Income Tax Fundamentals Chapter 1

Multiple Choice Questions

N.B- My answers are highlighted.

1. The current income tax system was:

a. Designed solely to raise money to run the government

b. Authorized by the founding fathers when the government was formed

c. Not designed with social objectives in mind

d. Authorized by the Sixteenth Amendment to the Constitution in 1913

e. None of the above

2. Partnership income is reported on:

a. Form 1040

b. Form 1120

c. Form 1040X

d. Form 1065

3. Which of the following is a deduction for adjusted gross income in 2012?

a. Alimony payments

b. Medical expenses

c. Personal casualty losses

d. Charitable contributions

e. None of the above

4. All of the following are itemized deductions in 2012 except:

a. Charitable contributions

b. Casualty losses

c. Moving expenses

d. Medical expenses

e. All of the above are itemized deductions

5. Ramon, a single taxpayer, has adjusted gross income for 2012 of $98,000 and his itemized deductions total $19,000. What taxable income will Ramon show in 2012?

a. $73,550

b. $75,200

c. $92,550

d. $89,050

e. $70,05

6. Ben is a single taxpayer in 2012 who is 32 years old. What is the minimum amount of income that he must have to be required to file a tax return for 2012?

a. $5,950

b. $11,900

c. $9,750

d. $10,300

e. None of the above

7. Joan, who was divorced in 2012, had filed a joint tax return with her husband in 2011. During 2012, she did not remarry and continued to maintain her home in which her five dependent children lived. In the preparation of her tax return for 2012, Joan should file as:

a. A single individual

b. A qualifying widow(er)

c. Head of household

d. Married, filing separately

e. None of the above

8. Margaret and her sister support their...