indifferent between investing in a city of El Paso bond that pays 3.4% interest and a corporate bond that pays 5.1% interest. What is Javier’s marginal tax rate?

53.33%

33.33%

43.33%

100%

None of the choices are correct.

2)

Lebron received $50,000 of compensation from his employer and he received $400 of interest from a municipal bond. What is the amount of Lebron’s gross income from these items?

$0.

$50,400.

$50,000.

$400.

3)

Madison’s gross tax liability is $10,950. Madison had $5,160 of tax credits available and she had $10,050 of taxes withheld by her employer. What is Madison’s taxes due (or taxes refunded) with her tax return?

$0 taxes due and $0 tax refund.

$5,790 taxes due.

$900 taxes due.

$4,260 tax refund.

4)

If Tom invests $80,000 in a taxable corporate bond that provides a 7 percent before-tax return, how much will Tom’s investment be worth in either 8 or 20 years from now when the bond matures? Assume Tom’s marginal tax rate is 35 percent.

$137,455; $309,575.

$116,330; $202,758.

$114,204; $194,792.

$129,491; $259,456.

None of the choices are correct.

5)

The Statements on Standards for Tax Services (SSTS) and Code of Professional Conduct provide professional standards for tax professionals and were issued by which of the following organizations?

AICPA

U.S. Treasury

Congress

IRS

6)

married but files separately, earns $170,000 of taxable income. He also has $14,750 in city of Tulsa bonds. His wife, Theresa, earns $49,500 of taxable income.

If Leonardo instead had $55,500 of additional tax deductions for year 2016, his marginal tax rate on the deductions would be: (Tax rate schedules)

rev: 10_06_2016_QC_CS-63159

32.89%

32.45%

35.45%

None of the choices are correct.

24.15%

7)

Which of the following statements regarding tax deductions is false?

Taxpayers are not entitled to any deductions unless specific provisions in the tax code allow the deductions.

The standard deduction is a from AGI deduction.

Deductions can be labeled as deductions above the line or deductions below the line.

From AGI deductions tend to be associated with business activities while for AGI deductions tend to be associated with personal activities.

8)

following is not considered a primary authority?

Supreme Court case

Tax Law Review article

Regulation

Internal Revenue Code

None of the choices are correct.

9)

purchased an annuity that provides $13,600 quarterly payments for the next 11 years. The annuity was purchased at a cost of $365,200. How much of the first quarterly payment will Fran include in her gross income?

$35,673

$13,600

$8,300

$5,300

None of the choices are correct.

10)

Maren received 10 NQOs (each option gives her the right to purchase 12 shares of stock for $9 per share) at the time she started working the stock price was $6 per share. When the share price was $14 per share, she exercised all of her options. Eighteen months later she sold all of the shares for $20 per share. What is the amount of Maren’s bargain element?

$960.

$0.

$1,680.

None of the choices are correct.

$600.

11)

Bernie is a former executive who is retired. This year Bernie received $254,000 in pension payments and $14,000 of social security payments. What amount must Bernie include in his gross income?

Zero

$261,000

$265,900

$268,000

$254,000

12)

Manny, a single taxpayer, earns $82,500 per year in taxable income and an additional $8,750 per year in city of Boston bonds.

If Manny earns an additional $12,500 in taxable income in year 2016, what is his marginal tax rate on this income? (Tax rate schedules)

rev: 10_06_2016_QC_CS-63159

None of the choices are correct.

25.92%.

25.13%.

28.13%.

22.3%.

13)

Which of the following has the highest authoritative weight?

Revenue Ruling

Regulation

Internal Revenue Code

Private Letter Ruling

Revenue Procedure

14)

Sally received $57,900 of compensation from her employer and she received $650 of interest from a corporate bond. What is the amount of Sally’s gross income from these items?

$58,550.

$650.

$57,900.

$0.

15)jack and Jill

are married. This year Jack earned $79,500 and Jill earned $87,500 and they received $5,500 of interest income from a joint savings account. How much gross income would Jack report if he files married-separate from Jill?

None of the choices are correct.

$85,000 if they reside in a community property law state.

$86,250 if they reside in a community property law state.

$79,500 if they reside in a common law state.

$93,000 if they reside in a common law state.

16)

taxpayer, earns $79,500 per year in taxable income and an additional $13,250 per year in city of Boston bonds.

What is Manny’s current marginal tax rate for year 2016? (Tax rate schedules)

rev: 08_12_2016_QC_CS-63159, 10_13_2016_QC_CS-63159

21.79%

21.93%

14.99%

17.82%

25.00%

17)

marginal tax rate is 20%. If corporate bonds pay 6% interest, what interest rate would a municipal bond have to offer for Bill to be indifferent between the two bonds?

None of the choices are correct

7.20%

20%

6%

5%

18)

taxpayer, earns $135,000 in taxable income and $3,100 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2016, how much federal tax will he owe? (Tax rate schedules)

$35,043

None of the choices are correct.

$32,418

$30,836.75

$29,375.5

19)

Which of the following committees is not involved in enacting tax legislation?

Senate Finance Committee

House Ways and Means Committee

House Tax Committee

Joint Conference Committee

20)

Leonardo, who is married but files separately, earns $70,000 of taxable income. He also has $5,750 in city of Tulsa bonds. His wife, Theresa, earns $31,500 of taxable income.

If Leonardo earned an additional $33,500 of taxable income this year, what would be the marginal tax rate on the extra income for year 2016? (Tax rate schedules)

rev: 10_06_2016_QC_CS-63159

27.47%

24.47%

16.97%

None of the choices are correct.

27.22%

21)

Joanna received $68,400 compensation from her employer, the value of her stock in ABC company appreciated by $8,600 during the year (but she did not sell any of the stock), she received $44,400 of life insurance proceeds from the death of her husband. What is the amount of Joanna’s gross income from these items?

$77,000.

$112,800.

$68,400.

$121,400.

References

22)

If Lucy earns a 6% after-tax rate of return, $19,000 received in four years is worth how much today? Use Exhibit 3.1. (Round present and future value factor(s) to 3 decimal places.)

$15,048.

$17,884.

$19,000.

$20,649.

None of the choices are correct.

23)

Ben’s employer offers employees the following benefits. What amount must Ben include in his gross income?

Benefit

Value

Health insurance coverage

$

5,460

Group term life insurance ($50,000)

4,355

Disability insurance coverage (considered purchased by Ben)

3,770

Whole life insurance coverage ($100,000)

7,340

$11,110

$9,230

$7,340

Zero – none of the above benefits is included in gross income

11695

24.

Assume that Shavonne’s marginal tax rate is 30% and her tax rate on dividends is 20%. If a corporate bond pays 8.8% interest, what dividend yield would a dividend-paying stock (with no growth potential) have to offer for Shavonne to be indifferent between the two investments from a cash-flow perspective?

20%

8.7%

None of the choices are correct.

8.8%

7.7%

References

Multiple ChoiceDifficulty: 2 MediumLearning Objective: 03-05 Apply the conversion strategy, provide examples, and describe its limitations.

Check my work

25)

Jamison’s gross tax liability is $9,500. Jamison had $2,400 of available credits and he had $6,150 of taxes withheld by his employer. What is Jamison’s taxes due (or taxes refunded) with his tax return?

$7,100 taxes due.

$950 taxes due.

$3,350 taxes due.

$950 tax refund.

26. if Nicolai

earns an 10% after-tax rate of return, $14,000 today would be worth how much to Nicolai in 5 years? Use Exhibit 3.1. (Round present and future value factor(s) to 5 decimal places.)

$14,000.

$8,701.

$12,728.

$22

547.

$15,400.

27)

27.

Which of the following items is most commonly used to check the status of a court case?

Revenue ruling

Tax digest

Determination letter

Citator

Private letter ruling

28

value:

2.00 points

Shaun is a student who has received an academic scholarship to State University. The scholarship paid $14,100 for tuition, $2,550 for fees, and $1,125 for books. In addition, Shaun’s dormitory fees of $8,625 were paid by the University when he agreed to counsel freshman on campus living. What amount must Shaun include in his gross income?

$2,550

Zero – none of the above benefits is included in gross income

$9,750

$8,625

$11,175

29.

Opal deducted $2,440 of state income taxes on her tax return last year. This year she received a state income tax refund of $210. What amount of the refund, if any, should Opal include in her gross income if last year her total itemized deductions exceeded the standard deduction by $370?

$370

$2,070

None of the choices are correct – refunds of state income taxes are not included in gross income.

$210

$160

References

Multiple ChoiceDifficulty: 2 MediumLearning Objective: 05-01 Apply the concept of realization and explain when taxpayers recognize gross income.

30.

value:

2.00 points

All of the following are for AGI deductions except:

Charitable contributions.

Business expenses for a self-employed taxpayer.

Moving expenses.

Rental and royalty expenses.

References

Multiple ChoiceDifficulty: 2 MediumLearning Objective: 04-01 Describe the formula for calculating an individual taxpayer’s taxes payable or refund and generally explain each formula component.

Check my work

31.

value:

2.00 points

Assume that Lucas’ marginal tax rate is 10% and his tax rate on dividends is 5%. If a dividend-paying stock (with no growth potential) pays an 8.8% dividend yield, what interest rate would a municipal bond have to offer for Lucas to be indifferent between the two investments from a cash-flow perspective?

8.36%

5%

None of the choices are correct.

8.8%

10%

References

Multiple ChoiceDifficulty: 2 MediumLearning Objective: 03-05 Apply the conversion strategy, provide examples, and describe its limitations.

interest payments this year. What amount must Mike include in his gross income (for federal tax purposes)?

Bond

Interest

General Motors

$

2,250

City of New York

1,700

State of New Jersey

2,000

U.S. Treasury

1,650

$3,900

$5,900

$3,650

$3,950

$4,250

33.

value:

2.00 points

Marc, a single taxpayer, earns $99,000 in taxable income and $3,100 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2016, what is his current marginal tax rate? (Tax rate schedules)

None of the choices are correct.

28.00%

25.00%

33.00%

15.00%

References

Multiple ChoiceDifficulty: 1 EasyLearning Objective: 01-03 Describe the different tax rate structures and calculate a tax.

Check my work

Time remaining: 3:42:37

34.

value:

2.00 points

The income tax base for an individual tax return is:

Adjusted gross income.

Gross income.

Adjusted gross income minus from AGI deductions.

Realized income from whatever source derive

d.

35.

value:

2.00 points

If Julius has a 15% tax rate and a 9% after-tax rate of return, $44,500 of income in three years will cost him how much tax in today’s dollars? Use Exhibit 3.1. (Round present and future value factor(s) to 3 decimal places.)

$5,153.

None of the choices are correct.

$34,354.

$6,675.

$44,500.

References

Multiple ChoiceLearning Objective: 03-02 Apply the timing strategy and describe its applications and limitations.

Difficulty: 2 MediumLearning Objective: 03-03 Apply the concept of present value to tax planning.

Check my work

36.

value:

2.00 points

Geronimo files his tax return as a head of household for year 2016. If his taxable income is $253,500, what is his average tax rate? (Tax rate schedules)

25.05%

27.10%

32.94%

None of the choices are correct.

26.18%

References

Multiple ChoiceDifficulty: 2 MediumLearning Objective: 01-03 Describe the different tax rate structures and calculate a tax.

Check my work

compensation from his employer and he received $570 of interest from a municipal bond. What is the amount of Lebron’s gross income from these items?

$570.

$52,500.

$53,070.

$0.

References

Multiple ChoiceDifficulty: 1 EasyLearning Objective: 04-01 Describe the formula for calculating an individual taxpayer’s taxes payable or refund and generally explain each formula component.

Check my work

38)

38.

value:

2.00 points

Which of the following is a type of common tax service used in tax research?

Annotated tax service

Antiquated tax service

Analytical tax service

Technical tax service

All of the choices are correct.

References

eBook & Resources

Multiple ChoiceDifficulty: 2 MediumLearning Objective: 02-05 Perform the basic steps in tax research and evaluate various tax law sources when faced with ambiguous statutes.

38.

value:

2.00 points

Which of the following is a type of common tax service used in tax research?

Annotated tax service

Antiquated tax service

Analytical tax service

Technical tax service

All of the choices are correct.

39)

Leonardo earns $95,000 of taxable income. He also has $8,000 in city of Tulsa bonds. His wife, Theresa, earns $46,000 of taxable income.

What is Leonardo and Theresa’s effective tax rate for year 2016? (Tax rate schedules)

17.98%

16.37%

19.9%

22.52%

29.37%

40.

Assume that Lavonia’s marginal tax rate is 20%. If a city of Tampa bond pays 6% interest, what interest rate would a corporate bond have to offer for Lavonia to be indifferent between the two bonds?

9.00%

5.00%

8.00%

20.00%

7.50%.

41.

Rhett made his annual gambling trip to Uwin Casino. On this trip Rhett won $390 at the slots and $1,340 at poker. Also this year, Rhett made several trips to the race track, but he lost $770 on his various wagers. What amount must Rhett include in his gross income?

$390

$1,340

$1,730

$960

Zero – gambling winnings are not included in gross income

42.

Marc, a single taxpayer, earns $30,000 in taxable income and $1,000 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2016, what is his effective tax rate? (Tax rate schedules)

None of the choices are correct.

19.49%

10.75%

21.41%

13.02

43.

value:

2.00 points

If Joel earns a 8% after-tax rate of return, $21,000 received in two years is worth how much today? Use Exhibit 3.1. (Round present and future value factor(s) to 3 decimal places.)

$21,000.

$19,410.

$17,997.

$22,680.

None of the choices are correct.

44.

value:

2.00 points

Which of the following is not an itemized deduction?

Charitable contributions.

Real estate taxes.

Alimony paid.

Medical expenses.

References

Multiple ChoiceDifficulty: 2 MediumLearning Objective: 04-01 Describe the formula for calculating an individual taxpayer’s taxes payable or refund and generally explain each formula component.

45.

value:

2.00 points

If Susie earns $775,000 in taxable income, how much tax will she pay as a single taxpayer for year 2016? (Tax rate schedules)

$279,658.85

$253,453.75

$262,200.9

None of the choices are correct.

$263,069.95

46.

value:

2.00 points

Samantha was ill for four months this year. Samantha missed work during this period, but disability insurance paid $19,800 of disability pay to replace her missed salary. Samantha shares the cost of the insurance with her employer. This year Samantha’s employer paid $2,800 in disability premiums for Samantha as a nontaxable fringe benefit and Samantha paid the remaining $1,400 of premiums from her salary. What amount of the disability pay must Samantha include in her gross income (Rounded to the nearest whole dollar)?

$13,200

Zero – none of the above disability pay is included in gross income

$7,700

$19,800

$1,400

47.

value:

2.00 points

Curtis invests $825,000 in a city of Athens bond that pays 10.25% interest. Alternatively, Curtis could have invested the $825,000 in a bond recently issued by Initech, Inc. that pays 13% interest with similar risk as the city of Athens bond. Assume that Curtis’s marginal tax rate is 28%.

How much explicit tax would Curtis incur on interest earned on the Initech, Inc. bond?

$30,030

$60,885

$77,220

$23,677.5

None of the choices are correct.

48.

value:

2.00 points

Meeting which of the following standards for tax return positions would allow both taxpayers and tax practitioners to avoid a penalty with respect to a tax return position?

Significant authority

Realistic possibility

Reasonably probable

Supreme authority

Substantial authority