1. The U.S. income tax was enacted by the _____ amendment to the Constitution.

a.16th

b.18th

c.2nd

d.13^th

2. Tax law is a tool used by government to:

a.Raise revenue to run government

b.Support research and development

c.Further economic goals

d.Encourage social objectives

e.All of these choices are correct.

3. Entities required to report income to the IRS are:

a.Partnerships

b.Estates

c.Trusts

d.Corporations

e.All of these choices are correct.

4. What is reported on Schedule A of Form 1040?

a.Itemized deductions

b.Interest and dividends income

c.Sole proprietor income

d.Capital gains

5. Adjusted gross income (AGI) is:

a.Gross income minus exemptions

b.Gross income minus deductions for AGI

c.Gross income minus deductions from AGI

d.Itemized deductions plus exemptions

6. Taxable income equals:

a.Gross income less deductions less payments

b.Gross income less exemptions less payments

c.Gross income less exemptions

d.AGI less deductions (standard or itemized) less exemptions

7. John and Mary are married and are both over 65. They have interest income from banks and bonds of $22,000 and no other income. They file:

a.Form 1040

b.Form 1040EZ

c.Form 1040A

d.They are not required to file a tax return.

8. Which of the following taxpayers does not have to file a tax return for 2017?

a.A single taxpayer who is under age 65, with income of $11,000.

b.Married taxpayers (ages 45 and 50 years), filing jointly, with income of $25,000.

c.A student, age 25, with unearned income of $1,400 who is claimed as a dependent by his parents.

d.A qualifying widow (age 67) with a dependent child and income of $16,950.

e.All of these taxpayers must file a return.

9. Lois and Rick were married on Thanksgiving Day of the current tax year. For the current tax year, they may choose to file:

a.Married filing separately

b.Single

c.Married filing jointly

d."Single" or "Married filing separately"

e."Married filing separately" or "Married filing separately"

10. Joan is 72 and lives alone. Her spouse died in 2016. For the year 2017, Joan must file:

a.Qualifying widow

b.Married, filing jointly

c.Single

d.Married, filing separately

11.George, who is an only child, is 23 years old and lives at home with his married parents. He earns $25,000 a year working for the local surfboard maker. How many exemptions should his parents claim on their tax return?

a.2

b.1

c.4

d.3

12.An exemption can be claimed for a taxpayer's child:

a.But the exemption must be prorated in the year of birth or death, based on the number of months the dependent was alive in those years.

b.Who works and pays more than half of his or her own support.

c.If the child is a premature baby kept in the hospital until after the end of the year.

d.In the year of birth but not in the year of death.

e.Even though the taxpayer has not obtained a Social Security number for the child.

13.Married taxpayers filing separate returns:

a.Must each have income to allow both spouses to file separate returns.

b.Must not live in a community property state.

c.Must have lived apart for at least part of the year.

d.Must both itemize deductions if one spouse decides to do so.

e.Cannot claim head of household filing status.

14. Olive and Marvin file a joint income tax return for 2017. They have adjusted gross income of $135,000 and itemized deductions of $37,000. What is the amount of deductions that Olive and Marvin may claim on their 2017 income tax return?

a.$6,350

b.$20,800

c.$24,300

d.$12,700

e.$37,000

15. Mary is 48 years old and in good health. She has two dependent children. Her husband died suddenly in 2016. In 2017, she has gross income of $34,000, no deductions for adjusted gross income, and does not itemize deductions. Mary's taxable income for 2017 is:

a.$21,850

b.$21,300

c.$12,500

d.$34,000

e.$9,150

16. Raymond owns two cars (for personal use), an investment portfolio with stocks and bonds, a house (which he lives in), and an online retail business that holds land, a building, display cabinets, and inventory. Which of these assets is not a capital asset?

a.Cars

b.Inventory

c.House

d.Stocks

e.Big screen television in his house

17. Which of the following statements is not correct with respect to the taxation of capital gains?

a.In any year, only $3,000 of net capital losses can be deducted against ordinary income.

b.Short-term capital gains have preferential tax rates.

c.Long-term capital gains are taxed at a lower rate than ordinary income.

d.Long-term gains have preferential tax rates of 0 percent, 15 percent, and 20 percent for most taxpayers.

e.All of these choices are correct statements.

18. Eloise bought stock in ABC Corporation many years ago for $5,000. She sold it in the current tax year for $7,500 and paid the broker $150. What is Eloise's gain or loss?

a.$2,500 short-term gain

b.$2,650 short-term loss

c.$2,500 long-term gain

d.$2,350 long-term gain

19. The Affordable Care Act (ACA) imposes a 3.8% Medicare tax on:

a.Interest and dividends

b.Pensions and IRAs

c.Wages

d.Self-employment income

20. Which of the following types of income is subject to the Affordable Care Act (ACA) 3.8 percent Medicare tax on net investment income?

a.Long-term capital gains.

b.Wages earned by an investment manager.

c.Gain on the sale of a principal residence which is otherwise excluded from tax.

d.Retirement plan distributions.

21. Joyce is married and files a joint return with her husband. She works for a large corporation and earns $300,000 for 2017. What is Joyce's 0.9% Medicare tax for 2017?

a.$1,900

b.$450

c.$900

d.$3,800

22. The IRS website, www.irs.gov provides:

a.IRS E-mail links

b.YouTube videos

c.A search function

d.Forms and publications

e.All of these choices are correct.

23. Tax information may be found at the following:

a.iTunes podcast

b.www.irs.gov

c.Twitter handle @irsnews

d.All of these choices are correct.

24.For the taxpayer, e-filing:

a.Saves paper and postage

b.Reduces errors

c.Offers faster refunds

d.All of these choices are correct.

25. Individual taxpayers may e-file using:

a.Mobile phone app

b.Professional preparer

c.Home computer

d.Libraries

e.Any of these choices are correct.