Question
9. Ernie Brooks lived and worked exclusively in California until he retired on December 31, 2020. He moved to Nevada on January 1, 2021. His
9. Ernie Brooks lived and worked exclusively in California until he retired on December 31, 2020. He moved to Nevada on January 1, 2021. His former California employer pays its employees on the 5th of every month. On January 10, 2021, Ernie received in the mail his last paycheck of $4,000 from his former California employer. What amount of the compensation is taxable by California?
A. $0
B. $2,000
C. $3,000
D. $4,000
10. A divorce decree showed Ron Fowler was to provide $2,000 a month of "family support" to his ex-spouse. No amount of the family support is designated as child support. What amount of the payment is considered alimony?
A. $0
B. $1,000
C. $1,500
D. $2,000
21. Greg Murphy is a California resident. He is 35 years old and a single taxpayer. In 2020, he has salary of $36,000,
U.S. Treasury interest income of $700, and dividend income of $600. Also, Greg uses the standard deduction for both Federal and California tax purposes. What is Gregs California standard deduction?
A. $0
B. $1,100
C. $4,601
D. $9,202
Lesson 5
22. The California Franchise Tax Board has the authority to identify and penalize unregistered tax preparers. The amount of the penalty for the first failure to register is what amount?
A. $2,500
B. $5,000
C. $7,500
D. $10,000
23. Which of the following exceptions allow a tax preparer to disclose confidential information concerning a client without their written consent?
A. There is no exception, written consent is always required
B. Based on the tax preparers individual judgment of the situation
C. In response to an official inquiry from a Federal or State government regulatory agency
D. To gain the confidence of a new prospective client and highlight the practitioners abilities as a preparer
24. The general time limit for Franchise Tax Board (FTB) to assess additional California state income and franchise taxes is provided by Section 19057 of the Revenue and Taxation Code. Which of the following statements is true regarding the Statute of Limitations on Assessments?
A. The law generally requires the FTB to mail a proposed deficiency assessment to the taxpayer within four years after the filing date of the taxpayer's return
B. Assessments are never allowed after the general time limit expires
C. When determining the time limit, returns filed before the original due date of a personal income tax return are considered as filed on that specific date
D. If the taxpayer did not file an income tax return, the FTB has two years from the original due date to assess the tax
25. The Franchise Tax Board (FTB) accepts handwritten, general, or durable Power of Attorney (POA) declarations. However, the declarations must contain all of the following required information except:
A. Taxpayer or business entity name
B. Taxpayers mailing address
C. Taxpayers Social Security number or business entity identification number
D. Taxpayers email address
1. Generally, under the Tax Cuts and Jobs Act, which of the following major items cannot be subtracted from gross income? A. Contributions to a traditional individual retirement arrangement (IRA) B. Moving expenses C. Qualified educator expenses D. Student loan interest
2. For 2021, all of the following statements are true regarding the higher additional standard deduction under the Tax Cuts and Jobs Act except: A. The additional standard deduction for married taxpayers 65 or over or blind is $1,350 B. The additional standard deduction for a single taxpayer or head of household who is 65 or over or blind is $1,700 C. The taxpayer can claim the higher standard deduction for a dependent D. A person is considered to reach age 65 on the day before his or her 65th birthday
3. Kevin and Jennifer are married and filing a joint tax return. They have a combined taxable income of $80,000. They have four children, whom they claim as dependents. When they file their 2021 income tax return, Kevin and Jennifers taxable income will be reduced by what amount for their personal exemption deduction? A. $0 B. $12,900 C. $17,200 D. $21,500
4. If the taxpayer obtains a court decree of annulment, which holds that no valid marriage ever existed, he or she is considered unmarried even if he or she filed joint returns for earlier years. The taxpayer must file amended returns (Form 1040X) claiming which of the following filing status for all tax years that are affected by the annulment and not closed by the statute of limitations for filing a tax return? A. Single B. Head of Household C. Married Filing Separately D. A or B
5. Oscar is divorced. His dependent son, Sam, lived with him all year. Property taxes of $1,000 and mortgage interest of $5,000 on the home where he and Sam live are divided equally with his ex-wife. Oscar also paid all the utilities of $150 per month. What amount of the yearly household expenses can Oscar use to determine if he qualifies for the head of household filing status? A. $2,500 B. $3,500 C. $4,800 D. $6,000
6. Which of the following is not an advantage of filing a joint income tax return? A. Joint filers can claim double the amount of the personal exemption deduction B. The IRS gives joint filers one of the largest standard deductions each year, allowing them to deduct a significant amount of their income immediately C. Married couples who file together qualify for multiple tax credits such as the Earned Income Tax Credit and the Child and Dependent Care Credit D. Joint filers receive higher income thresholds for certain taxes and deductions which means they can earn a larger amount of income and still qualify for certain tax breaks
7. Bill and Karen Green filed a joint return showing Karen's wages of $50,000 and Bill's self-employment income of $10,000. The IRS audited their return and found that Bill did not report $20,000 of self-employment income. The additional income resulted in a $6,000 understated tax, plus interest and penalties. After obtaining a legal separation from Bill, Karen filed Form 8857 - Request for Innocent Spouse Relief to request separation of liability relief. The IRS proved that Karen actually knew about the $20,000 of additional income at the time she signed the joint return. Bill is liable for all of the understated tax, interest, and penalties because all of it was due to his unreported income. Which of the following is true regarding Karens liability for the understated tax, interest and penalties due for the unreported income of $20,000? A. Karen is not liable for the understated tax, interest, and penalties due to the $20,000 of unreported income B. The IRS cannot collect the entire $6,000 plus interest and penalties from Karen because she is not individually liable for it C. The IRS can collect the entire $6,000 plus interest and penalties from either Karen or Bill because they are jointly and individually liable for it D. Even though Karen knew that Bill received the income, relief is available for that income because she did not know it was taxable.
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