ACCT 2321 Test - Fall 2007 Test I Multiple Choice Portion...

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Fall 2007, Test I, Multiple Choice Portion Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. Spencer and Ashley are married and live in a common law state. Spencer wants to make gifts to their four children in 2007. What is the maximum amount of the annual exclusion they will be allowed for these gifts? a. $48,000. b. $96,000. c. $1,096,000. d. $2,096,000. ____ 2. In terms of probability, which of the following taxpayers would be least likely to be audited by the IRS? a. Taxpayer is a wage earner at a General Motors auto assembly plant. b. Taxpayer owns and operates a cash discount liquor store. c. Taxpayer just received a $2 million jury award against a manufacturer of automobile tires. d. Taxpayer owns and operates a used car dealership. e. Taxpayer held the winning Powerball ticket. ____ 3. Trent files his tax return 35 days after the due date. Along with the return, Trent remits a check for $8,000 which is the balance of the tax owed. Disregarding the interest element, Trent’s total failure to file and to pay penalties are: a. $80. b. $720. c. $800. d. $880. ____ 4. Which of the following sources has the highest tax validity? a. Revenue Ruling. b. Revenue Procedure. c. Regulations. d. Internal Revenue Code section. ____ 5. Which of the following types of Regulations has the highest tax validity? a. Temporary. b. Legislative. c. Interpretative. d. Procedural. ____ 6. If a taxpayer decides not to pay a tax deficiency, he or she must go to which court? a. Appropriate U.S. Circuit Court of Appeals. b. U.S. District Court. c. U.S. Tax Court. d. U.S. Court of Federal Claims. ____ 7. Which is a primary source of tax law? a. Serverino R. Nico, Jr., 67 T.C. 647 (1977). b. Article by a Federal judge in Tax Notes. c. General Counsel Memoranda. d. Written determination letter. e. All of the above are primary sources.
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____ 8. Monica, age 18, is claimed by her parents as a dependent. During 2007, she had interest income from a bank savings account of $1,000 and income from a part-time job of $4,500. Monica’s taxable income is: a. $4,500 – $4,800 = $0. b. $5,500 – $5,350 = $150. c. $5,500 – $4,800 = $700. d. $5,500 – $850 – $3,400 = $1,250. ____ 9. Ava is a widow, age 74 and blind, who is claimed as a dependent by her son. During 2007, she received $4,800 in Social Security benefits, $1,200 in bank interest, and $1,800 in cash dividends from stocks. Ava’s taxable income for 2007 is: a. $3,000 – $850 – $2,600 = $0. b. $3,000 – $2,600 = $400. c. $3,000 – $850 – $1,300 = $850. d. $7,800 – $850 – $2,600 = $4,350. ____ 10. Elton and Elsie are husband and wife and file a joint return for 2007. Both are under 65 years of age. They provide more than half of the support of their daughter, Kristie (age 25), who is a full-time medical student. Kristie receives a $3,500 scholarship covering her room and board at college. They furnish all of the support of Hattie (Elton’s grandmother), who is age 70 and lives in a nursing home. They also support
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ACCT 2321 Test - Fall 2007 Test I Multiple Choice Portion...

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