2024 – Which if any of the following taxes are proportional rather than progressive removed
income tax – 2024
Which, if any, of the following taxes are proportional (rather than progressive)?
[removed]a.State general sales tax
[removed]b.Federal estate tax
[removed]c.Federal gift tax
[removed]d.Federal corporate income tax
[removed]e.All of these choices are correct.
Which of the following sources has the highest tax validity?
[removed]a.Internal Revenue Code section
[removed]b.Regulations
[removed]c.Revenue Procedure
[removed]d.Revenue Ruling
[removed]e.None of these choices are correct.
During 2016, Esther had the following transactions:
| Salary | $70,000 |
| Interest income on Xerox bonds | 2,000 |
| Inheritance from uncle | 40,000 |
| Contribution to traditional IRA | 5,500 |
| Capital losses | 2,500 |
Esther’s AGI is:
[removed]a.$64,000
[removed]b.$67,000
[removed]c.$102,000
[removed]d.$62,000
[removed]e.$104,000
Evan and Eileen Carter are husband and wife and file a joint return for 2016. Both are under 65 years of age. They provide more than half of the support of their daughter, Pamela (age 25), who is a full-time medical student. Pamela receives a $5,000 scholarship covering her tuition at college. They furnish all of the support of Belinda (Evan’s grandmother), who is age 80 and lives in a nursing home. They also support Peggy (age 66), who is a friend of the family and lives with them. How many dependency exemptions may the Carters claim?
[removed]a.Three
[removed]b.Four
[removed]c.Five
[removed]d.Two
[removed]e.None of these choices are correct.
Kirby is in the 15% tax bracket and had the following capital asset transactions during 2016:
| Long-term gain from the sale of a coin collection | $11,000 |
| Long-term gain from the sale of a land investment | 10,000 |
| Short-term gain from the sale of a stock investment | 2,000 |
Kirby’s tax consequences from these gains are as follows:
[removed]a.(5% × $10,000) + (15% × $13,000)
[removed]b.(15% × $13,000) + (28% × $11,000)
[removed]c.(15% × $23,000)
[removed]d.(0% × $10,000) + (15% × $13,000)
[removed]e.None of these choices are correct.
The Green Company, an accrual basis taxpayer, provides business-consulting services. Clients generally pay a retainer at the beginning of a 12-month period. This entitles the client to no more than 40 hours of services. Once the client has received 40 hours of services, Green charges $500 per hour. Green Company allocates the retainer to income based on the number of hours worked on the contract. At the end of the tax year, the company had $50,000 of unearned revenues from these contracts. The company also had $10,000 in unearned rent income received from excess office space leased to other companies. Based on the above, Green must include in gross income for the current year:
[removed]a.$10,000
[removed]b.$0
[removed]c.$50,000
[removed]d.$60,000
[removed]e.None of these choices are correct.
Darryl, a cash basis taxpayer, gave 1,000 shares of Copper Company common stock to his daughter on September 29, 2016. Copper Company is a publicly held company that has declared a $2.00 per share dividend on September 30th every year for the last 20 years. Just as Darryl had expected, Copper Company declared a $2.00 per share dividend on September 30th, payable on October 15th, to stockholders of record as of October 10th. The daughter received the $2,000 dividend on October 18, 2016.
[removed]a.Darryl must recognize the $2,000 dividend as his income because he constructively received the dividend.
[removed]b.Darryl must recognize $1,500 of the dividend because he owned the stock for three-fourths of the year.
[removed]c.Darryl must recognize the income of $2,000 because the purpose of the gift was to avoid taxes.
[removed]d.The daughter must recognize the income because she owned the stock when the dividend was declared and she received the $2,000.
[removed]e.None of these choices are correct.
Under the terms of a divorce agreement, Kim was to pay her husband Tom $7,000 per month in alimony. Kim’s payments will be reduced to $3,000 per month when their 9 year-old son becomes 21. The husband has custody of their son. For a twelve-month period, Kim can deduct from gross income (and Tom must include in gross income):
[removed]a.$60,000
[removed]b.$36,000
[removed]c.$0
[removed]d.$48,000
[removed]e.None of these choices are correct.
Albert had a terminal illness which required almost constant nursing care for the remaining two years of his estimated life, according to his doctor. Albert had a life insurance policy with a face amount of $100,000. Albert had paid $25,000 of premiums on the policy. The insurance company has offered to pay him $80,000 to cancel the policy, although its cash surrender value was only $55,000. Albert accepted the $80,000. Albert used $15,000 to pay his medical expenses. Albert made a miraculous recovery and lived another 20 years. As a result of cashing in the policy:
[removed]a.Albert must recognize $65,000 ($80,000 – $15,000) of gross income.
[removed]b.Albert must recognize $55,000 of gross income, but he has $15,000 of deductible medical expenses.
[removed]c.Albert is not required to recognize any gross income because of his terminal illness.
[removed]d.Albert must recognize $40,000 ($80,000 – $25,000 – $15,000) of gross income.
[removed]e.None of these choices are correct.
Tonya is a cash basis taxpayer. In 2016, she paid state income taxes of $8,000. In early 2017, she filed her 2016 state income tax return and received a $900 refund.
[removed]a.If Tonya itemized her deductions in 2016 on her Federal income tax return, she must amend her 2016 Federal income tax return and use the standard deduction.
[removed]b.If Tonya itemized her deductions in 2016 on her Federal income tax return and her itemized deductions exceeded the standard deduction by at least $900, the refund will not affect her 2017 tax return.
[removed]c.If Tonya itemized her deductions in 2016 on her Federal income tax return and her itemized deductions exceeded the standard deduction by more than $900, she must recognize $900 income in 2017 under the tax benefit rule.
[removed]d.If Tonya itemized her deductions in 2016 on her Federal income tax return, she should amend her 2016 return and reduce her itemized deductions by $900.
[removed]e.None of these choices are correct.
Marsha is single, had gross income of $50,000, and incurred the following expenses:
| Charitable contribution | $2,000 |
| Taxes and interest on home | 7,000 |
| Legal fees incurred in a tax dispute | 1,000 |
| Medical expenses | 3,000 |
| Penalty on early withdrawal of savings | 250 |
Her AGI is:
[removed]a.$49,750
[removed]b.$39,700
[removed]c.$39,750
[removed]d.$40,000
[removed]e.None of these choices are correct.
During 2015, the first year of operations, Silver, Inc., pays salaries of $175,000. At the end of the year, employees have earned salaries of $20,000, which are not paid by Silver until early in 2016. What is the amount of the deduction for salary expense?
[removed]a.If Silver uses the cash method, $0 in 2015 and $195,000 in 2016.
[removed]b.If Silver uses the accrual method, $175,000 in 2015 and $20,000 in 2016.
[removed]c.If Silver uses the accrual method, $195,000 in 2015 and $0 in 2016.
[removed]d.If Silver uses the cash method, $175,000 in 2015 and $0 in 2016.
[removed]e.None of these choices are correct.