1. Above-the-line deductions are more valuable than below-the-line deductions. (True/False)

2. For purposes of determining "above-the-line" and "below-the-line" deductions, the "line" is:

a. gross income

b. earned income

c. taxable income

d. adjusted gross income

3. Medical and dental expenses are a(n):

a. "above-the-line" deduction

b. "below-the-line" deduction

c. standard deduction

d. personal exemption

4. Your clients are seeking to minimize their tax liability. You advise them to do all of the following, except:

1. Maximize their IRA contributions
2. Make payments on outstanding student loans
3. Contribute to a Health Savings Account
4. Postpone stock sales if new capital losses are incurred

5. Individuals are subject to income tax and self-employment tax liability only. Businesses may be subject to income tax, AMT, NIIT, and the Additional Medicare Surtax liability. (True/False)

6. Interest from treasury bonds is subject to federal tax, but is exempt from all state and local income taxes. (True/False)

7. In addition to income tax and self-employment tax, Taxpayers may be subject to:

1. the Alternative Minimum Tax.
2. the Net Investment Income Tax.
3. the Additional Medicare Surtax.
4. all of the above.

8. All of the following are examples of above-the-line deductions that are subtracted from gross income, EXCEPT:

1. contributions to health savings accounts
2. charitable contributions

c. qualified tuition and fees

d. IRA contributions

9. Deductions are better than credits for most taxpayers. (True/False)

10. Filing status has little or no effect on the taxpayers tax liability. (True/False)