Tax Exam Questions (15 Questions)

1. Which source provides the highest level of tax guidance for an individual?

A private letter ruling issued to a different taxpayer

Technical advice memorandums

Revenue rulings

IRS publications

2. Which item is an administrative source of tax law?

Congressional committee reports

Internal Revenue Code

U.S. Treasury Regulations

Judicial interpretations

3. Which item is a source of tax law from the legislative branch of government?

Revenue rulings

Income tax regulations

Internal Revenue Code

Court decisions

4. What is the first step of the tax research process?

Evaluate the authorities

Communicate the conclusions to the client

Identify the issues

Determine the facts

5. Which method should a taxpayer use to depreciate a new computer purchased during a given tax year?

MACRS

ACRS

Amortization

Depletion

6. Which filing status would create the lowest tax liability for a taxpayer with $19,000 of taxable income?

Single

Married filing separately

Married filing jointly

Head of household

7. Which item qualifies as an individual tax credit?

Employment uniform credit

Unreimbursed business costs credit

Earned income tax credit

Personal exemption credit

8. Which tax credits apply to individuals?

Tax preparation credit and charitable contributions credit

Medical credit and student loan interest credit

Child tax credit and foreign tax credit

Property tax credit and mortgage interest credit

9. What is the percentage (up to the ceiling) for OASDI that employers are required to withhold?

5.65%

6.20%

7.65%

1.45%

10. Which type of interest qualifies as an itemized deduction?

Interest on a loan for investment stock

Interest paid on a personal credit card

Interest paid on a loan to buy municipal bonds

Interest on a personal car loan

11. What is an example of a deductible charitable contribution?

Cash contributions given to a public charity

Cash value for time given to a qualified charitable organization

Cash given to a neighbor who recently became unemployed

Cash contributions to individuals experiencing homelessness

12. Which amount may be deducted for donating capital gain property to a public charity?

Fair market value (FMV)

Lower of FMV or basis at time of acquisition

Lower of FMV or basis at time of donation

Basis

13. Which type of income is used as the deductible limit base for medical expenses?

Net income

Gross income

Adjusted gross income

Taxable income

14. Which type of expenditure may qualify as an itemized deduction?

Federal income tax

Business license tax

Medicare tax

Real estate property tax

15. What qualifies as a deductible medical expenditure?

Elective cosmetic surgery not for correcting deformity

Controlled substances legal under state law but illegal federally

Nonprescription medicines

Dental examinations

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