- C) Must meet the time test.
- D) Must meet both the time and distance test.
Answer: D
Explanation: All three tests, employment, distance, and time must be met to qualify for the moving expense deduction.
Difficulty: 1 Easy
Topic: Moving Expenses
Learning Objective: 04-03 Determine the deduction for moving expenses.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
51) Rena had the following moving expenses during 2017:
| Cost of packing and transporting her household goods | $ | 1,500 |
| Lodging for travel between the old home and new home | $ | 600 |
| Meals incurred during the trip | $ | 175 |
Rena moved to start a new job and met all the required tests for moving expense deductibility. What is the total amount of moving expenses that can be deducted on her 2017 return?
- A) $2,275.
- B) $1,675.
- C) $2,100.
- D) $600.
Answer: C
Explanation: $1,500 + 600 = $2,100. Meals incurred while moving are not deductible.
Difficulty: 2 Medium
Topic: Moving Expenses
Learning Objective: 04-03 Determine the deduction for moving expenses.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
52) For the deduction of self-employment taxes, which of the following statements is correct?
- A) They are 80% deductible as a for AGI deduction.
- B) They are not deductible.
- C) They are taken as an itemized deduction on Schedule A.
- D) They are 50% deductible as a for AGI deduction.
Answer: D
Explanation: The self-employment tax is calculated on the net earnings of the business and 50% of that amount is deductible as for AGI deduction.
Difficulty: 1 Easy
Topic: Self-Employment Tax Deduction
Learning Objective: 04-04 Explain the deduction for half of self-employment taxes.
EA: Yes
Accessibility: Keyboard Navigation
Gradable: automatic
Reviews
There are no reviews yet.