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Jane is unmarried and has no children, but provides more than half of her mother'sfinancial support. Jane's mother lives in an apartment across town and has a part-time job earning $5,000 a year. Which is the most advantageous filing status available to Jane?


A) Qualifying individual.
B) Head of household.
C) Single.
D) Surviving single.

E) A) and C)
F) B) and D)

Correct Answer

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In year 1, Harold Weston's wife died. Since her death, he has maintained a household for their son Frank (age 3) , his qualifying child. Which is the most advantageous filing status available to Harold in year 4?


A) Surviving spouse.
B) Qualifying widower.
C) Head of household.
D) Married filing joint.

E) None of the above
F) B) and C)

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In certain circumstances, a married taxpayer who does not file a joint tax return with her spouse may qualify for the head of household filing status.

A) True
B) False

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Which of the following statements regarding exclusions and/or deferrals is false?


A) Deferrals are income items taxpayers realize in one year but include in gross income in a subsequent year.
B) Exclusions are favorable because taxpayers never pay tax on income that is excluded.
C) Interest income from municipal bonds is excluded from gross income.
D) An income item need not be realized in order to qualify as an exclusion item.

E) C) and D)
F) A) and C)

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The test for a qualifying child includes a gross income restriction while the test for qualifying relative does not.

A) True
B) False

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An individual with gross income of $5,000 could qualify as a qualifying child of another taxpayer but could not qualify as a qualifying relative of another taxpayer.

A) True
B) False

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A personal automobile is a capital asset.

A) True
B) False

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Taxpayers are allowed to deduct more for each personal exemption they claim than for each dependency exemption they claim.

A) True
B) False

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Char and Russ Dasrup have one daughter, Siera, who is 16 years old. In November oflast year, the Dasrup's took in Siera's 16 year old friend, Angela, who has lived with them ever since. The Dasrup's have not legally adopted Angela but Siera often refers to Angela as "her sister." In the current year, the Dasrups provide all of the support for both girls, neither girl receives any income during the year, and both girls live at the Dasrup'sresidence. Which of the following statements is true regarding the dependencyexemptions (and the reason for the exemptions) Char and Russ may claim for the current year for these girls?


A) One exemption for Siera as a qualifying child and one exemption for Angela as a qualifying relative.
B) One exemption for Siera as a qualifying child and one exemption for Angela as a qualifying child.
C) One exemption for their daughter Siera as a qualifying child but no exemption for Angela.
D) None of these statements is true.

E) C) and D)
F) A) and C)

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Anna is a 21-year-old full-time college student (she plans on returning home at the end of the school year) . Her total support for the year was $34,000 (including $8,000 oftuition) . Anna covered $12,000 of her support costs out of her own pocket (from savings, she did not work) and she received an $8,000 scholarship that covered all of her tuition costs. Which of the following statements regarding who is allowed to claim Anna as an exemption is true?


A) Even if Anna's grandparents provided the remaining $14,000 of support for Anna ($34,000 minus $12,000 minus $8,000) they would not be able to claim her as a dependent.
B) Because she provided more than half her own support, Anna may claim a personal exemption for herself.
C) Even if Anna's parents provided the remaining $14,000 of support for Anna ($34,000 minus $12,000 minus $8,000) , they would not be able to claim her as a dependent.
D) None of these statements is true.

E) All of the above
F) C) and D)

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Which of the following is NOT a from AGI deduction?


A) Standard deduction.
B) Personal exemption.
C) Itemized deduction.
D) None of these. All of these are from AGI deductions.

E) All of the above
F) B) and C)

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Which of the following statements regarding for AGI tax deductions is true?


A) A taxpayer may deduct for AGI deductions only if the deductions exceed the taxpayer's deductible exemption amounts.
B) Taxpayers subtract for AGI deductions from gross income to determine AGI.
C) A taxpayer may deduct for AGI deductions only if the deductions exceed the taxpayer's standard deduction amount.
D) A taxpayer may deduct for AGI deductions only if the deductions exceed the taxpayer's itemized deductions.

E) A) and B)
F) A) and C)

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In June of year 1, Edgar's wife Cathy died and Edgar did not remarry during the year.What is his filing status for year 1 (assuming they did not have any dependents) ?


A) Single.
B) Qualifying widower.
C) Head of household.
D) Married filing jointly.

E) None of the above
F) B) and C)

Correct Answer

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Which of the following statements regarding the difference between the requirements for a qualifying child and the requirements for a qualifying relative is false?


A) Qualifying children are subject to age restrictions while qualifying relatives are not.
B) Qualifying relatives are subject to a gross income restriction while qualifying children are not.
C) The relationship requirement is more broadly defined (more inclusive) for qualifying relatives than for qualifying children.
D) The support test for qualifying relatives focuses on the support the potential dependent self-provides while the support test for qualifying children focuses on the support the taxpayer provides.

E) C) and D)
F) A) and D)

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A taxpayer who is claimed as a dependent on another's tax return may not claim any personal or dependency exemptions on his or her tax return.

A) True
B) False

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In February of 2016, Lorna and Kirk were married. During 2017, Lorna received $40,000 ofcompensation from her employer and Kirk received $30,000 of compensation from his employer. The couple together reported $2,000 of itemized deductions. Lorna and Kirk filed separately in2017. What is Lorna's taxable income and what is her tax liability (use the applicable tax rateschedule)?

Correct Answer

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Earl and Lawanda Jackson have been married for 15 years. They have no children. Ned, who is an old friend from high school, has been living with the Jacksons during thecurrent year. Which of the following is a true statement regarding whether the Jacksons can claim a dependency exemption for Ned in the current year?


A) Assume that Ned originally moved into the Jackson's home two years ago and he has lived there ever since. If this year Ned earned $3,000 at a part time job and he received $5,000 in municipal bond interest, he may qualify as the Jackson's dependent so long as the Jacksons provided more than half his support.
B) If Ned moved into the Jackson's home in June and he lived there for the remainder of the year, he may qualify as the Jackson's qualifying relative.
C) If Ned lived in the Jackson's home for the entire year, he will qualify as their dependent no matter who provided his support.
D) If Ned is over 19 or he is not a full-time student, he cannot qualify as the Jackson's dependent.

E) None of the above
F) A) and B)

Correct Answer

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Which of the following statements regarding tax deductions is false?


A) Deductions can be labeled as deductions above the line or deductions below the line.
B) The standard deduction is a from AGI deduction.
C) From AGI deductions tend to be associated with business activities while for AGI deductions tend to be associated with personal activities.
D) Taxpayers are not entitled to any deductions unless specific provisions in the tax code allow the deductions.

E) All of the above
F) C) and D)

Correct Answer

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In April of year 1, Martin left his wife Marianne. While the couple was apart, they were not legally divorced. Marianne found herself having to financially provide for the couple's only child (who qualifies as Marianne's dependent) and to pay all the costs of maintaining the household. When Marianne filed her tax return for year 1, she filed areturn separate from Martin. What is Marianne's most favorable filing status for year 1?


A) Head of household.
B) Married filing separately.
C) Single.
D) Qualifying widow.

E) A) and C)
F) None of the above

Correct Answer

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Which of the following statements is true?


A) Income character determines the tax year in which the income is taxed.
B) A taxpayer selling a capital asset at a gain recognizes ordinary income.
C) Income character depends on the taxpayer's filing status.
D) Qualified dividend income is taxed at a lower rate than an equal amount of ordinary income.

E) None of the above
F) A) and C)

Correct Answer

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