Q1. The current income tax system was:

a. Designed solely to raise money to run the government

b. Authorized by the founding fathers when the government was formed

c. Not designed with social objectives in mind

d. Authorized by the Sixteenth Amendment to the Constitution in 1913

e. None of the above

Q2. Partnership income is reported on:

a. Form 1040

b. Form 1120

c. Form 1040X

d. Form 1065

Q3. Which of the following is a deduction for adjusted gross income in 2012?

a. Alimony payments

b. Medical expenses

c. Personal casualty losses

d. Charitable contributions

e. None of the above

Q4. All of the following are itemized deductions in 2012 except:

a. Charitable contributions

b. Casualty losses

c. Moving expenses

d. Medical expenses

e. All of the above are itemized deductions

Q5. Ramon, a single taxpayer, has adjusted gross income for 2012 of $ 98,000 and his itemized deductions total $ 19,000. What taxable income will Ramon show in 2012?

a. $ 73,550

b. $ 75,200

c. $ 92,550

d. $ 89,050

e. $ 70,050

Q6. Margaret and her sister support their mother and together provide 85 percent of their mothers support. If Margaret provides 40% of her mothers support:

a. Her sister is the only one who can claim their mother as a dependent

b. Neither Margaret nor her sister may claim their mother as a dependent

c. Both Margaret and her sister may claim their mother as a dependent

d. Margaret and her sister may split the dependency exemption

e. Margaret may claim her mother as a dependent if her sister agrees in a multiple support agreement

Q7. Lyn, age 65, and Robert, age 66, are married and support Lyns father (no taxable income) and Roberts mother, who has $ 2,200 of gross income. If they file a joint return for 2012, how many exemptions may Lyn and Robert claim?

a. 2

b. 3

c. 4

d. 5

e. 6

Q8. Arthur is 65 years old. He supports his father, who is 90 years old, blind, and has no income. For 2012, how many exemptions should Arthur claim on his tax return?

a. 1

b. 2

c. 3

d. 4

e. 5

Q9. Jayne purchased General Motors stock 6 years ago for $20,000. In 2012, she sells the stock for $35,000. What is Jaynes gain or loss?

a. $ 15,000 long-term

b. $ 15,000 short-term

c. $ 15,000 ordinary

d. $ 15,000 extraordinary

e. No gain or loss is recognized on this transaction

Q10. Shannon has a long-term capital loss of $7,000 on the sale of bonds in 2012. His taxable income without this transaction is $48,000. What is his taxable income considering this capital loss?

a. $ 55,000

b. $ 48,000

c. $ 45,000

d. $ 41,000

e. Some other amount