{"id":531,"date":"2022-04-06T21:32:00","date_gmt":"2022-04-06T21:32:00","guid":{"rendered":"https:\/\/highclasswriters.com\/blog\/?p=531"},"modified":"2022-04-06T21:32:02","modified_gmt":"2022-04-06T21:32:02","slug":"finance-35-multiple-choice-questions-no-writing-choose-correct-answers-only","status":"publish","type":"post","link":"https:\/\/highclasswriters.com\/blog\/finance-35-multiple-choice-questions-no-writing-choose-correct-answers-only\/","title":{"rendered":"Finance: 35 multiple choice questions (no writing, choose correct answers only)"},"content":{"rendered":"\n

QUESTION 1<\/p>\n\n\n\n

Which of the following best describes the function of tax conduit direct participation programs?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

They provide, in all instances, for certain allocations of income and expenses.<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

Gains and losses flow through to the taxpayer.<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

They relieve the taxpayer of the \u201cat-risk\u201d rules.<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

They magnify the tax impact of losses generated.<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 2<\/p>\n\n\n\n

In general, tax income is taxed to the grantor in all of the following situations, EXCEPT:<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

If he or she retained the power to revoke the trust.<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

If the trust will revert to the grantor upon the death of a lineal descendant under the age of 21.<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

If he or she retained control over the beneficial enjoyment of the trust property.<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

If he or she retained the power to administer the estate for his or her own benefit.<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 3<\/p>\n\n\n\n

Which of the following statements concerning the federal income tax treatment of the payout from a life insurance policy is correct?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

The full amount of a lump-sum payment of the policy\u2019s cash surrender value before the insured\u2019s death will be taxable as ordinary income.<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

If the policy\u2019s cash surrender value is placed under the fixed amount option, each installment payment will be fully taxable as ordinary income.<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

The lump-sumpayment of the policy\u2019s proceeds to the policy\u2019s beneficiary upon the insured\u2019s death will result in no taxable income for anyone.<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

A settlement option payout of a life insurance policy\u2019s death proceeds will result in no taxable income for the beneficiary.<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 4<\/p>\n\n\n\n

All of the following are sources of tax law and tax rules, EXCEPT:<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

IRS<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

Congress<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

U.S. Tax Court<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

Discriminant Functions SystemProgram<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 5<\/p>\n\n\n\n

Which of the following is includible in gross income for federal income tax purposes?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

Gift from a grandfather to pay tuition<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

A year-end bonus received by an employee, based on business profits<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

Excess living expenses received under an insurance contract after a home was damaged by fire<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

Interest paid on most bonds issued by a state or political subdivision<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 6<\/p>\n\n\n\n

All of the following statements concerning the nature and characteristics of simple trusts are correct, EXCEPT:<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

It is a separate entity for federal income tax purposes.<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

Trust income is taxable to the beneficiaries in the year in which it is distributed.<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

Trust income may be accumulated, but it is taxable to the beneficiaries in the year in which it is earned.<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

The grantor conveys to the trustee legal title to the trust property.<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 7<\/p>\n\n\n\n

Which of the following is a reason to invest in a passive income generator?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

The income can be offset by passive losses to increase tax-free cash flow.<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

Passive income generators are not subject to Treasury authority or tax regulations.<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

Passive income can be used to offset active income.<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

Passive income can be used to offset portfolio losses.<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 8<\/p>\n\n\n\n

An annuitant pays $60,000 for a pure or straight life annuitywhose annual payments are $6,000. The annuitant has a life expectancy of 16 years. How much of the $6,000 annual payment is includible annually in the annuitant\u2019s gross income?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

$1,368<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

$1,750<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

$2,250<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

$2,634<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 9<\/p>\n\n\n\n

The vast majority of large corporations use which of the following accounting methods?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

Accrual<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

Cash<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

Hybrid<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

Percentage-of-completion<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 10<\/p>\n\n\n\n

Charitable gifts may be made in the form of ordinary income property to any qualifying organization. The deduction for such gifts is limited to which of the following?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

The lesser of the taxpayer\u2019s basis or the property\u2019s fair market value<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

The fair market value of the property<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

The taxpayer\u2019s basis plus 40% of the capital gain<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

The fair market value reduced by 60% of the capital gain<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 11<\/p>\n\n\n\n

Bob realizes a net long-term capital gain of $6,000 and a net short-term capital loss of $4,000. Bob\u2019s taxable income is $40,000. What is the amount of net capital gain or loss to be reported on his tax return?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

$1,000 loss<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

$1,600 loss<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

$1,000 gain<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

$2,000 gain<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 12<\/p>\n\n\n\n

Which of the following is LEAST likely to be an audit trigger?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

Returns with tax-shelter activity<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

Returns with hobby losses<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

Returns with refunds over $1,000<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

Returns with deductions for home office expenses<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 13<\/p>\n\n\n\n

Joe Steir owns a ranch in Texas that he would like to exchange. Sylvia Potter is interested in a trade. Which of the following assets could Joe accept from Sylvia to qualify the transaction for like-kind treatment?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

Common stock<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

A 25-year working oil leasehold<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

Large apartment building in Pittsburgh<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

Milking equipment<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 14<\/p>\n\n\n\n

Which of the following statements is correct regarding IRS Private Letter Rulings?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

They are only a precedent for the taxpayer to whom they are issued.<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

They have the full force of law.<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

They must be followed by the IRS in other similar cases.<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

They are published by the IRS for other taxpayers to view.<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 15<\/p>\n\n\n\n

Last year, Roscoe Forest sold securities from his portfolio and realized the following gains and losses: net long-term capital loss of $14,000; net short-term capital gain of $600; and net short-term capital loss of $400. Which of the following amounts is the carryover which Roscoe can use in future years?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

$7,000<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

$7,800<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

$10,800<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

$14,000<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 16<\/p>\n\n\n\n

Which of the following statements best describes the general rule concerning the tax treatment of child support payments?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

The payments are taxable to the recipient, the payee.<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

The payments are deductible to the payor.<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

The payments are both taxable to the recipient and deductible to the payor.<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

The payments are nontaxable to the payee and nondeductible by the payor.<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 17<\/p>\n\n\n\n

Which of the following statements concerning the federal income tax treatment of investment income is (are) correct?<\/p>\n\n\n\n

Portfolio income includes both dividends and capital gains.<\/p>\n\n\n\n

An individual taxpayer may apply losses frompassive investment activities against portfolio income.<\/p>\n\n\n\n

An individual taxpayer may only apply losses from passive investment activities against income fromother passive investment activities.<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

1 only<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

1 and 2 only<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

1 and 3 only<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

2 and 3 only<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 18<\/p>\n\n\n\n

Taxable income with respect to an individual taxpayer is defined by which of the following?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

All compensation for services, no matter what the form of payment<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

Adjusted Gross Income (AGI), less the standard or itemized deduction(s), less the personal exemption<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

Earned income plus investment income<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

Compensation before payroll tax deductions or any other deductions by an employer<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 19<\/p>\n\n\n\n

Which of the following statements concerning the characteristics of a valid and enforceable premarital agreement are correct?<\/p>\n\n\n\n

It may be orally executed by the parties.<\/p>\n\n\n\n

A complete disclosure of the parties\u2019 net worth must be made before the signing of the agreement.<\/p>\n\n\n\n

It must be used to determine alimony payments in the event of a divorce.<\/p>\n\n\n\n

The agreement must be in writing and signed by both parties.<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

1 and 2 only<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

1 and 3 only<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

2 and 3 only<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

2 and 4 only<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 20<\/p>\n\n\n\n

Which of the following statements concerning the income tax implications for the purchaser of a deferred annuity contract bought in August of this year is (are) correct?<\/p>\n\n\n\n

Any accumulation of investment income is tax-deferred.<\/p>\n\n\n\n

A lump-sum withdrawal after 10 years of only 25% of the purchaser\u2019s initial investment will result in the receipt of no taxable income.<\/p>\n\n\n\n

A 10% penaltywill be imposed on the taxable portion of any lump-sum withdrawal that is made at age 60.<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

1 only<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

1 and 2 only<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

1 and 3 only<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

2 and 3 only<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 21<\/p>\n\n\n\n

A business activity is presumed to be \u201cengaged in for profit\u201d (and therefore exempt from the hobby loss rules) if it produces a profit for what number of tax years out of the five consecutive years ending with the current year (and not counting the exceptions of horse breeding, trading, showing, and racing)?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

One or more years<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

Two or more years<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

Three or more years<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

Four or more years<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 22<\/p>\n\n\n\n

Which of the following statements concerning the characteristics of a QDRO (Qualified Domestic Relations Order) are correct?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

It is an order that relates to the settlement of marital property rights and recognizes the alternate payee\u2019s right to receive the benefits of the participant in the employer\u2019s pension plan.<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

All divorce decrees concerned with the division of retirement benefits among spouses need not be \u201cqualified\u201d to avoid the problem of improperly assigned benefits.<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

The planner does not need to concern himself or herself about when the benefit amounts will be awarded to the spouse since they are automatically paid when the \u201cearliest retirement age\u201d occurs.<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

A QDRO is an order that assigns benefits from a qualified plan to the spouse who participated in the plan.<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 23<\/p>\n\n\n\n

Which of the following are among the standards which serve to define \u201cactive participation\u201d by an owner in real estate rental activities?<\/p>\n\n\n\n

Making management decisions, such as approving tenants<\/p>\n\n\n\n

Approving the terms of leases<\/p>\n\n\n\n

Approving expenditures for major repairs<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

1 and 2 only<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

1 and 3 only<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

2 and 3 only<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

1, 2, and 3<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 24<\/p>\n\n\n\n

An audit trigger can best be described by which of the following?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

A result of targeted programs<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

A result of a casualty loss<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

A divergence from IRS norms<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

A random screening of returns<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 25<\/p>\n\n\n\n

George would like to sell or exchange the high-speed office copier he has been using in his business. His neighbor is interested in trading for it. Which of the following assets could George accept in a like-kind transaction?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

Small apartment<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

Office word processor<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

Vacant office approved for commercial use<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

Personal-use passenger car<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 26<\/p>\n\n\n\n

Which of the following statements is (are) true concerning the federal income tax treatment of capital gains realized during 2013?<\/p>\n\n\n\n

For taxpayers in the 15% tax bracket, net short-term capital gains are not taxed, due to the 0% tax rate.<\/p>\n\n\n\n

Net long-term capital gains can be offset by net short-term capital losses for taxpayers in all brackets.<\/p>\n\n\n\n

A short-term capital gain is a gain from a capital asset held for less than 18 months.<\/p>\n\n\n\n

For taxpayers in the 15% bracket, net long-term capital gains held for more than one year are not taxed, due to the 0% tax rate.<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

2 only<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

1 and 3 only<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

2 and 4 only<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

1, 3, and 4 only<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 27<\/p>\n\n\n\n

The IRS makes use of all of the following audit programs and procedures, EXCEPT:<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

Discriminant Functions SystemProgram<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

Targeted programs<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

Computer verification of every deduction<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

Ranking of auditworthiness<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 28<\/p>\n\n\n\n

Which of the following business forms allow for limited liability?<\/p>\n\n\n\n

General partnership<\/p>\n\n\n\n

Direct ownership<\/p>\n\n\n\n

Limited partnership<\/p>\n\n\n\n

C corporation<\/p>\n\n\n\n

Limited liability company<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

1 and 2 only<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

2 and 3 only<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

3 and 4 only<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

3, 4, and 5 only<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 29<\/p>\n\n\n\n

If a divorce decree requires a husband to pay his wife $2,000 per month in alimony and child support, but when the children reach 21, the amount of the payment will be reduced to $800, and only this amount will be taxable and deductible as alimony, how should the $1,200 be treated?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

The $1,200 is tied to a contingency affecting the children and is deductible as a child support payment.<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

After the children reach 21 years of age, the $1,200 will still be a responsibility of the husband.<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

The $1,200 is tied to a contingency affecting the children and is nondeductible.<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

The court will determine the disposition of the $1,200.<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 30<\/p>\n\n\n\n

Which of the following statements concerning the disadvantages of the corporate form of organization is (are) correct?<\/p>\n\n\n\n

Corporations are limited in their corporate affairs to acts specifically enumerated in state statutes, the corporate charter, and the corporate bylaws.<\/p>\n\n\n\n

Since corporations are state-chartered, they are limited in their ability to cross state lines to conduct business, and the procedures necessary to overcome this disadvantage tend to be both expensive and cumbersome.<\/p>\n\n\n\n

Corporations tend to be less flexible than other business forms.<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

1 only<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

2 only<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

3 only<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

1, 2, and 3<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 31<\/p>\n\n\n\n

Caroline determined that her regular tax liability is $20,000 and her AMT tax liability is $25,000. What is the total amount of her income tax liability?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

$5,000<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

$20,000<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

$25,000<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

$45,000<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 32<\/p>\n\n\n\n

Susan bought a life policy last month with a single premium. Under these circumstances, which of the following statements is (are) correct?<\/p>\n\n\n\n

Susan can borrow the amount of the policy\u2019s investment income, without incurring income tax liability.<\/p>\n\n\n\n

If Susan surrenders the policy for its cash surrender value, she is in receipt of taxable income to the extent the policy\u2019s cash surrender value exceeds her cost basis.<\/p>\n\n\n\n

If Susan dies after borrowing the policy\u2019s cash surrender value, the designated beneficiary will be in receipt of taxable income.<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

2 only<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

1 and 2 only<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

1 and 3 only<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

2 and 3 only<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 33<\/p>\n\n\n\n

According to federal income tax rules concerning the taxation of trust income to a grantor, which of the following statements is correct?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

The income of a trust will not be taxed to a grantor who creates an irrevocable trust for his or her spouse for a period of at least five years.<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

The grantor will be taxed if he or she retains a discretionary power to withhold and accumulate income, even though the income is ultimately payable to the beneficiaries from whom it is withheld.<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

The power to retain or allocate receipts and disbursements between corpus and income will not subject the grantor to tax.<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

The grantor will not be subject to tax if the only right he or she retains and exercises is the power to borrow from the trust.<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 34<\/p>\n\n\n\n

Ben, an individual taxpayer filing a joint return, has $33,000 of investment interest expense and no investment income. What is the amount of investment interest expense disallowed?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

$16,500<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

$23,000<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

$26,500<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

$33,000<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 35<\/p>\n\n\n\n

The vast majority of individual tax returns are filed on the basis of which of the following accounting methods?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

Accrual<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

Cash<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

Hybrid<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

Completion-of-contract<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 36<\/p>\n\n\n\n

George Wood employs his 15-year-old son to do janitorial work in George\u2019s service station\/garage in the afternoons after school and sometimes on Saturdays.<\/p>\n\n\n\n

All of the following statements concerning payments to his son are correct, EXCEPT:<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

George\u2019s payments to his son are deductible from current income as a business expense.<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

George\u2019s payments are earned income for his son and allow him a standard deduction, as well as a personal exemption.<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

The standard deduction in 2013 for his son is the greater of $1,000 or his son\u2019s earned income plus $300, up to the $6,100 allowance for single individuals.<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

The payments to the son must be based on work that is economically significant to the business.<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 37<\/p>\n\n\n\n

Olaf Johnson has self-employment earnings of $52,000 and no other earned income. Which of the following is Olaf\u2019s self-employment tax?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

$4,938<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

$6,368<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

$7,347<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

$7,876<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 38<\/p>\n\n\n\n

Which of the following statements concerning the automatic reinvestment of dividends declared for mutual fund shares is (are) correct?<\/p>\n\n\n\n

The dividends are includible in the shareholder\u2019s gross income, even though he or she does not receive the dividends.<\/p>\n\n\n\n

The shareholder\u2019s basis for his or her investment in the mutual fund shares is not affected by the declaration and reinvestment of dividends.<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

1 only<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

2 only<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

both 1 and 2<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

neither 1 nor 2<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 39<\/p>\n\n\n\n

Use the following information to answer the next two questions<\/p>\n\n\n\n

HarryHanover bought a small rental apartment house several years ago for $120,000.<\/p>\n\n\n\n

Since then, he has had to put on a new roof, at a cost of $6,000.<\/p>\n\n\n\n

Apart from this, Harry has spent $4,000 on maintenance of the property and claimed $8,000 in depreciation.<\/p>\n\n\n\n

Which of the following is Harry\u2019s current adjusted basis in the property?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

$116,000<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

$118,000<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

$120,000<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

$122,000<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 40<\/p>\n\n\n\n

Assuming Harry sells the property for a net return of $124,000, which of the following is his realized and recognized gain on the property?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

$4,000<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

$6,000<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

$8,000<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

$10,000<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 41<\/p>\n\n\n\n

Carl Sweet purchased a passive investment. This year, the investment generated no passive income, and he had passive losses of $43,000. How much of this loss is deductible by Carl this year?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

$0<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

$4,300<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

$6,450<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

$8,600<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 42<\/p>\n\n\n\n

Which of the following statements concerning the federal income tax treatment of capital losses is (are) correct?<\/p>\n\n\n\n

An individual taxpayer whose taxable income is $30,000 can deduct all of his or her $5,000 net short-term capital loss if he or she has no capital gains.<\/p>\n\n\n\n

An individual taxpayer whose taxable income is $30,000 can deduct 50% of his or her $10,000 net long-term capital losses if he or she has no short-term capital gains.<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

1 only<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

2 only<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

both 1 and 2<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

neither 1 nor 2<\/p>\n\n\n\n

10 points  <\/p>\n\n\n\n

QUESTION 43<\/p>\n\n\n\n

A capital asset was acquired on March 15, 2014. To meet the long-term holding requirement, what is the earliest date the asset could be sold to obtain long-term capital gain treatment?<\/p>\n\n\n\n

            A.       <\/p>\n\n\n\n

August 16, 2014<\/p>\n\n\n\n

            B.       <\/p>\n\n\n\n

December 31, 2014<\/p>\n\n\n\n

            C.       <\/p>\n\n\n\n

March 15, 2015<\/p>\n\n\n\n

            D.       <\/p>\n\n\n\n

March 16, 2015<\/p>\n","protected":false},"excerpt":{"rendered":"

QUESTION 1 Which of the following best describes the function of tax conduit direct participation programs?             A.        They provide, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[1],"tags":[],"class_list":["post-531","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"yoast_head":"\nFinance: 35 multiple choice questions (no writing, choose correct answers only) - Highclasswriters<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/highclasswriters.com\/blog\/finance-35-multiple-choice-questions-no-writing-choose-correct-answers-only\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Finance: 35 multiple choice questions (no writing, choose correct answers only) - Highclasswriters\" \/>\n<meta property=\"og:description\" content=\"QUESTION 1 Which of the following best describes the function of tax conduit direct participation programs? 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