Test Bank for Income Tax Fundamentals 2023, 41e Gerald Whittenburg, Steven Gill

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Test Bank for Income Tax Fundamentals 2023, 41e Gerald Whittenburg, Steven Gill

CH 01 The Individual Income Tax Return

Indicate whether the statement is true or false.

• The U.S. federal tax law's sole purpose is to raise revenue.
• True
• False

• A corporation is a reporting entity but not a tax-paying entity.
• True
• False

• Partnership capital gains and losses are allocated separately to each of the partners.
• True
• False

• Married taxpayers may double their standard deduction amount by filing separate returns.
• True
• False

• An item is included in gross income unless the tax law specifies that the item is subject to exclusion.
• True
• False

• For taxpayers who do not itemize deductions, the standard deduction amount is subtracted from the taxpayer's adjusted

gross income.

• True
• False

• A taxpayer with self-employment income of $600 must file a tax return.
• True
• False

• A dependent child with earned income in excess of the available standard deduction amount must file a tax return.
• True
• False

• A single taxpayer, who is not a dependent on another’s return, not blind, and under age 65, with income of $11,800

must file a tax return.

• True
• False

• If a taxpayer is due a refund, it will be mailed to the taxpayer regardless of whether a tax return is filed.
• True
• False

• Taxpayers with self-employment income of $400 or more must file a tax return. 1 / 4

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• True
• False

• If your spouse dies during the tax year and you do not remarry, you must file as single for the year of death.
• True
• False

• Taxpayers who do not qualify for married, head of household, or surviving spouse filing status must file as single.
• True
• False

• If an unmarried taxpayer paid more than half the cost of keeping a home which is the principal place of residence of a

nephew who is not their dependent, they may use the head of household filing status.

• True
• False

• The maximum official individual income tax rate for 2022 is 39.6 percent, not including the Medicare surtax on net

investment income.

• True
• False

• All taxpayers may use the tax rate schedule to determine their tax liability.
• True
• False

• The head of household tax rates are higher than the rates for a single taxpayer.
• True
• False

• Most states are community property states.
• True
• False

• If taxpayers are married and living together at the end of the year, they must file a joint tax return.
• True
• False

• A taxpayer who maintains a household with an unmarried child may qualify to file as head of household even if the

child is not the taxpayer's dependent.

• True
• False

• A married person with a dependent child may choose to file as head of household if it reduces the taxpayer's tax

liability.

• True
• False

• Taxpayers who live alone, are legally separated from their spouses under a separate maintenance decree at year-end,

and have no dependents should file as single. 2 / 4

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• True
• False

• Malik, age 22, is enrolled in college on a full-time basis. His parents provide all of his support. Malik may be claimed

as a dependent by his parents.

• True
• False

• A dependent that dies during the tax year may still qualify as a dependent.
• True
• False

• For 2022, the deductions for personal and dependency exemptions are $4,300 each.
• True
• False

• Scholarships received by a student may be excluded for purposes of the support test for determining the availability of

the dependency exemption.

• True
• False

• The two types of dependents are qualifying child or qualifying relative.
• True
• False

• An 18-year-old full-time student who is claimed on the parents' tax return as a dependent is eligible for the child tax

credit.

• True
• False

• Most taxpayers may deduct the standard deduction amount or the amount of their itemized deductions, whichever is

higher.

• True
• False

• An individual taxpayer with a net capital loss may deduct up to $3,000 per year against ordinary income.
• True
• False

• Taxpayers can download tax forms from the IRS Internet site.
• True
• False

Indicate the answer choice that best completes the statement or answers the question.

• Which of the following is a goal of the tax law?
• Encouraging certain social goals such as contributions to charity
• Supporting certain economic goals such as increasing unemployment
• Encouraging smaller families 3 / 4

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• Promoting good will with other countries

• Which one of the following provisions was passed by Congress to meet a social goal of the tax law?
• The deduction for job hunting expenses
• The child and dependent care credit
• The moving expense deduction for adjusted gross income
• The deduction for soil and water conservation costs available to farmers

• Which of the following is an economic goal of the tax law?
• Ensuring that all persons pay the same amount of tax
• Reducing unemployment
• Lowering the cost of adoption
• Encouraging charitable contributions

• In 2022, Wesley has a fairly simple tax situation with moderate wage income and a modest amount of interest income.

Wesley, age 45, wishes to use the easiest possible tax form. He may file which of the following?

• Form 1040-EZ
• Form 1040-SR
• Form 1040
• Form 1065

• Which of the following forms may be filed by individual taxpayers?
• Form 1040
• Form 1041
• Form 1065
• Form 1120

• Which of the following is true of partnerships?
• They are not taxable entities.
• They are taxed in the same manner as individuals.
• They file tax returns on Form 1120.
• They file tax returns on Form 1041.

• Which of the following is correct regarding reporting and taxable entities?
• An individual is a reporting entity but not a taxable entity.
• A partnership is a taxable entity and a reporting entity.
• A corporation is a reporting entity but not a taxable entity.
• A partnership is a reporting entity but not a taxable entity.

• In 2022, Schedule 1 of Form 1040 is used to report what?
• Income from wages
• Capital gains and losses
• Withholding on wages
• Unemployment compensation

• Partnership income is reported on _____.
• Form 1040PTR
• / 4