ch3 - 1. Al owns an investment in Vireo Corporation stock...

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1. Al owns an investment in Vireo Corporation stock which during the year increased in value by $10,000. The $10,000 appreciation must be included in Al’s gross income for the year. a. True *b. False 2. Under the Federal income tax formula for individuals, the determination of adjusted gross income (AGI) precedes that of taxable income (TI). *a. True b. False 3. As used in the income tax formula, gross income would not include the receipt of a loan the taxpayer obtained from a bank. *a. True b. False 4. Under the income tax formula, a taxpayer must choose between deductions for AGI and the standard deduction. a. True *b. False 5. An “above the line” deduction refers to a deduction for AGI. *a. True b. False 6. Because they appear on page 1 of Form 1040, itemized deductions are also referred to as “page 1 deductions.” a. True *b. False 7. All exclusions from gross income are reported on Form 1040. a. True *b. False 8. Once TI (taxable income) is determined, the taxpayer must make a choice between itemizing or claiming the standard deduction. a. True *b. False
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9. The filing status of a taxpayer (e.g., single, head of household) must be identified before taxable income is determined. *a. True b. False 10. Lee, a citizen of Korea, is a resident of the U.S. Any income Lee receives from land he owns in Korea is not subject to the U.S. income tax. a. True *b. False 11. An increase in the amount of a taxpayer’s AGI will not affect the amount of medical expenses allowed as a deduction. a. True *b. False 12. The additional standard deduction for age and blindness is the same amount for single as for married taxpayers. a. True *b. False 13. The basic and additional standard deductions are not subject to an annual adjustment for inflation. a. True *b. False 14. A taxpayer who itemizes his deductions from AGI can claim the property taxes on his personal residence as a deduction. *a. True b. False 15. Claude’s deductions from AGI slightly exceed the standard deduction allowed for 2011. Under these circumstances, Claude cannot claim the standard deduction. a. True *b. False 16. As opposed to itemizing deductions from AGI, the majority of
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individual taxpayers choose the standard deduction. *a. True b. False 17. It is possible for an individual taxpayer to claim more than one type of standard deduction. *a. True b. False 18. Tad claims his 70-year-old mother as a dependent. The mother may not claim an additional standard deduction for her age. a. True *b. False 19. In 2011, Ed is 66 and single. If he has itemized deductions of $7,200, he should claim the standard deduction alternative. *a. True b. False 20. 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 2011 is $15,050 ($11,600 + $1,150 + $1,150 + $1,150). *a. True
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ch3 - 1. Al owns an investment in Vireo Corporation stock...

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