In which of the following situations will the divorced custodial parent be entitled to the dependency exemption...

1. In which of the following situations will the divorced custodial parent be entitled to the dependency exemption for the child?
The noncustodial parent provides $1,500
The custodial and noncustodial parent both provide $1,500 of support for the child
The custodial parent provides $1,500 of support for the child and the noncustodial parent provides $1,200.
All of the above
Question 2
1. ***** *****, age 21, is a full time student at Marshall College and a degree candidate for a bachelor's degree. During 2010, he received the following payments:
1. State scholarship for tuition, $3,600
2. Loan from college financial aid office $1,500
3. Cash support from parents $3,000
4. Cash dividends on qualified investments $700
5. Cash prize award in contest $500.
What is Robert's adjusted gross income for 2010?
$700
$6,600
$1,200
$4,800
Question 3
1. In December 2010, Mr. Stone cashed qualified Series EE U.S. Savings Bonds, which he had purchased in January 2000. The proceeds were used for his son's college education. All of the following statements are correct concerning the exclusion of the interest received except:
He cannot file as married filing separate.
Eligible expenses include room and board.
If the proceeds are more than the expenses, he will be able to exclude only part of the interest.
Before he figures his interest exclusion, he must reduce his qualified higher education expenses by certain benefits.
Question 4
1. Jim, a retail merchant, reported the following on his 2010 return:
Sales ..............................................$200,000
Cost of Goods Sold ............................ 80,000
Gross Profit ......................................$120,000
What amount must be omitted from income for the six-year-statute of limitations to apply?
$30,000
$20,000
More than $50,000
More than $30,000
Question 5
1. In September 2010, Bill and Linda, a married couple with $50,000 of gross income, cashed qualified Series EE US Savings Bonds which they had purchased in 2004. The proceeds were used to help pay for their son's 2010 college tuition. They received gross proceeds of $3,500, representing $3,000 of principal and $500 of interest. The qualified higher education expenses they paid in 2010 totaled $2,100. Their modified adjusted gross income for the year was $55,000. How much of the $500 interest can Bill and Linda exclude from gross income in 2010?
$0
$200
$300
$500
Question 6
1. All of the following statements are true except:
1. If the IRS revokes or modifies a published ruling, open tax years can be retroactively affected for all taxpayers.
2. Committee Reports of the House Ways and Means Committee, the Senate Finance Committee, and the Conference Committees are published by the Government Printing Office and are also reprinted in the Internal Revenue Bulletin and Cumulative Bulletin.
3. Title 26 of the U.S. Code contains the statutes that authorize the Treasury Department, specifically, the Internal Revenue Service, to collect taxes for the federal government.
4. Internal Revenue Code Section 1 defines the term "gross income".
#2
#1 and #4
#4
#3 and #2
Question 7
1. The Sixteenth Amendment granted Congress the right to:
Create progressive tax rates
Create a value-added tax
Tax income from whatever source derived
Impose a national property tax
Question 8
1. Net Capital Gains are:
Taxed at a maximum rate of 31 percent
Taxed at a maximum rate of 28 percent
Taxed at a maximum rate of 20 percent
Taxed at a maximum rate of 15 percent
Question 9
1. Mr. Garcia, a cash-basis taxpayer, owns an apartment building. His records reflect the following information for 2010.
Tenant G paid cost of floor repairs that were Mr. Garcia's responsibility - $950
Security deposits to be returned to tenants upon expiration of their leases in 2012 .........................................................................................$1,350
Advance rents received in December, 2010 for first 6 months in 2011 $3,000
What is the amount of gross rental income Mr. Garcia should include in his gross income based on the above facts.
$2,300
$3,000
$3,950
$4,350
$5,300
Question 10
1. David Drew owned two shares of ABC Corporation common stock. He paid $60 for one share on January 15, 2008 and $30 for one share on March 31, 2006. The corporation declared a stock dividend which gave stockholders two 2 new shares of common stock for each share owned. After the distributions of the shares to the shareholder, how many shares are owned by David and what is the adjusted basis of each share?
6 shares owned; 3 shares with $20/cost basis and 3 shares with $40/cost basis
6 shares owned: 4 shares with $0/cost basis and 1 share with $30/cost basis and 1 share with $60/cost basis.
6 shares owned: 3 shares with $30/cost basis each and 3 shares with $10/cost basis each.
6 shares owned: 2 shares with $45/cost basis each and 4 shares with $0/cost basis each.
Question 11
1. The Tax Reform Act of 1986:
Amended the Internal Revenue Code of 1954
Replaced the Internal Revenue Code of 1954 with the Internal Revenue Code of 1986
Replaced the Internal Revenue Code of 1954 with the Internal Revenue Code of 1987
Was found to be unconstitutional by the Supreme Court of 1987
Question 12
1. If a practitioner who is authorized to practice before the IRS knows that a client has not complied with the revenue laws of the U.S. with respect to a matter administered by the IRS, the practitioner is required to:
Advise the client of the noncompliance
Immediately notify the IRS
Do nothing
Advise his client and immediately notify the IRS
4 points
Question 13
1. Which of the following items of income sources may be excluded from gross income:
1. Insurance proceeds for loss of finger
2. Embezzlement proceeds
3. Child support
4. Interest on Series HH Bonds
5. Receipt of alimony by divorced husband
6. Gifts and inheritances
7. Scholarship grants for tuition
8. Interest income on bonds issued by State of Ohio
1, 3, 4, 6, and 7
3, 4, 6, 7, 8
1, 3, 4, 5, 6, 8
1, 3, 6, 7, 8
Question 14
1. ***** *****, a single individual, retired on March 3, 2010, at the age of 65. For the year 2010 he receives the following income:
Salary $14,000
Interest Income 2,000
Dividend Income 1,000
Tax Exempt Income 1,000
Social Security Benefits 5,000
Net rental income 6,000
What amount, if any, of his Social Security benefits must Charles include in his 2010 gross income and what is his "adjusted gross income"(AGI)"?
$0 Social Security; $23,000 AGI
$750 Social Security: $24,000 AGI
$750 Social Security: $23,750 AGI
$750 Social Security: $20,000 AGI
Question 15
1. All of the following fringe benefits can be excluded from the employee's income except:
Transportation up to $230 per month for combined commuter highway vehicle transportation, transit passes, and $230 per month for qualified parking.
Holiday gifts, other than cash, with a low fair market value.
Qualified employee discounts given employees on certain property and services offered to customers in the ordinary course of the line of business in which the employees perform services.
Memberships to municipal athletic facilities for employees, their spouses, and their dependent children.
Question 16
1. All of the following are considered "constructive receipt of income" except:
1. Lori was informed her check for services rendered was available but she did not pick it up until the following January 10.
2. Pierre earned income that was received by his agent but was not received by Pierre.
3. Jacque bought a 9-month certificate of deposit in November, 2009. It earned $200 interest in 2009. She may withdraw the principal and interest in 2009 if she pays a penalty of one month's interest - $100.
4. A payment on a sale of real property placed in escrow pending settlement at which time title would convey.
#3
#1 and 4
#4
#3 and 2
Question 17
1. Mr. Hines received a $6,200 grant from a local university for the fall of 2010. Mr. Hines was a candidate for a degree, and was required to be a research assistant, for which services he received payment under the grant. The $6,200 grant provided the following:
Tuition - $3,600
Books and supplies 500
Pay for services as research assistant 2,100
Mr. Hines spent the entire $6,200 on tuition, books, and supplies.
What amount must Mr. Hines include in his income for 2010?
$2,100
$2,600
$3,200
$3,600
Question 18
1. Peter's tax return was examined and the result was additional tax of $16,000 due to unreported lottery winnings. Peter has received a letter notifying him of his right to appeal the proposed changes within 30 days. Which of the following should Peter do in preparing his appeal?
Call the examiner and request a conference.
Provide a brief written statement of the disputed issues.
Submit a written protest within the time limit specified.
Submit a written protest explaining additional expenses not previously claimed.
Question 19
1. The legislative process of a tax bill begins with the:
House Ways and Means Committee
President
Senate Finance Committee
Any of the above
Question 20
1. Don Driller, who is 56 years of age, is provided with $120,000 of group-term life insurance by his employer. Based on the IRS uniform premium cost table, the total annual cost of a policy of this type is $9.00 per $1,000 of coverage. Don's required contribution to the cost of the policy is $2.00 per $1,000 of coverage per year. Don was covered for the full 12 months of 2010. How much of the cost must Don include in his income for 2010?
$0
$390
$630
$840
Question 21
1. Based upon the organization of the Internal Revenue Code, what general topic would be covered in Code Sec. 731?
Capital gains and losses
Partners and partnerships
Exempt organizations
Insurance companies
Question 22
1. When approving a tax bill and there are differences between the House and Senate versions, the differences are resolved by the:
President
Speaker of the House
President of the Senate
Joint Conference Committee
Question 23
1. ***** *****e, an employee of Smithson Company, was covered under a noncontributory pension plan. Frank died on April 15, 2010, at age 64 and pursuant to the plan, his widow received monthly pension payments of $500 beginning May 1, 2010. This non forfeitable death benefit was part of a group plan. What is the total amount of the above receipts that the widow should exclude from her gross income for 2010?
$0
$5,000
$9,000
$14,000
Question 24
1. The Hightown Council refused to increase the town budget. Robert Read was laid off from work on August 4, 2010. Earlier in the year he had been temporarily disabled from a job-related injury and had received disability benefits. At year-end Robert Read and his wife have the following sources of income:
Disability Income $2,500
Unemployment Compensation 5,000
Salary - 1/1 - 8/4/2010 10,000
Wife's Salary 9,000
Supplemental unemployment compensation
-Employer provided 3,000
What amount of Read's family income is includible in gross income for 2010?
$24,000
$22,000
$27,000
$21,500
Question 25
1. Judd Harrison owns 200 shares of stock in the Widget Company for which he paid $1,600 in 1999. The board of directors of the company decided to pay a 10 percent stock dividend in April, 2009, for which Judd received 20 shares of stock. In January, 2010 Judd decides to sell 100 shares in the Widget Company. Since April, 2009 no stock dividends had been paid by the company. On the date the stock is sold the market price is $12 a share. What is the basis that Judd must use in computing any gains and losses on the sale and what is the amount of gain or loss he must recognize in 2010?
Basis - $727; Gain $574
Basis - $800; Gain $460
Basis - $727; Gain $473
Basis - $800: Gain $400