Questions and Answers of Income Tax Fundamentals

Determine the different accounting methods allowed for tax purposes.
Determine the different accounting periods allowed for tax purposes.
Describe other itemized deductions.
Determine the charitable contributions deduction.
Apply the rules for an individual taxpayer’s interest deduction.
Calculate the itemized deduction for taxes.
Calculate the itemized deduction for medical expenses.
Describe other adjustments for adjusted gross income.
Explain the general contribution rules for small business and self-employed retirement plans.
Explain the treatment of Individual Retirement Accounts (IRAs), including Roth IRAs.
Describe the self-employed health insurance deduction.
Explain how Health Savings Accounts (HSAs) can be used for tax-advantaged medical care.
Compute the qualified business income (QBI) deduction.
Describe the basic tax treatment of deductions for net operating losses.
Explain the treatment of passive income and losses.
Apply the tax rules for rental property and vacation homes.
Apply the exclusion of gain from personal residence sales.
Describe the treatment of capital losses.
Compute the tax on capital gains.
Calculate the gain or loss on the disposition of an asset.
Apply the holding period for long-term and short-term capital gains and losses.
Define the term “capital asset.”
Apply the factors used to determine whether an activity is a hobby, and understand the tax treatment of hobby losses.
Ascertain when a home office deduction may be claimed and how the deduction is computed.
Explain the tax treatment of bad debt deductions.
Explain the special limits for business gift deductions.
Determine which clothing and uniforms may be treated as tax deductions.
Identify the tax treatment of dues and subscriptions.
Identify the requirements for claiming business education expenses.
Determine the requirements for deducting meals.
Identify the requirements for deducting travel expenses.
Identify the requirements for deducting transportation expenses.
Describe the tax treatment of inventories and cost of goods sold.
Complete a basic Schedule C (Profit or Loss from Business).
Distinguish between the different rules for married taxpayers residing in community property states when filing separate returns.
Apply the rules governing inclusion of Social Security benefits in gross income.
Describe the tax treatment of unemployment compensation.
Explain the tax implications of using educational savings vehicles.
Describe the tax treatment of alimony and child support.
Describe the elements of scholarship income that are excluded from tax.
Identify the general rules for the tax treatment of gifts and inheritances.
Describe the tax treatment of municipal bond interest.
Identify the tax treatment of interest and dividend income.
Describe the tax treatment of life insurance proceeds.
Calculate the taxable and nontaxable portions of annuity payments.
Determine when prizes and awards are included in income.
Identify the common employee fringe benefit income exclusions.
Determine when meals and lodging may be excluded from taxable income.
Explain the general tax treatment of health insurance.
Describe salaries and wages income reporting and inclusion in gross income.
Apply the definition of gross income.
Describe the basics of electronic filing (e-filing).
Access and use various Internet tax resources.
Compute basic capital gains and losses.
Calculate the correct standard or itemized deduction amount for taxpayers.
Define qualifying dependents.
Determine filing status and understand the calculation of tax according to filing status.
Identify individuals who must file tax returns.
Apply the tax formula for individuals.
Describe the different entities subject to tax and reporting requirements.
Explain the history and objectives of U.S. tax law.
Indicate whether the following statements are true or false:Decreasing one’s tax liability through legal methods is called tax planning, while illegally reducing taxes is called tax evasion.In a
Indicate whether the following statements are true or false:The tax law includes a penalty for writing a “bad” check in payment of the taxpayer’s tax liability.The statute of limitations for a
For each of the following situations, indicate the nature and amount of the penalty that could be imposed.Description of the Penalty Penalty Amounta. Larry is a tax protester and files his tax
Indicate which of the following statements are true or false:The IRS is a division of the Treasury Department.The IRS has four major divisions.The IRS local offices process most individual tax
Martha, Steve, and Lew form a partnership to operate a grocery store. For each of the following contributions by the partners, indicate (1) the amount of income or gain recognized, if any, by the
Khushboo’s basis in her 30 percent interest in the Rishi Partnership is $46,000 at the start of the current year. During the current year, Rishi reports ordinary business income of $70,000. Rishi
Feela is a one-third partner in Alchemy LLC, which is taxed as a partnership. Her basis prior to Alchemy paying Feela an $11,000 cash distribution is $27,000. How much income does Feela recognize
Which of the following items do not have to be reported separately on a partnership return?a. Tax-exempt incomeb. Dividend incomec. Interest expense on business loansd. Capital gains and lossese.
Blake and Ryan form the Poole Partnership. Blake contributes cash of $15,000. Ryan contributes land with an adjusted basis of $10,000 and a fair market value of $21,000.The land is subject to a
Abigail contributes land with an adjusted basis of $56,000 and a fair market value of$58,000 to Blair and Partners, a partnership. Abigail receives a 50 percent interest in Blair. What is Blair’s
Abigail contributes land with an adjusted basis of $56,000 and a fair market value of$58,000 to Blair and Partners, a partnership. Abigail receives a 50 percent interest in Blair. What is Abigail’s
Abigail contributes land with an adjusted basis of $56,000 and a fair market value of$58,000 to Blair and Partners, a partnership. Abigail receives a 50 percent interest in Blair. What is Abigail’s
Abigail contributes land with an adjusted basis of $56,000 and a fair market value of$58,000 to Blair and Partners, a partnership. Abigail receives a 50 percent interest in Blair. What is Blair’s
Drew Freeman operates a small business and his payroll records for the first quarter of 2019 reflect the following:Employee Matt D. Jack F. Avery F. Tiffany Y.Gross wages $2,870.00 $1,400.00
Thuy worked as the assistant manager at Burger Crown through August 2019 and received wages of $79,000. Thuy then worked at Up and Down Burger starting in September of 2019 and received wages of
Fiduciary Investments paid its employee, Yolanda, wages of $139,000 in 2019.Calculate the FICA tax:Withheld from Yolanda’s wages: Social Security $Medicare $Paid by Fiduciary: Social Security
Lamden Company paid its employee, Trudy, wages of $52,000 in 2019. Calculate the FICA tax:Withheld from Trudy’s wages: Social Security $Medicare $Paid by Lamden: Social Security $Medicare $Total
Kana is a single wage earner with no dependents and taxable income of $205,000 in 2019. Her 2018 taxable income was $155,000 and tax liability was $31,490. Calculate the following (note: this
Sophie is a single taxpayer. For the first payroll period in July 2019, she is paid wages of $2,200 monthly. Sophie claims one allowance on her Form W-4.a. Use the percentage method to calculate the
Ralph and Kathy Gump are married with one 20-year-old dependent child. Ralph earns a total of $98,000 and estimates their itemized deductions to be $29,500 for the year. Kathy is not employed. Use
Phan estimates her wages for the year will be $42,000 and her itemized deductions will be $14,000. In the previous year, Phan had a small tax liability. Assuming Phan files as head of household, use
Phan Mai is single with two dependent children under age
Betty owns three separate IRA accounts with different banks. She wishes to consolidate her three IRAs into one IRA in 2019. How many distribution rollovers may Betty make in 2019?a. Oneb. Twoc.
The FUTA tax is:a. An unemployment tax with a rate of 2.9 percent up to $132,900 of salary per employee.b. A disability tax with a rate of 2.9 percent up to $7,000 of salary per employee.c. An
Estimated payments for individual taxpayers are due on the following dates:a. Twice a year on April 15 and September 15b. Four installments on April 15, June 15, September 15, and January 15 of the
Michele is single with no dependents and earns $23,000 this year. Michele claims sixteen allowances on her Form W-4. Which of the following is correct concerning her Form W-4?a. Michele may not under
Steve Drake sells a rental house on January 1, 2019, and receives $100,000 cash and a note for $50,000 at 7 percent interest. The purchaser also assumes the mortgage on the property of $25,000.
Nadia Shalom has the following transactions during the year:Sale of office equipment on March 15 that cost $20,000 when purchased on July 1, 2017. Nadia has claimed $3,100 in depreciation and sells
During 2019, Pepe Guardio purchases the following property for use in his calendar year-end manufacturing business:Item Date Acquired Cost Manufacturing equipment (7 year) June 2 $ 40,000 Office
During 2019, William purchases the following capital assets for use in his catering business:New passenger automobile (September 30) $54,000 Baking equipment (June 30) 7,000 Assume that William
Mike purchases a new heavy-duty truck (5-year class recovery property) for his delivery service on March 30, 2019. No other assets were purchased during the year. The truck is not considered a
Using the information from Question 21, what is Oscar’s basis on his new building?a. $130,000b. $132,000c. $140,000d. $142,000
What is Sarajane’s basis in the equipment received in the exchange described in Question 19, assuming her basis in the equipment given up was $12,000?a. $0b. $12,000c. $14,000d. $16,000e. None of
Susan and Stan Collins live in Iowa, are married and have two children ages 6 and 10.In 2019, Susan’s income is $41,214 and Stan’s is $12,000 and both are self-employed.They also have $500 in
Go to the IRS website (www.irs.gov) and redo Problem 10 above using the most recent Form 2441, Child and Dependent Care Expenses. Print out the completed Form 2441. Do not calculate the earned income
Clarita pays $3,000 in qualified child care expenses during the year. If her adjusted gross income (all from wages) for the year is $19,600 and she takes the standard deduction, calculate Clarita’s
Clarita is a single taxpayer with two dependent children, ages 10 and
Beth earned $25,500 in wages during the year and paid $6,700 for the care of her children.$_____________
Calculate the amount of the child and dependent care credit allowed before any tax liability limitations or other credits for 2019 in each of the following cases, assuming the taxpayers had no income

Showing 100 - 200 of 1418