1. The Internal Revenue Code allows for up to $500,000 of gain from the sale of a principal residence to escape taxation. This is an example of

an exclusion from tax

a tax credit.

a tax deduction.

a tax-deferred exchange

2. Name three types of losses that individuals realize that are either not deductible or the deduction is limited

3. Tax planning is more important than tax compliance when trying to avoid taxes.

True

False

4. Individual taxpayers prefer capital gain income and ordinary income losses because capital gains are taxed at lower tax rates and ordinary losses are not limited to net 3,000 per year like net capital losses are.

True

False

5. Name three financial accounting vs. tax accounting items that create timing or permanent differences.

6. Which of the following is false regarding the U.S. tax system?

The income tax system is progressive tax system.

The marginal tax rate is the highest tax bracket a taxpayer reached in a given year.

Capital gains are always taxed at 15%.

The sales tax is a proportional tax.

7. Alec Rondeau was never married and never made taxable gifts until 2017. In 2017 he gifted $6,500,000 of marketable securities to his five adult nephews, outright. Each nephew received 1/5th. What are Alec's taxable gifts and gift tax liability?

8. Why would a taxpayer NOT want to use the installment method to defer a realized gain?