Tax 503 Chapter 4 Exam Actual Questions And Correct Detailed Answers.
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Course
TAX.
Institution
TAX.
Put the following items in the order in which they are found in the individual income tax formula. - correct answer 5. Equals taxable income
4. Minus from AGI deductions
3. Equals adjusted gross income
1. Gross income
2. Minus for AGI deductions
The U.S. ...
Put the following items in the order in which they are found in the individual income tax formula. -
correct answer 5. Equals taxable income
4. Minus from AGI deductions
3. Equals adjusted gross income
1. Gross income
2. Minus for AGI deductions
The U.S. tax laws are based on the all-inclusive concept where gross income includes all realized income
from whatever source derived. - correct answer True
Which one of the following choices is the definition of realized income? - correct answer
Income from a transaction with a second party where there is a measurable change in property rights
between parties
Income that is taxed in the current year according to the tax rate schedule is referred to as ______
income. - correct answer ordinary
Depreciable assets used in a trade or business are classified as capital assets. - correct answer
False
Which of the following statements is TRUE regarding the individual income tax formula? - correct
answer A taxpayer may deduct the greater of his standard deduction or his itemized
deductions from AGI to arrive at taxable income.
The U.S. tax laws are based on the all-inclusive concept where gross income includes all realized income
from "whatever_______ ________ ." - correct answer source derived
Which of the following choices describe tax deductions? (Choose all that apply.) - correct answer
- Tax deductions are a matter of legislative grace.
, - Taxpayers are NOT allowed to deduct anything unless a specific tax provision allows them to do so.
Which of the following statements is correct? - correct answer Stock which has
appreciated in value must be sold before it is considered part of gross income.
Deductions ______ (for/from) AGI cause a reduction in AGI, which increases the deductibility of
_________ (for/from) AGI deductions subject to AGI limitations. - correct answer
for , from
Yolanda is your client. With her current level of taxable income, she is paying tax at a 24% marginal rate.
She received $2,000 in qualified dividends this year. What rate of tax do you expect that Yolanda will pay
on her dividends? - correct answer The qualified dividends are taxed at a favorable
rate. Since Yolanda is in the 24% bracket, the dividends will be taxed at 15%.
Which of the following assets are classified as capital assets? (Check all that apply.) - correct answer
- A house owned and used by a taxpayer
- Stock held for investment
Zack is single and has collected the following information for preparing his 2019 taxes: Gross income
$74,000, tax credits $2,500, itemized deductions $9,000, deductions for AGI $5,000, tax prepayments
$8,400. Based on this information, Zack's "adjusted gross income" equals $_______ , and his "taxable
income" equals $_________ - correct answer - 69000
- 56800
Which of the following items are deductions FOR adjusted gross income? (Check all that apply.) - correct
answer - Capital losses
- Contributions to (non Roth) qualified retirement accounts
- Health insurance for self-employed persons
- Alimony paid for divorces finalized before 1/1/2019
All sources of income are taxable unless specifically excluded through a tax provision.
However,________ are NOT permitted unless a specific tax provision allows them. - correct answer
deductions
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