Question51

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Which of the following sources of income are taxable items on the federal tax return but arenottaxed by California and therefore must besubtractedfrom federal adjusted gross income:

Select one:

a.Social Security Benefits

b.Unemployment Compensation

c.California Lottery winnings

d.All of the above

Question52

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Which of the following interest payments arenotexcluded from California income tax:

Select one:

a.U.S. Savings Bonds

b.Corporate Bonds

c.U.S. Treasury Bonds

d.None of the above.

Question53

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When determining whether or not a non-resident's business income may be taxable as California source income, a[n] ________ may need to be calculated.

Select one:

a.equation

b.apportionment

c.solution

d.formula

Question54

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Lottery winnings are subject to federal income tax. California will withhold federal taxes from the lottery winnings to pay potential federal tax liabilities.If the Lottery Commission has your Social Security number they will withhold ______of your winnings and send the money to the Internal Revenue Service.

Select one:

a.20 percent

b.24 percent

c.35 percent

d.10 percent

Question55

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Which of the following statements isfalse?

Select one:

a.Generally, California and federal law are the same related to the tax treatment of Medical Savings Accounts MSAs.

b.California does not conform to federal legislation for HSAs, a contribution to an HSA is not deductible.

c.A rollover from a MSA to a HSA is a non-taxable event and is not included in California taxable income.

d.All of the above are true.

Question56

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If an unacceptable method of depreciation was used on business property that moves into California, then the ____ method must be used to re-figure the California basis in the property:

Select one:

a.MACRS

b.Straight Line

c.Modified Straight Line

d.ARS

Question57

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Non-residents of California are taxed only on income (or allowed to deduct losses) from California sources, including:

Select one:

a.A non-resident's income (or loss) from a business located in California (subject to limitation).

b.Interest received by a non-resident from a bank located in California.

c.Keogh (HRIO) distributions received from a California source by a non-resident after 12/31/1995.

d.Stock options received by a non-resident from a California based corporation.

Question58

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On April 1st of the tax year you and your spouse/RDP fulfill a lifelong dream.You sell your California home, pack all of your possessions and move to Paris, France. You obtain a French driver's license, and make new friends in Paris.Your flight to France leaves California on April 1st.Neither one of you has any intention of returning to California to live.Which of the following is an accurate statement?

Select one:

a.You will be considered a resident of California for the entire year, regardless of when you moved during the year and you will file a form 540 yax return.

b.Through March 31st you were a California resident. All income through March 31st is taxable by California. Starting April 1st, you are a non-resident of California and only income from California sources will be taxable by California. You will file a form 540NR tax return for the year that you moved.

c.You will not be considered a resident of California for the entire year in the year that you move out of the state permanently. You will not file a California tax return.

d.Residency status can not be determined for the year based on the information provided.

Question59

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California part-year residents (residents who moved into or out of the State during the year) will be:

Select one:

a.Taxed on all income and therefore required to file a form 540 tax return on compensation from employment, income from businesses and proceeds from investments (including stock sales) received during the year while both a resident and nonresident.

b.Taxed on all income and therefore required to file a form 540NR tax return on compensation from employment, income from businesses and proceeds from investments (including stock sales) received during the year while a resident and only on California source income while a nonresident.

c.Not taxed on any income if the taxpayer moved out of California and did not return during the remainder of the year.

d.None of the above is a correct statement.

Question60

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The ___________ rule is available to certain individuals leaving California under employment-related contracts. The rule might allow for an individual to be considered a non-resident for California tax purposes.

Select one:

a."Safe Harbor"

b."Safe Resident"

c."Move-Out"

d."Move-In"

Question61

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Factors to consider when determining whether or not you are a resident of the State of California may include:

Select one:

a.Where you are registered to vote

b.Where your vehicles are registered

c.Location of your principal residence

d.All of the above

Question62

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For taxable years beginning on or after January 1, 1994, an absence from California under an employment-related contract, under the Safe Harbor Rule, for a period of at least ____ consecutive days may be considered an absence for other than a temporary or transitory purpose.

Select one:

a.365

b.546

c.366

d.180

Question63

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If another person prepared your tax return, he or she is notautomatically granted access to your tax information in future dealings with the FTB.At some point, you may wish to designate someone to act on your behalf inmatters related or unrelated to a filed tax return (e.g., an audit examination). Toprotect your privacy, you must submit to the FTB a legal document called a _________authorizing another person to discuss or receive personalinformation about your income tax records.

Select one:

a.Power of Attorney (POA)

b.Beneficiary

c.Trustor

d.Certificate of Designation (COD)

Question64

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Regarding Alimony / Family Support payments, which of the following statements is true based on changes made by the federal Tax Cuts and Jobs Act?

Select one:

a.There will continue to be no differences between federal and California regarding the taxing or deduction of alimony payments.

b.Federal tax no longer allows a deduction from income for the taxpayer making the alimony payments. California does not conform with this provision.

c.Federal tax no longer counts as income alimony received by a taxpayer. California does not conform with this provision.

d.Statements B and C are true.

Question65

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Which of the following statements isfalseregarding differences between the federal and California tax returns?

Select one:

a.California does not allow a deduction for business expenses incurred at a club that discriminates.

b.Federal law taxes income received by Indians from reservation sources. California does not tax income earned by tribal members who live in Indian country affiliated with their tribe and receive earnings from the same tribal source of which they are members.

c.California unlike federal law, does not allow members of the clergy an exclusion from income for either the rental value of a home furnished as part of their compensation or for a rental allowance paid as part of their compensation.

d.The allowable NOL carryover under California law is different than the allowable NOL carryover under federal law. There is no NOL carryback under California law.

Question66

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California law definescommunity propertyas any asset acquired or income earned by a married person while living with a spouse. Separate property is defined as ______.

Select one:

a.anything acquired by a spouse before the marriage.

b.property received during the marriage by gift, devise, or bequest.

c.property received after the parties separate.

d.All of the above could be determined to be separate property.

Question67

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Which of the following financial instruments will pay interest that will not be taxed by California?

Select one:

a.A Government National Mortgage Association (Ginnie Mae) Bond.

b.A Municipal Bond issued by the City of San Diego, California, to finance the construction of a new library.

c.A Certificate of Deposit issued by the Royal Bank of Canada through its New York City office.

d.A and B above pay interest that will not be taxed by California.

e.All of the above will pay interest that will be taxed by California.

Question68

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If you received a California State Income Tax refund and you had to include the refund as taxable income on your federal return, what will you need to do on your California income tax return?

Select one:

a.You will need to subtract it as an adjustment on your California Tax return. California does not tax the state income tax refund received in the prior year.

b.You will need to add it as an adjustment on your California Tax return. California taxes the state income tax refund received in the prior year.

c.You do nothing. California will conform to whatever was required on the federal return in regards to the state tax refund.

d.A determination as to whether or not the state refund will be taxed by California cannot be made with the information given as it will also depend on the total California adjusted income of the taxpayer.

Question69

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Which of the statements below is (are) correct?

Select one:

a.Social security benefits are not taxable by California.

b.Railroad sick pay is not taxable by California.

c.CA SDI benefits received as a substitute for Unemployment Insurance benefits, is not taxable by California.

d.Both A and B are correct.

e.All of the above are correct.

Question70

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Which of the following payments will not be taxed by California?

Select one:

a.Social Security survivor's and disability benefits.

b.Tier 1 and Tier 2 Railroad Retirement Benefits.

c.Foreign social security not taxed by the federal government due to a tax treaty between the United States and another country which excludes the foreign social security from federal income.

d.Railroad benefits paid by individual private railroads.

e.Only A and B above are not taxed by California.

Question71

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Regarding theMortgage Credit Certificate Tax Credit Program (MCC) and the corresponding federal tax credit that is available to taxpayers, which of the following statement is (are) true?

Select one:

a.This MCC Tax Credit program may enable first-time homebuyers to convert a portion of their annual mortgage interest into a direct dollar for dollar tax credit on their federal individual income tax returns.

b.This MCC Tax Credit program may enable first-time homebuyers to convert a portion of their annual mortgage interest into a direct dollar for dollar tax credit on their California individual income tax returns.

c.The federal credit is a refundable credit. The complete credit will be applied in the year claimed and will increase the homebuyers refund if the credit is greater than the tax liability.

d.All of the above are true.

Question72

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Which of the following scenarios is a correct handling of the federal and state tax returns?

Select one:

a.Bill and Diane filed as Married Joint and itemized their deductions on their federal tax return. Because they filed their federal return in this way, they must itemize deductions on their California state return.

b.Jose and Sandra each used the Married Separate filing status on their separate federal and California state returns. Sandra itemized her deductions as this was most advantages for her, but Jose found that he could receive a larger deduction by taking the standard deduction on his returns and therefore took the standard deduction instead.

c.Elise and Guy took the standard deduction on their Married Joint federal return. Because the standard deduction for California is lower than it is for the federal return, they found that it would be more advantages for them to itemize their deductions on their California return and therefore filed their California return with itemized deductions.

d.Suzanne and Carmen each used the Married Separate filing status on their separate federal and California state returns. They each went to different tax preparers and did not discuss their tax returns with each other. Both Sandra and Carmen independently decided to take the standard deduction on their federal return. However, on the California return, Sandra itemized her deductions while Sandra still took the standard deduction on her return.

Question73

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Regarding the effectiveness ofa pre-nuptial agreement to keep property separatebetween a couple, which of the following are generally elements that must be present in the agreement?

Select one:

a.The agreement must be in writing.

b.The agreement must be entered into voluntarily.

c.There must be full and/or fair disclosure at the time of the enactment of the agreement.

d.All of the above are elements that must be present.

Question74

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A taxpayer completes their California tax return and discovers they have a tax balance due. Which of the following are methods provided by the FTB that will allow a tax payment to be made?

Select one:

a.Pay with a Credit Card, a fee will apply.

b.Check or money order, mail payment with tax return.

c.Web Pay, a direct debit from a financial institution account, no fee charged.

d.A and B are valid and correct payment methods.

e.All of the above are valid correct payment methods.

Question75

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Like the Federal AMT, the purpose of the California AMT is to make sure that certain taxpayers do not use various tax incentives to pay little or no California income tax. The California alternative minimum tax rate is ___of the taxpayer's alternative minimum tax base.

Select one:

a.10%

b.5%

c.2.5%

d.7%