1. Which of the following statements regarding realized income is CORRECT? A) Realized income will become recognized income. B) Realized income results in tax liability; recognized income does not.

C) Income is usually recognized before realized. D) All of the above are true.

2. Which of the following is MOST ACCURATE regarding tax authority? A) Tax treaties are more authoritative than the Internal Revenue Code. B) An IRS Publication is a primary authority.

C) A Revenue Procedure is more detailed (granular) than a Revenue Ruling.

D) An IRC Regulation does not carry the force of law.

3. Which of the following is MOST ACCURATE regarding IRS audits? A) The IRS audits all taxpayers at some point in their lives, or the lives of their businesses.

B) IRS auditors have less individual control and flexibility over the audit outcome after the issuance of a 30-day letter.

C) The key advantage of the Tax Court is that only attorneys may participate in the proceedings.

D) Taxpayers are never randomly selected for audit.

4. Sally received $60,000 of compensation from her employer, as well as $500 of interest from corporate bonds. What is the amount of Sally's gross income from these items? A) $0. B) $500. C) $60,000. D) $60,500.

5. Which of the following statements is NOT correct regarding tax deductions and credits? A) Credits should be taken and documented with extreme care.

B) Deductions are construed in favor of the IRS. The taxpayer bears the burden of proving that they apply. C) The Lifetime Learning credit is nonrefundable.

D) A taxpayer can never benefit from a nonrefundable credit.