QUESTION 1

Which of the following does not illustrate one of the four basic tax planning principles?

		Buying investments that pay qualified dividends rather than nonqualified dividends.
		Taking advantage of employer-provided health insurance.
		Frequent buying and selling of investments in order to take advantage of the short-term capital gains rates.
		Investing in a Roth IRA.

1 points

QUESTION 2

Which of the following is not a form on which individual taxpayers can report their income, deductions, exemptions, and other information required to calculate their federal tax liability?

		Form 1040.
		Form 1040A.
		Form 1040EZ.
		Form 1040IND.

1 points

QUESTION 3

Leona is 68 years old and single. What is the greatest amount of adjusted gross income that Leona can have for 2015 without being required to file a tax return?

		$6,300.
		$9,700.
		$10,300.
		$11,850.

1 points

QUESTION 4

Melissa is 58 years old and single. She is also legally blind. What is the greatest amount of adjusted gross income that Melissa can have for 2015 without being required to file a tax return?

		$6,300.
		$9,700.
		$10,300.
		$11,850.

1 points

QUESTION 5

Lucy and Lou are married and normally file a joint return. For 2015, under which of the following circumstances, if any, are they not required to file a tax return?

		If Lucy is 64 and Lou is 66 and their gross income is $26,000.
		If Lucy and Lou are both 35, have one dependent, and their gross income is $23,000.
		If Lucy is 64 and Lou is 66, Lou is blind, and their gross income is $24,000.
		In all cases (a, b, and c), they must file a tax return.

1 points

QUESTION 6

In year 1 Austin earns $700 from delivering papers for a newspaper company. He is treated as self-employed. In year 2 the newspaper company hires him as an employee and pays him $700 as W-2 income with no federal or state income tax withheld. Is Austin required to file an income tax return in either year?

		Year 1: Yes; Year 2: Yes
		Year 1: No; Year 2: Yes
		Year 1: Yes; Year 2: No
		Year 1: No; Year 2: No

1 points

QUESTION 7

Which of the following credits is not a credit that reduces the tax calculated on taxable income?

		Dependency credit.
		Child tax credit.
		Earned income credit.
		Credit for estimated tax payments.

1 points

QUESTION 8

Jackie and Julie have been in a long-term relationship and get married on January 1, 2016. They intend to file a joint return for all years in which they are eligible to do so. Neither Jackie nor Julie has ever been married before and neither have any children or other dependents. What filing status can Julie use on her 2015 tax return?

		Married Filing Jointly.
		Surviving Spouse.
		Head of Household.
		Single.

1 points

QUESTION 9

Jackie and Julie have been in a long-term relationship and get married on January 1, 2016. They intend to file a joint return for all years in which they are eligible to do so. Neither Jackie nor Julie has ever been married before and neither have any children or other dependents. Jackie, age 22, is a full-time student in college. Jackie has lived with her mother, Janet, who is a widow, all year until her marriage. Janet provided more than half of Jackie's support. What filing status can Janet use on her 2015 tax return?

		Married Filing Jointly.
		Surviving Spouse.
		Head of Household.
		Single.

1 points

QUESTION 10

Jackie and Julie have been in a long-term relationship and get married on December 29, 2015. They intend to file a joint return for all years in which they are eligible to do so. Neither Jackie nor Julie has ever been married before and neither have any children or other dependents. What filing status can Julie use on her 2015 tax return?

		Married Filing Jointly.
		Surviving Spouse.
		Head of Household.
		Single.

1 points

QUESTION 11

Jackie and Julie have been in a long-term relationship and get married on December 29, 2015. They intend to file a joint return for all years in which they are eligible to do so. Neither Jackie nor Julie has ever been married before and neither have any children or other dependents. Jackie, age 22, is a full-time student in college. Jackie has lived with her mother, Janet, who is a widow, all year until her marriage. What filing status can Janet use on her 2015 tax return?

		Married Filing Jointly.
		Surviving Spouse.
		Head of Household.
		Single.

1 points

QUESTION 12

Which of the following is not a requirement that must be satisfied in order for a legally married taxpayer to use the head of household filing status?

		The taxpayer must file a separate tax return from the spouse.
		The taxpayer must furnish over one-half of the cost of maintaining the household.
		The spouse must not be a member of the household during the last six months of the tax year.
		The taxpayer must be legally separated from the spouse.

1 points

QUESTION 13

Which of the following is a requirement that must be satisfied in order for a legally married taxpayer to use the head of household filing status? 1 -- The taxpayer must file a separate tax return from the spouse. 2 -- The taxpayer must furnish over one-half of the cost of maintaining the household. 3 -- The spouse must not be a member of the household during the last six months of the tax year. 4 -- The taxpayer must be legally separated from the spouse.

		2 only.
		4 only.
		3 and 4.
		1, 2 and 3.

1 points

QUESTION 14

Which of the following is NOT a requirement that must be satisfied in order for a legally married taxpayer to use the head of household filing status? 1 -- The taxpayer must file a separate tax return from the spouse. 2 -- The taxpayer must furnish over one-half of the cost of maintaining the household. 3 -- The spouse must not be a member of the household during the last six months of the tax year. 4 -- The taxpayer must be legally separated from the spouse.

		2 only.
		4 only.
		3 and 4.
		1, 2, and 3.

1 points

QUESTION 15

Charles died in 2014. His wife, Charlotte, filed a joint return with Charles for 2014. Following Charles's death, Charlotte maintained a home for herself and her two minor children. Charlotte remarried in 2015, but does not want to file a joint return with her new husband. What filing status should Charlotte use in 2015?

		Surviving Spouse.
		Head of Household.
		Married Filing Separately.
		Married Filing Jointly.

1 points

QUESTION 16

Nancy and Oliver had been married for 25 years when Oliver died suddenly in February of 2015. Although Nancy was deeply depressed about Oliver's death, she knew that Oliver would want her to move on with her life, and she began dating again. It wasn't long before Nancy was swept off of her feet by Paul. After a romantic weekend in the Catskills, Paul and Nancy got married in November of 2015. What filing status will be used for Nancy and Oliver for 2015?

		Nancy and Oliver must both use the single filing status.
		Nancy will use the married filing jointly status, and Oliver will use the married filing separately status.
		Nancy and Oliver will both use the married filing jointly status.
		Nancy will use the surviving spouse filing status, and Oliver will use the married filing jointly status.

1 points

QUESTION 17

Ursula's divorce from her husband, Boris, became final on December 30, 2015. Ursula's children lived with her for the first four months of 2015, but moved in with their father after Ursula was declared legally blind. Ursula did not contribute anything to the cost of maintaining the household when the children were living with her husband. Ursula is 40 years old. What filing status can Ursula use during 2015 and what is her standard deduction?

		Married Filing Jointly; $13,600.
		Head of Household; $10,650.
		Single; $7,850.
		Married Filing Separately; $7,400.

1 points

QUESTION 18

Ralph is not married and does not have any children. However, Ralph is a very good son and his widowed mother lives in an apartment in his home. Ralph pays for all the household living costs . Which of the following filing statuses should Ralph use and why?

		Single, because Ralph is not married.
		Single, because Ralph does not have any qualifying children.
		Head of Household, because Ralph's mother can be claimed as a dependent.
		Head of Household, because Ralph's mother is a qualifying child.

1 points

QUESTION 19

Virgil is single and does not have any children. However, Virgil is a very good son and provides more than half of the cost of maintaining a very nice, but separate, apartment and the necessary living expenses for his mother. Which of the following filing statuses should Virgil use and why?

		Single, because Virgil is not married and has no one living in his household.
		Single, because Virgil does not have any qualifying children.
		Head of Household, because Virgil's mother can be claimed as a dependent.
		Head of Household, because Virgil's mother is a qualifying child.

1 points

QUESTION 20

Gee and Bea Lee have a very diverse family. Which of the following children does not meet the relationship test for the purpose of Gee and Bea claiming a dependency exemption for that child?

		Dan, Bea's 8-year-old son from a prior marriage.
		Fran, Gee's 10-year-old cousin.
		Stan, a 5-year-old foster child placed with Gee and Bea by a state agency.
		Xan, Bea's 12-year-old niece.

1 points

QUESTION 21

Which of the following tests must be satisfied by a qualifying child? 1 -- Relationship Test 2 -- Gross Income Test 3 -- Abode Test 4 -- Citizenship Test

		1 and 2.
		3 and 4.
		1, 2, and 3.
		1, 3, and 4.

1 points

QUESTION 22

Abby and Brock are divorced. They have one daughter, Caroline, who spends exactly six months of the year living with her mother and exactly six months of the year living with her father. Abby has an AGI of $200,000 and Brock has an AGI of $150,000. Caroline is a qualifying child of both Abby and Brock. Who can claim Caroline as a dependent?

		Abby.
		Brock.
		Both Abby and Brock.
		Either Abby or Brock; they can determine between them who claims Caroline
		Neither Abby nor Brock.

1 points

QUESTION 23

Under what circumstances will the child of divorced parents be treated as the qualifying child of the noncustodial parent? 1 -- The parents are divorced. 2 -- The child receives over one-half of his support for the year from his parents. 3 -- The child is in the custody of the parents for more than half the year. 4 -- The custodial parent signs a statement that he will not claim the child as a dependent for the year and the noncustodial parent attaches the statement to his return.

		1 only.
		1, 2, and 3.
		2, 3, and 4.
		1, 2, 3, and 4.

1 points

QUESTION 24

Eloise is an unmarried, elderly woman who lives alone in a small apartment. Eloise is only able to provide 6% of her own support. The remainder of her support is provided by the following people: -- 10% of her support is provided by her oldest son, Frank. -- 22% of her support is provided by her daughter, Gertrude. -- 30% of her support is provided by her son, Henry. -- 32% of her support is provided by her friend, Irene. Which of these individuals is eligible to claim Mary as a dependent?

		Irene can claim Eloise as a dependent because she provides more support than anyone else.
		Frank can claim Eloise as a dependent because he is the oldest son.
		Henry can claim Eloise as a dependent, but only if Gertrude signs an appropriate statement.
		None of these individuals may claim Eloise as a dependent.

1 points

QUESTION 25

Patty and John are divorced. They have one daughter, Reese, who spends exactly six months of the year living with her mother and exactly six months of the year living with her father. Patty has an AGI of $200,000 and John has an AGI of $150,000. Reese is a qualifying child of both Patty and John. Who can claim Reese as a dependent?

		Patty.
		John.
		Both Patty and John.
		Neither Patty nor John.

1 points

QUESTION 26

Tony (age 70) and Kate (age 68) are married and file a joint return for 2015. Although Tony's eyesight is above average for a man his age, Kate is legally blind. What is Tony and Kate's standard deduction for 2015?

		$12,600.
		$13,850.
		$15,100.
		$16,350.
		17,600

1 points

QUESTION 27

Alexandra is 17 years old and is claimed as a dependent by her parents. Alexandra earned $3,400 in wages and $200 in interest income during 2015. What is Alexandra's basic standard deduction for 2015?

		$1,000.
		$3,400.
		$3,750.
		$6,300.

1 points

QUESTION 28

Which of the following taxpayers can use the standard deduction?

		Zeke, who files a separate return from his wife Yasmine. Yasmine itemizes deductions on her return.
		Xavier, who is a nonresident alien.
		William, who files a tax return for less than 12 months because he changed his annual accounting period.
		Violet, who owns a personal residence.

1 points

QUESTION 29

Anne is single, blind, and 72 years old. What is her total standard deduction?

		$6,300.
		$7,850.
		$8,500.
		$9,400.

1 points

QUESTION 30

Larry (age 64) and Kay (age 63) are raising their granddaughter, Sophia, who qualifies as their dependent. Sophia is blind. Larry and Kay file a joint return in the current year. What is their total standard deduction?

		$12,600.
		$13,850.
		$15,100.
		$16,350.

1 points

QUESTION 31

Linus (age 65) and Karen (age 63) are married and raising their granddaughter, Marie, who qualifies as their dependent. Marie is blind. Linus and Karen file a joint return in 2015. What is their standard deduction?

		$12,600.
		$13,850.
		$15,100.
		$16,350.

1 points

QUESTION 32

Abner and Bette have been married for 20 years and always file a joint return, but never itemize their deductions. Abner and Bette have gross income of $80,000 and deductions for adjusted gross income in the amount of $5,000, but they do not have any children. Neither Abner nor Bette are over the age of 65 and neither is blind. What is Abner and Bette's taxable income in 2015?

		$54,400.
		$58,400.
		$62,400.
		$75,000.

1 points

QUESTION 33

Tanya, age 28, and Eddie, age 30, are married. They file a joint return and their taxable income for 2015 is $92,000. Compute the tax on their taxable income using the tax rate schedules.

		$12,962.50.
		$14,587.50.
		$16,082.50.
		$23,000.00.

1 points

QUESTION 34

Hank and Irene are married and have two dependents. Hank and Irene are both 35 years old and have gross income of $115,000. Their deductions for AGI equal $10,000 and they always use the standard deduction. Using the married filing jointly tax rate schedule, compute their tax on taxable income for 2015.

		$10,687.50.
		$15,600.00.
		$19,100.00.
		$19,650.00.

1 points

QUESTION 35

Joely, age 35, is unmarried and has two dependents for whom she maintains a household for the entire year. Joely has an adjusted gross income of $65,000 and uses the standard deduction. Using the appropriate tax rate schedule, calculate Joely's tax on her taxable income for 2015.

		$5,905.
		$8,150.
		$9,600.
		$11,350.

1 points

QUESTION 36

Josie is 17 years old and is claimed as a dependent by her parents. Josie earned $4,200 in wages and $900 in interest income during 2015. What is Josie's basic standard deduction for 2015?

		$4,200.
		$4,550.
		$5,100.
		$5,350.

1 points

QUESTION 37

Meghan is 16 years old and is claimed as a dependent by her parents. Meghan earned wages of $3,000 and had interest income of $4,000 during 2015. Meghan had expenses of $950 related to producing the interest income. What is Meghan's net unearned income for 2015?

		$2,050.
		$2,150.
		$3,050.
		$4,000.

1 points

QUESTION 38

Kevin is 16 years old and is claimed as a dependent by his parents. Kevin earned wages of $3,000 and interest income of $4,000 during 2015. Kevin had expenses of $950 related to producing the interest income. How much of Kevin's taxable income will be taxed at Kevin's rate in 2015?

		$700.
		$2,100.
		$3,000.
		$7,000.

1 points

QUESTION 39

Joan is in the 35% income tax bracket and her son just started delivering newspapers on the weekend. His total earnings from the paper route are $2,100 for the taxable year. What is the amount of tax owed on the son's income?

		None.
		$110.00.
		$385.00.
		$735.00.

1 points

QUESTION 40

Five years ago, Jamal purchased 10,000 shares of stock at $10 per share in a pharmaceutical company. Today, the stock is worth $200,000 and is paying a dividend of $8,000 per year. Jamal expects that the stock will continue to appreciate at a rate of 12% per year, including the dividend. He wants to establish a college education fund for his 2 daughters, ages 19 and 14. Which of the following statements is/are true? 1 -- If Jamal gives 2,500 shares of stock to his 19-year old daughter, all dividends from the 2,500 shares will be taxed in her income tax bracket. 2 -- If Jamal gives 2,500 shares of stock to his 14-year old daughter her basis will be $20 per share. 3 -- Two years from now, if Jamal's older daughter sells her 2,500 shares of stock at $20 per share; she will have no gain or loss. 4 -- All dividend income earned by his 14-year old daughter in excess of $2,100, will be taxed at Jamal's marginal income tax rate.

		4 only.
		1 and 4.
		2 and 4.
		1, 2, and 3.

1 points

QUESTION 41

When reviewing a client's income tax return from the prior year you notice that she had adjusted gross income of $175,000 and paid federal income tax of $31,500. Assuming that the client's income for this year will closely approximate that of last year, what is the minimum amount the client needs to pay in estimated payments or withholdings to meet the safe harbor rule?

		$28,350.
		$31,500.
		$34,650.
		$37,800.