Posted: December 20th, 2021

ACC – Federal income tax for Individual and business MCQs

21 A taxpayer works in a foreign country beginning April 1, 2012 through May15,2013. If the tax payers foreign earned income for 2012 is $77900, his foreign earnedincome exclusion for 2012 isA 71455 B 34818 C 0 D95100 E 7790022 Nondeductible taxes include all of the following exceptA federal gift taxesB real estate tax paid on behalf of the taxpayers sonC Social security taxesD All of these are nondeductible taxesE Gasoline taxes23 Supporting evidence to justify a casualty loss deduction includes all the followingexceptA the cost to repair the property to its pre-incident conditionB all of these provide supporting evidence to justify a casualty loss deductionC the FMV immediately before and after the lossD pictures taken before and after the casualtyE appraisal of the property before and after the casualty24A maximum deduction limitation of 30% of AGI applies to charitable contributionsto public charities of which one of the following types of properties.A appreciated capital gains property that is not reduced by any amount ofappreciationB cash or property other than appreciated capital gains propertyC contributions of inventoryD none of the other choicesE Cash contributions25A tornado damaged Angelas home. Prior to the storm, her living expenses were$1200 a month, Angela had to move out of her home for three months while it wasbeing fix. During that time, her living expenses increased by $800 a month. Theinsurance company reimbursed Angela $1000 a month during the three months tocover her living expenses. The amount that Angela must include in gross income isA 2400 B 3000 C 0 D600 E none of the other choices26Which of the following is not a factor considered in determining whether anactivity is a business or a hobbyA relative amount of pleasure derived from the activityB time and effort devoted to the activityC all of these are factors considered in determining whether all activity is abusiness or a hobby.D extent of dependence on the activity for financial supportE Locating the activity in the taxpayers home27a tax attorney uses a country club to entertain clients and spends the followingamounts : annual dues, $1000; personal meals, $1500; business meals,$2500 . Heuses the country club 30% for business. What is the deductible expenses?A 750 B 1550 C 375 D 1250 E none of the other choices28what is the standard mileage rate for computing the deductible cost of operating acar for business purposes during 2012.A 0.555 B 0.23 C 0.14 D 0.19 E 0.5029A taxpayer reports $35000 as net profit on schedule C. the taxpayer also reportwage income of $15000. The taxpayers deduction for AGI for the employers shareof the self-employment tax in 2012 isA none of the other choices B2677 C 2472 D 2150 E422930the maximum amount that a 54-year-old sole proprietor can contribute to his simpleplan in 2012 isA 14000 B5000 C 17000 D 11500 E 2250031the maximum number of employees that an employer can have to be able to offer asimple plan isA 50 B25 C 200 D none of the other choices E 10032If a 45-year-old employee contribute $11500 to his employers 401k plan during2012. How much can be contribute to his employers ROTH 401kA 11500 B5500 C 0 D 11000 E 1700033In the year a child is born, exemption for the newborn child must proratedA True Bfalse34An abandoned spouse is someone who is married on the last day of the year butqualifies to file as a single taxpayer and uses the single tax rates ( instead of themarried filling separately rates) to compute tax liabilityA True B false35under the abandoned spouse rules if one spouse qualifies an abandoned spouse thenthe other spouse must file as singleA true B false36the initial child tax credit equals $1000 for each dependent child under the age 17A True B false37when a married taxpayer with $80000 of taxable income files a separate income taxreturn, he will have a larger tax liability than another taxpayer with the same taxableincome who files as a single taxpayerA true Bfalse38the tax table is more difficult to use than the tax rate schedulesA True B false39for purposes of the child and dependent care credit, a dependent child who is notincapacitated must be under age13A True B False40 only distributions from a corporations earning and profit( E&P) produce ordinarydividendsA true B false41taxpayers with less than $1500 of dividend income can file form1040EZA true B false42 In a compensation-related loan, the lender is taxed on the amount of imputedinterest, but the amount of taxable interest income is offset by a deduction for wageexpense.A true B false43 the discrimination rules do not apply to on-promise athletic facilitiesA true B false44 a penalty charged by a commercial bank on the early withdrawal of money from acertificate of deposit account can be deducted for adjusted gross incomeA true B false45 self-employed taxpayers deduct qualified moving expenses for AGI assuming theypass the distance and employment tests.A True B false46 when taxpayer are charged an early withdrawal penalty they reduce the amount ofinterest they include in gross incomeA True B false47 Deductible interest includes interest paid on a qualified home equity loanA True B False48 A taxpayer is allowed to take an itemized deduction for a loss resulting fromdamage to the taxpayers automobile caused by a collision, even if the taxpayer was atfaultAtrue B false49 To be deductible as an itemized deduction. Personal property taxes must be advalorum taxesA ture B false50 When an activity ( excluding horse activities) shows a profit in any three of fiveconsecutive years, it is assumed to be a business rather than a hobbyA true B false51 If a taxpayers business expense does not exceed $100, the taxpayer will not berequired to keep supporting documents to verify the deductions claimed.A true B false52 When employees drive their personal cars from one job to a second job, they cantake a deduction for the mileage driven between the two jobs.A True B false53 taxpayers can deduct costs they pay to tax professional to help them contestincome taxes assessed by the IRSA true B false54 cash method taxpayers who prepay expenses to be incurred in a subsequent taxyear are allowed to deduct the expense in the year of paymentA true B false55 An accrual basis taxpayer in a qualified service business is required to accrueservice revenue that has been earned but not yet collected, even if , based onexperience, it is probably not collectible.A true Bfalse56 If a self-employed taxpayer has employees he can establish a SEP plan for himselfwithout offering the plan to all full-time( eligible employees)A True B false57 sole proprietors deduct amount paid to workers classified as independentcontractors as wage expense on schedule C.A True B false

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