1. Ann Bolen's husband died last year. Ann maintains a household where she andher 8-year-old daughter reside for the tax year. On her tax return, sheproperly claims a dependency exemption for her daughter. For the current year,Ann should file her tax return as:a. married taxpayer filing separately.b. surviving spouse.c. head of household.d. single individual.e. none of the above.4. Tammy Yeager (unmarried, age 56) claims her elderly mother (age 74) as adependent. Tammy's mother does not live with her, but Tammy pays for almostall of the costs of maintaining her mother's household. Tammy's 2009 standarddeduction is:a. $8,350.b. $9,750.c. $5,700.d. $7,100.e. $9,450.Answer: ______10. In 2008, a couple pays $10,000 towards the adoption of a U.S. born child.The couple pays another $10,000 in 2009 when the adoption is finalized. Inboth years, AGI is less than $150,000. Which of the following statements bestdescribes the couple's adoption credit?a. The couple is entitled to a $10,000 adoption credit in 2008, and a$2,150 adoption credit in 2009.b. The couple is entitled to a $20,000 adoption credit in 2009.c. The couple is entitled to a $12,150 adoption credit in 2009, and willcarryover $7,850 to 2010.d. The couple is entitled to a $10,000 adoption credit in 2009, and willcarryover $7,850 to 2010.e. none of the above.Answer: ______11. A married couple with two dependent children (ages 6 and 9) and AGI of$121,600 can claim a child tax credit of:a. $0.b. $600.c. $1,400.d. $2,000.e. none of the above.Answer: ______12. A taxpayer's earned income and AGI is $23,000. The taxpayer's total taxliability (before any tax credits) is $1,300. The taxpayer's only tax creditsare a $840 child and dependent care credit and the child tax credit for twoqualifying children. The taxpayer's refundable child tax credit is:a. $2,000.b. $460.c. $0.d. $1,540.e. $700.Answer: ______16. As part of their divorce agreement, Harry transfers to Mary, his formerspouse, GM stock with a market value of $30,000. Harry had $20,000 invested inthe stock. How does this transfer affect Harry, and what is Mary's basis inthe stock?a. Harry has no gain or loss, and Mary's basis is $20,000.b. Harry has no gain or loss, and Mary's basis is $30,000.c. Harry has a gain of $10,000, and Mary's basis is $20,000.d. Harry has a gain of $10,000, and Mary's basis is $30,000.e. None of the above.17. Joyce Rescho is self-employed and uses the calendar year and the accrualmethod of accounting. She reports the following activities for December:Received$10,000fromclientsforservicesto beperformednext yearReceived$30,000forservicesperformedinDecemberReports$15,000 inaccountsreceivablefor workperformedinDecemberReceived$2,000 forservicesperformedinNovemberWhat amount must Rescho include in gross income for December?a. $45,000b. $47,000c. $55,000d. $57,000e. None of the aboveAnswer: ______19. Dan's taxable income falls in the 15% tax bracket. Included in his taxableincome is $5,000 of ordinary dividends, of which $2,000 are qualifieddividends. The amount of tax Dan will pay on his qualified dividends is:a. $300.b. $0.c. $250.d. $100.e. $200.Answer: ______23. Which of the following statements does not apply to Coverdell educationsavings accounts?a. Parents may make nondeductible contributions of up to $2,000 perchild each year.b. Contributions must be for a child of the taxpayer under the age ofc. Qualifying educational expenses include tuition, books, supplies, androom and board.d. When the child reaches age 30, unused amounts are distributed to theparent who is taxed on any accumulated earnings.e. All of the above apply to Coverdell education savings accounts.Answer: ______24. Mike and Deb (ages 49 and 53, respectively) file a joint return. Mike'swages of $92,300 are their only source of income in 2009. Mike contributes tohis 401(k) plan at work. What amount can Mike contribute and deduct to histraditional IRA for 2009?a. $0b. $3,730c. $4,180d. $5,000e. $6,000Answer: ______25. The maximum dollar limit on deductible moving expenses is:a. $2,250.b. $5,250.c. $7,250.d. $10,250.e. None of the above.Answer: ______26. Which of the following statements does not apply to the deduction forstudent loan interest?a. The student loan interest deduction is a deduction for AGI.b. The deduction is available only for the first 60 months of interestpayments.c. Acceptable educational expenses include tuition, books, supplies, androom and board.d. An interest deduction phase-out may apply.e. None of the above.Answer: ______27. Post-graduate fellowship grants are taxable.a. Trueb. FalseAnswer: ______28. A single person with $2,400 of earned income and $3,000 of unearned incomeis entitled to contribute $5,000 to her IRA.a. Trueb. FalseAnswer: ______29. Expenses not allowed as deductible medical expenses include:a. cost of artificial teeth or limbs.b. expenses to hire an ambulance.c. premiums on life insurance.d. cost of orthopedic shoes.e. all of the above are deductible medical expenses.Answer: ______30. Olin owns a principal residence and two vacation homes. His home mortgageinterest on these three homes is $16,950, $20,900, and $22,680, respectively.How much of the $60,530 can Olin deduct on Schedule A?a. $60,530b. $16,950c. $39,630d. $37,850e. $43,580Answer: ______31. The Starks own a home in Tampa, Florida. They paid $1.2 million for thehome several years ago. They originally took out a $1 million mortgage on thehome. In the current year, the Starks refinanced their home at a time when thehome was worth $2 million and the outstanding mortgage balance was $700,000.Their new mortgage is for $1.3 million. After the refinancing, the Starks'sacquisition debt amount is:a. $1.2 million.b. $700,000.c. $1.3 million.d. $1 million.e. $800,000.Answer: ______32. The Martins' home is damaged in a hurricane. Prior to the hurricane, theirliving expenses were $3,000 a month. Because the Martins had to move out oftheir home for five months while it was being fixed, their total livingexpenses increased to $5,000 a month. The insurance company reimbursed theMartins $2,000 a month for their temporary living expenses. The amount thatthe Martins must include in gross income is:a. $0.b. $5,000.c. $2,000.d. $3,000.e. $10,000.Answer: ______33. Tom incurred two casualties during the year. The first involved his car,which was involved in an accident. Tom's basis in the car was $15,000. Priorto the accident, the car was worth $5,000; after the accident it was worth$2,800. Tom's insurance company reimbursed him $1,000 for his loss. The secondcasualty involved a theft of artwork from his home. Tom purchased the artworkfor $20,000 and it was worth $35,000 at the time of the theft. Tom's insurancecompany reimbursed him $10,000 for his loss. If Tom's AGI is $55,000, hiscasualty and theft loss deduction on Schedule A is:a. $4,700.b. $5,700.c. $5,200.d. $0.e. None of the above.Answer: ______34. Investment income includes net capital gain and qualified dividends thatthe taxpayer pays a lower (0% or 15%) tax rate on.a. Trueb. FalseAnswer: ______35. When an individual has insurance coverage but declines to report a caraccident to the insurance company in order to avoid an increase in futureinsurance premiums, the taxpayer cannot claim a casualty loss deduction forany of the loss.a. Trueb. FalseAnswer: ______36. Which of the following is not a factor considered in determining whetheran activity is a business or a hobby?a. Locating the activity in the taxpayer's homeb. Relative amount of pleasure derived from the activityc. Time and effort devoted to the activityd. Extent of dependence on the activity for financial supporte. All of the above are factors considered in determining whether anactivity is a business or a hobbyAnswer: ______38. A taxpayer has $7,200 in gambling losses and has $6,000 of lotterywinnings. On his tax return:a. The taxpayer will deduct $1,200 of gambling losses as a miscellaneousitemized deduction subject to the 2% AGI rule.b. The taxpayer will deduct $1,200 of gambling losses as a miscellaneousitemized deduction (not subject to the 2% AGI rule).c. The taxpayer will deduct $6,000 of gambling losses as a miscellaneousitemized deduction (not subject to the 2% AGI rule).d. The taxpayer will deduct $6,000 of gambling losses as a miscellaneousitemized deduction subject to the 2% AGI rule.e. None of the above.Answer: ______39. Katie is sent by her employer on a domestic business trip. She is gone atotal of 8 days. She flies to New York on Saturday and spends Sundaysightseeing. She attends a conference Monday - Friday of that next week andthen flies home on Saturday. What portion of her airfare can Katie take as atravel expense deduction?a. 62.5%b. 75%c. 80%d. 87.5%e. 100%Answer: ______40. Which of the following statements is false regarding the hobby loss rules?a. The deduction for expenses related to hobby activities cannot exceedhobby income.b. Hobby income is included in gross income and hobby-related expensesare miscellaneous deductions subject to the 2% AGI rule.c. Depreciation is the last expense taxpayers deduct against hobbyincome.d. Hobby deductions in excess of hobby income are carried over to offsethobby income in future tax years.e. All of the above statements are true (there are no false statements).Answer: ______41. Impairment-related work expenses for disabled employees are subject to the2% of AGI rule in computing deductible miscellaneous expenses.a. Trueb. FalseAnswer: ______42. Dues paid to public service organizations are deductible as employeebusiness expenses.a. Trueb. FalseAnswer: ______43. Which of the following is generally not a deductible business expense onSchedule C?a. Office suppliesb. Depreciationc. Rentd. Charitable contributionse. All of the above are deductible business expenses on Schedule CAnswer: ______44. If the accumulation of home office expenses for the business use of a homeresults in a net loss for the year, the expense that is the last deductiontaken and thus the first expense postponed to the next year is:a. mortgage interest.b. property taxes.c. depreciation.d. utilities.e. none of the above.Answer: ______45. The maximum number of employees that an employer can have to be able tooffer a SIMPLE plan is:a. 25.b. 50.c. 100.d. 200.e. none of the above.Answer: ______46. If a 45-year-old employee contributes $11,000 to his employer's 401(k)plan during 2009, how much can he contribute to his employer's Roth 401(k)?a. $5,500.b. $16,500.c. $11,000.d. $10,500.e. $0.Answer: ______47. The self-employment tax in 2009 for a sole proprietor with $154,800 ofprofits from self-employment and no wages is:a. $23,684.b. $17,389.c. $21,873.d. $16,340e. none of the above.Answer: ______48. The self-employment tax in 2009 for a sole proprietor with $154,800 ofprofits from self-employment and $54,500 of wages is:a. $8,002.b. $12,437.c. $10,631.d. $15,346.e. none of the above.Answer: ______49. If a taxpayer has Schedule C net profit of $60,000, the maximumcontribution to a SEP plan is $12,000, which is 20% of the Schedule C netprofit.a. Trueb. FalseAnswer: ______50. On the first of each month, Donna's employer gives her $500 to cover herwork-related car expenses. The employer does not require Donna to report heractual costs. During the year, Donna can substantiate driving 24,000work-related miles. Which of the following describes the correct tax treatmentof Donna's car expenses and reimbursement?a. Donna's employer adds $6,000 to her wages, and Donna deducts $6,000for AGI and $7,200 as a miscellaneous deduction subject to the 2% AGIrule.b. Donna's employer adds $6,000 to her wages and Donna deducts $13,200as a miscellaneous deduction subject to the 2% AGI rule.c. Donna is not taxed on the reimbursement and she deducts $7,200 as amiscellaneous itemized deduction subject to the 2% AGI rule.d. Donna is not taxed on the reimbursement and she deducts $7,200 forAGI.e. Donna is not taxed on the reimbursement and she deducts $13,200 as amiscellaneous deduction subject to the 2% AGI rule.Answer: ______