Copyright McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

1 Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Chapter 02 Expanded Tax Formula, Forms 1040A and 1040, and Basic Concepts 1)The federal individual income tax returns are the 1040ES, 1040A and 1040.A)True B)False 2)The tax code defines adjusted gross income (AGI) as gross income minus a list of permitted deductions.A)True B)False 3)The amount of tax liability for a taxpayer depends on many factors, including the filing status of the taxpayer.A)True B)False 4)A married couple can file a joint return only if both have earned income.A)True B)False 5)A married couple in the process of obtaining a divorce cannot file a joint tax return.A)True B)False 6)A taxpayer filing separately must show the name, address, and social security number of the spouse on the tax return.A)True B)False 7)To qualify for head of household status, a taxpayer must maintain a household that is the principal place of abode of a qualifying person for more than half the year.A)True B)False 8)A taxpayer can qualify for head of household even though his or her parents are living in a separate household from that of the taxpayer (assume all other requirements are met).A)True B)False 9)If a taxpayer's spouse dies during the tax year, the taxpayer must file as a qualifying widow(er).A)True B)False Fundamentals of Taxation 2017 Edition 10th Edition Cruz Test Bank Visit TestBankDeal.com to get complete for all chapters

2 Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.10)The exemption amount is subject to annual adjustment for inflation.A)True B)False 11)The personal exemption for 2016 is $4,050.A)True B)False 12)A taxpayer can be claimed as a dependent on another return and still he or she can claim a personal exemption on his or her tax return.A)True B)False 13)To be claimed as a dependent, a person must be a qualifying child or a qualifying relative.A)True B)False 14)A qualifying child does not have to meet the support test in order to be claimed as a dependent.A)True B)False 15)A qualifying relative must be related to the taxpayer (as listed by the IRS), or be a member of the taxpayer's household for the entire year.A)True B)False 16)A taxpayer who either is 65 or older or blind can claim an additional standard deduction.A)True B)False 17)The standard deduction in 2016 for a married couple, under 65 and not blind, is $12,600.A)True B)False 18)In 2016, the additional standard deduction for a single taxpayer, who is 65 or older and not blind, is

$1,200.

A)True B)False

3 Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.19)Even if the total of the itemized deductions is lower than the standard deduction, a taxpayer should choose to itemize on his or her tax return.A)True B)False 20)The tax tables stop at taxable income of $115,000.A)True B)False 21)Most taxpayers make payments to the IRS through income tax withholdings and quarterly estimated tax payments.A)True B)False 22)A taxpayer may request an automatic seven-month extension of time to file his or her tax return.A)True B)False 23)An extension to file a tax return is an extension of time to file and an extension of time to pay.A)True B)False 24)The maximum penalty for failure to file a tax return that is not due to fraud is 25%.A)True B)False 25)The IRS can impose a 75% penalty on any portion of understatement of tax that is attributable to negligence.A)True B)False 26)Taxable income (TI) is computed after subtracting from adjusted gross income (AGI), the standard deduction or itemized deductions and personal and dependency exemptions.A)True B)False 27)When a taxpayer's AGI exceeds certain levels, certain tax benefits are reduced or eliminated.A)True B)False

4 Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.28)Marital status of a taxpayer is determined on the last day of the tax year.A)True B)False 29)A couple who is legally married on the last day of the tax year cannot file married filing separately.A)True B)False 30)Even though the taxpayer is claimed as a dependent on another tax return, he or she can still receive an exemption amount for himself or herself when filing his or her tax return.A)True B)False 31)In a multiple support agreement, the taxpayer who will receive the exemption must file all the Forms 2120 with his or her tax return.A)True B)False 32)The taxpayer's brother must live with the taxpayer for the entire year to meet the relationship or member of household test under qualifying relatives.A)True B)False 33)If a married couple files separate returns and one of them itemizes, the other spouse must also itemize.A)True B)False 34)A taxpayer who has income that is not subject to withholding is never required to make estimated payments during the year.A)True B)False 35)If the taxpayer still owes tax after April 15, the IRS assesses interest based on the remaining amount owed.A)True B)False 36)Many deductions and credits are determined with reference to adjusted gross income (AGI).A)True B)False