A dependent's only income for 2010 is $5,650 of taxable wages and $640 of taxable interest on a savings account. The dependent's 2010 taxable income is: a. $0. b. $940. c. $590. d. $340. e. None of the above On January 1, 2010, Rob pays $92,550 for corporate bonds that have a $100,000 face value. The bonds were originally issued 10 years earlier for $94,660. Prior to January 1, 2010, the previous owner had included $3,100 of original issue discount (OID) in gross income. On January 1, 2010, the amortized carrying value (ACV) of the bonds is: a. $95,650. b. $92,550. c. $96,900. d. $93,800. e. $97,760. On January 1, 2010, Rob pays $92,550 for corporate bonds that have a $100,000 face value. The bonds were originally issued 10 years earlier for $94,660. Prior to January 1, 2010, the previous owner had included $3,100 of original issue discount (OID) in gross income. The amount of Rob's market discount on the bonds is: a. $2,110. b. $7,450. c. $5,340 d. $5,210. e. $4,350. An unmarried taxpayer itemized deductions in 2009. The taxpayer's itemized deductions were $6,250; the standard deduction amount was $5,700. Included in the taxpayer's itemized deductions were $3,700 of state income tax withheld. In 2010, the taxpayer receives an $800 refund check from the state government. What amount must the taxpayer include in gross income in 2010? a. $0. b. $550. c. $750. d. $800. e. None of the above On August 1 of the current year, an unmarried taxpayer retires and begins receiving monthly pension checks in the amount of $2,200. During her working years, the taxpayer contributed $5,720 to her employer's pension plan with after-tax dollars. Using the taxpayer's age at the time the payments begin, the taxpayer's number of expected monthly payments is 260. Of the $11,000 in pension benefits the taxpayer received during the current year, what amount must she include in gross income? a. $0. b. $5,280. c. $10,890. d. $3,080. e. $11,000. Unemployment compensation is included in the recipient's gross income. a. True b. False A taxpayer who received a $500 literary prize award for the best nonfiction book published in the current year and used the funds for a 3-day vacation includes the $500 in gross income. a. True b. False For purposes of the moving expense deduction, self-employed taxpayers can take the deduction if: a. they are employed full-time at the new job location for at least 39 of the first 52 weeks after the move. b. they are employed full-time at the new job location for at least 78 of the first 104 weeks after the move. c. the move is related to the start of a business in a new area. d. Both a. and b. e. All of the above. Which of the following statements does not apply to the deduction for student loan interest? a. The student loan interest deduction is a deduction for AGI. b. The deduction is available only for the first 60 months of interest payments. c. Acceptable educational expenses include tuition, books, supplies, and room and board. d. An interest deduction phase-out may apply. e. None of the above. Payments by taxpayers in February 2011 to their IRAs existing at the end of 2010, are assumed to have been made for the 2010 tax year. a. True b. False Which of the following types of unreimbursed employee business expenses is not reported on Form 2106? a. Parking fees, tolls, and local transportation b. Meals and entertainment expenses c. Commuting expenses to and from employment d. Travel while away from home overnight on business e. All of the above are reported on Form 2106 During the past three years, a taxpayer used the standard mileage method for deducting vehicle expenses. When the vehicle is sold, what rate(s) per mile, if any, does the taxpayer use to reduce the vehicle's basis? a. Recovery rate in effect at time of purchase b. Recovery rate applicable to each year of business use c. Standard mileage allowance applicable to each year of business use d. The basis is not reduced e. None of the above Which of the following is not a condition that must be met in order for an employee to take a deduction for an office in the home? a. The employee must use a specific portion of the home exclusively for work. b. The employee must use a specific portion of the home on a regular basis for work. c. The employee must maintain an office area as either the principal place of work or the place where the employee regularly meets with clients. d. The employee must work at home for the convenience of the employer. e. All of the above conditions must be met. Which of the following is not correct regarding an accountable reimbursement plan? a. In an accountable plan, employees must substantiate their expenses to the employer. b. In an accountable plan, employees must be required to return any reimbursement in excess of substantiated expenses. c. In an accountable plan, employees deduct reimbursed expenses on their tax returns. d. Employees are not taxed on reimbursements they receive from an accountable plan. e. All of the above statements are true regarding an accountable plan. A statutory employee's business expenses are subject to the 2% AGI rule. a. True b. False Under a nonaccountable reimbursement plan, the employee deducts all reimbursed expenses as a miscellaneous itemized deduction subject to the 2% AGI rule (but only 50% of meals and entertainment). a. True b. False If a 50-year-old employee contributes $11,500 to his employer's 401(k) plan during 2010, how much can he contribute to his employer's Roth 401(k)? a. $5,000. b. $16,500. c. $22,000. d. $10,500. e. $0. A taxpayer buys tickets to an event that he does not attend with his client. Which of the following statements is true? a. The taxpayer can deduct 50% of the costs of the tickets as entertainment expense. b. The taxpayer can deduct up to $25 of the costs of the tickets as a gift. c. The taxpayer can deduct 100% of the cost of the tickets as a gift. d. The taxpayer can deduct up to 50% of the cost of the tickets as a gift. e. Either a. or b. When an employee is reimbursed by his employer based on a per diem amount that is in line with the federal per diem rate and the employee's actual expenses are less than the reimbursement, the employee is not taxed on the excess. a. True b. False