12) Interest on a home equity loan

Select one:

a. Is never deductible

b. Maybe deductible, but are subject to interest on a maximum $250,000 principal loan amount

c. May be deductible if the proceeds of the loan are used to buy, build or substantially improve

d. None of these

13) A tax preparer may be subject to a $540 preparer penalty under IRC 6695(g)

Select one:

a. For failure to comply with due diligence requirements limited to a maximum of $540

b. For each failure to comply with the due diligence requirements

c. For failure to file Form 8879

d. For including a Schedule A when filing a return using the standard deduction

e. None of these

14) Monroe is a mechanic and his Form W-2, box 1, shows $21,000 from his job at Wild Autos. He also works as a waiter on the weekends. His Form W-2, box 1, from the restaurant shows wages of $8,000 in box 1. He also received $18 in tips, which were not reported to his employer. What amount will Monroe report as wages on Form 1040, line 1?

Select one:

a. $21,000

b. $29,000

c. $8,018

d. $29,018

15) Ned operates a business as a sole proprietor. In the course of his business, he occasionally hires contract labor to help with odd jobs around his warehouse.

Select one:

a. He must issue a Form 1099-MISC to every individual to whom he paid $600 or more

b. He must issue a Form 1099-MISC to every individual to whom he paid $60 or more

c. He is not required to issue any information returns since the individuals are independent contractors and not employees

d. He must issue a Form 1099-NEC to every individual to whom he paid $600 or more

16) If a security deposit is meant to be the last month's rent, when must it be included in taxable income?

Select one:

a. In the final year of the lease

b. In the year after the lease has ended

c. In the year it was received

d. It is not included in taxable income