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A taxpayer should include which of the following when figuring their federal gross income?
 
  1. Prior-year federal income tax refund
  2. Ordinary dividends
  3. Personal injury compensation
  4. Qualified disaster relief payments

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Trinidad Tremblay
Trinidad TremblayLv2
15 Jan 2020

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1.Which of the following statements about conversion of income is correct?

a.

converting ordinary income into capital gain is a beneficial tax planning strategy
b.

converting capital gain income into ordinary income is a beneficial tax planning strategy
c.

converting qualifying dividends into interest income is a beneficial tax planning strategy
d.

holding assets that will generate a capital gain inside a retirement plan is a beneficial tax planning strategy

2. Which of the following statements is NOT a true statement regarding long-term capital assets?

a.

capital assets that are held for more than one year are treated as long-term
b.

no distinction is made between capital losses and ordinary losses
c.

with few exceptions, the maximum capital gains tax rate is 15%

the benefit of holding a capital asset long enough to garner long-term capital gain treatment must be weighed against the financial risk associated with a possible decline in value during the holding period

3. Which of the following statements about the taxation of dividends is correct?

a.

all dividends are taxed at the same rate as applicable to capital gains
b.

dividends paid by credit unions and mutual insurance companies qualify for the lower tax rate
c.

qualifying dividends are taxed at a maximum 15% rate

d. there is no tax benefit to changing some of an individual's funds from a lower-yielding fixed income investment into a dividend-paying stock

4. Which of the following is an advantage of making an IRC Section 83(b) election with respect to restricted stock?

a.

an 83(b) election can be made any time within the tax year of the transfer of shares from the company to the employee
b.

if the stock is forfeited, the compensation recognized and the taxes paid are deductible as losses
c.

any future appreciation would be taxed as capital gain instead of taxable compensation

d. the employee does not receive any cash at the time of the stock award to pay the tax on the compensation recognized under the election

5.The maximum alternative minimum tax rate for individuals is:

a.

less than the maximum regular federal income tax rate for individuals
b.

equal to the maximum regular federal income tax rate for individuals
c.

greater than the maximum regular federal income tax rate for individuals

d. going to decrease each year by 1% until it reaches 20% in 2010

6. How is alternative minimum taxable income (AMTI) for individuals computed?

a.

AMTI = taxable income + adjustments + preferences - exemptions
b.

AMTI = taxable income - adjustments + preferences - exemptions
c.

AMTI = taxable income +/- adjustments + preferences - exemption
.

d. AMTI = taxable income +/- adjustments - preferences - exemptions

7. Which of the following statements regarding the calculation of alternative minimum taxable income (AMTI) for corporations versus the calculation of AMTI for individuals is accurate?

a.

AMTI is calculated the same for both corporations and individuals
b.

an additional step is required for corporations based on their adjusted current earnings
c.

the exemption amount for corporations is not subject to phaseout to phaseout while the exemption amounts for individuals are
d.

thethere is no adjustments to taxable income for corporations, only preferences

For the Tax Year 2015, George has the following expenses that he wants to include as itemized deductions for the year. His adjusted gross income is $72,000.

Medical expenses $4,500

Mortgage payment including 11,400

Mortgage interest 8,000

Property Tax 2,400

Principal Repayment 1,000

Credit card interest 450

Charitable contributions 1,500

State Income taxes 3,500

Federal Income Tax Withheld 7,000

a) Using information provided Form 1040 Schedule A, what is the total itemized deduction he can take? (Show all work.)

b) Using Tax Tables or Tax Rates for 2015, how much Federal Income tax does George owe for 2015?

c) George is thinking of contributing $4,000 to his Traditional IRA, how much Federal Tax will he save this year

PROBLEMS I: 3-34 Noncash Compensation. For each of the following items indicate, whether the individual taxpayer must include any amount in gross income. a. Employees of Eastside Bookstore are given their birthdays off with pay. b. Westside Hardware, Inc., gave each employee 10 shares of Westside stock worth $100 per share in lieu of a cash bonus. c. Employees of Northside Manufacturing were allowed to take home the company’s old computers when the company purchased new ones.

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