DEVRY ACCT224 WEEK 3 and week 5 homework es

Week 3

(TCO 4) Which of the following statements is NOT true?

In theory, the IRS should collect the same amount of tax on a worker's compensation, whether the worker is an employee or an independent contractor.

The IRS believes that contractors pay more taxes than employees.

An employer has a financial incentive to treat workers as independent contractors rather than employees.

If the IRS reclassifies a worker from independent contractor to employee, the employer can become liable for the employee's share of the unpaid interest and penalties. (General Feedback:

Chapter 15, page 444)

Comments:

Question 2. Question : (TCO 4) Tom's annual compensation is $145,000. What is the maximum amount that Tom's employer may contribute to a defined contribution plan on his behalf in 2013?

49,000

3,500

49,000

51,000 (General Feedback:

Chapter 15 Contribution is limited to lesser of compensation or $51,000, page 465)

Comments:

Question 3. Question : (TCO 5) Which of the following statements is NOT true?

The interest earned on state and local debt instruments is excluded from income for federal tax purposes.

Treasury notes have maturity periods from one to ten years.

Treasury bonds have maturity periods from 10 to 30 years.

The interest on U.S. debt obligations is subject to federal income tax. (General Feedback:

Chapter 16, pages 494)

Comments:

Question 4. Question : (TCO 5) Which of the following is false about the tax policy reasons offered to justify a preferential tax rate for capital gains?

Capital gain accrues over time but is taxed only in the year of sale. Therefore, it is taxed at a higher marginal rate than would have been likely if gain had been recognized as it accrued.

A preferential rate is not necessary to counteract the effects of inflation.

A preferential rate encourages the mobility of capital.

All of these are not reasons offered to justify a preferential tax rate for capital gains. (General Feedback:

Chapter 16, pages 505-506)

Comments:

Question 5. Question : (TCO 5) Julia owns an apartment complex. She is active with respect to this rental activity. This year, the complex generated a loss of $75,000. Assuming that her AGI before this item is $120,000 and there are no other passive activities, she may deduct:

None, and carry over $75,000 of the loss.

$25,000, and carry over the rest of the loss.

$15,000, and carry over the rest of the loss.

$10,000, and carry over the rest of the loss. (General Feedback:

Chapter 16, pages 508-510. ($120,000-$100,000) * 50%=$10,000, then $25,000 - $10,000)

Comments:

Week 5

(TCO 8) Which of the following statements is false?

A taxpayer can be charged a penalty for the late payment of taxes even if an extension to file was granted.

The interest charged on the late payment of taxes is not deductible on the federal tax return.

The penalty for late filing and late payment of taxes is 10% of the balance of tax due with the return for each month it is delinquent. (General Feedback:

Chapter 18, pages 574–577)

A taxpayer who can establish a reasonable cause for the late filing of his or her tax return will not be charged a late filing penalty.

Comments:

Question 2. Question : (TCO 8) Thomas did not extend or file his 2013 federal tax return until December 3, 2014. His total tax liability was $5,000; the return showed a net refund due of $75. He filed late because he was in Vegas with his old fraternity buddies. What amount of late-filing penalty will he owe for the 2013 tax year?

$2,500

$150

$0

$75 (General Feedback:

Chapter 18, page 576. The IRS does not assess a penalty if no tax is due. )

Comments:

Question 3. Question : (TCO 8) Mr. and Mrs. Lee filed a complete and accurate return for 2013 on April 14, 2014. When will the statute of limitations expire for their 2013 return?

April 15, 2019

April 15, 2017

August 15, 2016

October 14, 2015 (General Feedback:

Chapter 18. The IRS has 3 years from the later of the April 15 due date or the date the return was actually filed.)

Comments:

Question 4. Question : (TCO 8) Which of the following is generally considered an indication that Ken has committed tax fraud?

Ken made major addition errors.

Ken's business records and documents were destroyed in a flood.

Ken does not have any receipts for large deductions taken on his tax return.

Ken employed a CPA to prepare his tax return. (General Feedback:

Chapter 18, page 580)

Comments:

Question 5. Question : (TCO 8) Which of the following statements concerning the innocent spouse rule is/are true?

All of the above

The tax deficiency in question must be attributable to the omission of gross income or the claim of bogus deductions or credits made by both spouses on their joint return.

The innocent spouse must show that he or she did not know, and had no reason to know, that the return understated the joint federal tax liability.

A spouse is generally relieved of the additional tax liability to the extent that he or she did NOT significantly benefit from the omitted income and was ignorant of the omission. (General Feedback:

Chapter 18, pages 587–588)

Comments: