CHAPTER 3--TAX FORMULA AND

CHAPTER 3--TAX FORMULA AND - CHAPTER 3-TAX FORMULA AND TAX...

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CHAPTER 3--TAX FORMULA AND TAX DETERMINATION; AN OVERVIEW OF PROPERTY TRANSACTIONS Student: ___________________________________________________________________________ 1. Currently, the top Federal income tax rate in effect is the highest it has ever been. True False 2. As used in the income tax formula, gross income would not include the receipt of a loan the taxpayer obtained from a bank. True False 3. Under the income tax formula, a taxpayer must choose between deductions for AGI and the standard deduction. True False 4. An “above the line” deduction refers to a deduction for AGI. True False 5. Because they appear on page 1 of Form 1040, itemized deductions are also referred to as “page 1 deductions.” True False 6. Most exclusions from gross income are not reported on Form 1040. True False 7. Once TI (taxable income) is determined, the taxpayer must make a choice between itemizing or claiming the standard deduction. True False 8. The filing status of a taxpayer (e.g., single, head of household) need not be identified until after taxable income is determined. True False 9. Lee, a citizen of Korea, is a resident of the U.S. Any income Lee receives from land he owns in Korea is subject to the U.S. income tax. True False 10. An increase in the amount of a taxpayer’s AGI will not affect the amount of medical expenses allowed as a deduction. True False 1
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11. Since an abandoned spouse is considered to be unmarried with dependents, the standard deduction for head of household can be used. True False 12. The additional standard deduction for age and blindness is the same amount for single as for married taxpayers. True False 13. The basic and additional standard deductions are subject to an annual adjustment for inflation. True False 14. A taxpayer who itemizes his deductions from AGI can claim the property taxes on his personal residence as a deduction. True False 15. It is possible for an individual taxpayer to claim more than one type of standard deduction. True False 16. Tad claims his 70-year-old mother as a dependent. The mother may not claim an additional standard deduction for her age. True False 17. In 2010, Ed is 66 and single. If he has itemized deductions of $6,200, he should claim the standard deduction alternative. True False 18. Jason and Peg are married and file a joint return. Both are over 65 years of age and Jason is blind. Their standard deduction for 2010 is $14,700 ($11,400 + $1,100 + $1,100 + $1,100). True False 19. Derek, age 46, is a surviving spouse. If he has itemized deductions of $11,600 for 2010, Derek should not claim the standard deduction. True False 20. Buddy and Hazel are ages 72 and 71 and file a joint return. If they have itemized deductions of $13,500 for 2010, they should not claim the standard deduction.
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CHAPTER 3--TAX FORMULA AND - CHAPTER 3-TAX FORMULA AND TAX...

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