Test Bank For
Income Tax Fundamentals 2021 39e Gerald E. Whittenburg, Martha Altus-Buller, Steven Gill
Chapter 1-12
Chapter 1
Indicate whether the statement is true or false.
1. A dependent that dies during the tax year may still qualify as a dependent.
a. True
b. False
2. An 18-year-old full-time student who is claimed on the parents' tax return as a dependent is eligible for the child tax
credit.
a. True
b. False
3. If taxpayers are married and living together at the end of the year, they must file a joint tax return.
a. True
b. False
4. A single taxpayer, who is not a dependent on another’s return, not blind and under age 65, with income of $11,750 must
file a tax return.
a. True
b. False
5. If a taxpayer is due a refund, it will be mailed to the taxpayer regardless of whether he or she files a tax return.
a. True
b. False
6. Taxpayers with self-employment income of $400 or more must file a tax return.
a. True
b. False
7. A taxpayer with self-employment income of $600 must file a tax return.
a. True
b. False
8. Taxpayers who do not qualify for married, head of household, or qualifying widow or widower filing status must file as
single.
a. True
b. False
9. An individual taxpayer with a net capital loss may deduct up to $3,000 per year against ordinary income.
a. True
b. False
,Name: Class: Date:
10. If an unmarried taxpayer paid more than half the cost of keeping a home which is the principal place of residence of a
nephew, who is not her dependent, she may use the head of household filing status.
a. True
b. False
11. A corporation is a reporting entity but not a tax-paying entity.
a. True
b. False
12. Scholarships received by a student may be excluded for purposes of the support test for determining the availability of
the dependency exemption.
a. True
b. False
13. Taxpayers can download tax forms from the IRS Internet site.
a. True
b. False
14. An item is not included in gross income unless the tax law specifies that the item is subject to taxation.
a. True
b. False
15. Partnership capital gains and losses are allocated separately to each of the partners.
a. True
b. False
16. The head of household tax rates are higher than the rates for a single taxpayer.
a. True
b. False
17. Married taxpayers may double their standard deduction amount by filing separate returns.
a. True
b. False
18. A dependent child with earned income in excess of the available standard deduction amount must file a tax return.
a. True
b. False
19. If your spouse dies during the tax year and you do not remarry, you must file as single for the year of death.
a. True
b. False
20. A taxpayer who maintains a household with an unmarried child may qualify to file as head of household even if the
child is not the taxpayer's dependent.
a. True
b. False
,Name: Class: Date:
21. A married person with a dependent child may choose to file as head of household if it reduces his or her tax liability.
a. True
b. False
22. The maximum official individual income tax rate for 2019 is 39.6 percent, not including the Medicare surtax on net
investment income.
a. True
b. False
23. For taxpayers who do not itemize deductions, the standard deduction amount is subtracted from the taxpayer's adjusted
gross income.
a. True
b. False
24. An individual, age 22, enrolled on a full-time basis at a college, is considered a student for purposes of determining
whether a dependency exemption is permitted.
a. True
b. False
25. All taxpayers may use the tax rate schedule to determine their tax liability.
a. True
b. False
26. The two types of dependents are qualifying child or qualifying dependent.
a. True
b. False
27. Most taxpayers may deduct the standard deduction amount or the amount of their itemized deductions, whichever is
higher.
a. True
b. False
28. Most states are community property states.
a. True
b. False
29. A taxpayer who is living alone, is legally separated from his or her spouse under a separate maintenance decree at
year-end, and has no dependents should file as single.
a. True
b. False
30. For 2019, the deduction for personal and dependency exemptions are $4,200 each.
a. True
b. False
31. The US federal tax law's sole purpose is to raise revenue.
a. True
, Name: Class: Date:
b. False
Indicate the answer choice that best completes the statement or answers the question.
32. Which of the following is a true statement with respect to the gross income test for the qualifying relative dependency
exemption?
a. The relative must receive less than $4,200 of gross income in order to qualify.
b. The gross income test does not have to be met provided the relative is under age 19 at the end of the tax year.
c. The gross income test does not have to be met provided the relative is under age 24 at the end of the tax year.
d. The gross income test does not have to be met provided the relative is a student.
e. All choices are correct
33. John, 45 years old and unmarried, contributed $1,000 monthly in 2019 to the support of his parents' household. The
parents lived alone and their income for 2019 consisted of $500 from dividends and interest. What is John's filing status
and how many dependents should he claim on his 2019 tax return?
a. Single and no dependents
b. Head of household and no dependents
c. Single and 2 dependents
d. Head of household and 2 dependents
e. None of these
34. In 2019, Wesley has a fairly simple tax situation with moderate wage income and a modest amount of interest income.
Wesley, age 45, wishes to use the easiest possible tax form. He may file:
a. Form 1040EZ
b. Form 1040A
c. Form 1040
d. Form 1065
e. None of these
35. The IRS:
a. requires official tax forms be obtained at the local IRS office.
b. links to the H & R Block Web site.
c. provides information on how to choose a stock.
d. has an app for mobile phones.
36. William is a divorced taxpayer who provides a home for his dependent child, Edward. What filing status should
William indicate on his tax return?
a. Head of household
b. Married, filing separately
c. Single
d. Qualifying widow(er)
e. None of these
37. Clay purchased Elm Corporation stock 20 years ago for $10,000. In the current year, he sells the stock for $29,000.
What is Clay's gain or loss?
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