| Question 1. 1. (TCO 4) Which of the following statements is true? (Points : 2) |
There is a nonwritten, impermanent relationship between a client and the independent contractor. Payroll taxes should be withheld from the compensation of independent contractors. The classification of whether or not an individual is an independent contractor or employee determines the payroll tax liability of a company. The relationship between a client and the independent contractor is permanent. |
| Question 2. 2. (TCO 4) Debbie is an attorney who has practiced law for over 10 years. During this period, she has served many clients, but for the past several years, she has spent most of her time with only one client: Randall Corporation. In fact, in 2015, she did not receive fees from any client other than Randall, she moved her office into the Randall Corporation headquarters building, and she abides by the Randall Corporation full-time work schedule. Also, she no longer seeks business from other clients. (Points : 2) |
Debbie is now an employee of Randall. Debbie is still an independent contractor of Randall. Debbie is now both employee and independent contractor of Randall. None of the above |
| Question 3. 3. (TCO 4) Paulette Parsons, a U.S. citizen using the calendar year as her tax year and making Italy her tax home, became a bona fide resident of Italy on November 3, 2013. Her salary in 2015 is $151,000. How much of her salary is subject to U.S. tax? (Points : 2) |
$46,800 $47,200 $50,200 $44,200 |
| Question 4. 4. (TCO 4) Samuel Simpson is 46 years old and elects group-term insurance of $120,000. How much would Simpson have to include in his gross income? (Points : 2) |
$250 $300 $88 $126 |
| Question 5. 5. (TCO 4) Which of the following is not true? (Points : 2) |
The tax laws confer a general set of advantages on an array of retirement savings plans. A nonqualified distribution prior to age 59 is not fully taxable and is subject to a 10% nondeductible penalty. A negative feature of ISOs is that employers never receive a tax deduction for the options bargain element. The 10% penalty applies only to the portion of a withdrawal included in the participants income. |
| Question 6. 6. (TCO 4) Braxton, a single taxpayer, has taxable income of $100,000. Included in this amount is $5,000 of qualified dividends. Braxtons marginal tax rate is 28%. At what rate would his dividend income be taxed? (Points : 2) |
35% 28% 15% 18% |
| Question 7. 7. (TCO 5) In July 2014, Mr. Madden bought a $49,080 U.S. Treasury bill for $41,500; the bill matured 26 weeks after date of issue. She reported no 2014 income from this investment, even though most of the interest on the bill accrued in 2014. When Mr. Madden redeemed the bill in January, 2015 for $49,080, how much would he have to recognize as interest income? (Points : 2) |
$8,030 $3,080 $5,870 $7,580 |
| Question 8. 8. (TCO 5) In 1920, a transferred realty by a gift to create an irrevocable inter vivos trust. The property cost $40,000 and was worth $55,000 on the date of the gift. The income tax basis to the trust for gain or loss is (Points : 2) |
$15,000. $25,000. $55,000. $35,000. |
| Question 9. 9. (TCO 5) Which of the following statements is not true? (Points : 2) |
The executor of a decedents estate must file Form 706. When a beneficiary inherits property from a decedent, the inheritance is not excluded from the beneficiarys gross income. Millions of individuals work conscientiously to provide financial comfort for their families. When a married individual dies, any unused amount of the decedents exclusion becomes available for use by the surviving spouse. |
Question 10.10. (TCO 5) Jasper Corporation, a closely held corporation, generated $200,000 of income from operations during the year. It also received passive losses of $200,000 and interest of $50,000 (Jasper Corporation was fully at risk for the amount of loss). What is the corporations taxable income? (Points : 2) |
$50,000 $30,000 $120,000 $170,000 |
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