Chapter 1: The Individual Income Tax Return Key
1. A married person with a dependent child may choose to file as head of household if it reduces his or her tax
liability.
2. A taxpayer who is living alone and is legally separated from his or her spouse under a separate maintenance
decree at year-end should file as single.
3. If your spouse dies during the tax year and you do not remarry, you must file as single for the year of death.
4. For 2011, personal and dependency exemptions are worth $3,700 each.
5. If a taxpayer is due a refund, it will be mailed to the taxpayer regardless of whether he or she files a tax
return.
6. Scholarships received by a student may be excluded for purposes of the support test for determining the
availability of the dependency exemption.
7. A taxpayer with self-employment income of $600 must file a tax return.
8. Taxpayers who do not qualify for married, head of household, or qualifying widow or widower filing status
must file as single.
9. A single taxpayer, who is not blind and who is under age 65, with income of $8,750 must file a tax return.
10. The two types of exemptions are the personal exemption and the dependency exemption.
11. A corporation is a reporting entity but not a tax-paying entity.
12. Partnership capital gains and losses are allocated separately to each of the partners.
13. An item is not included in gross income unless the tax law specifies that the item is subject to taxation.
14. For taxpayers who do not itemize deductions, the standard deduction amount is subtracted from the
15. Taxpayers with self-employment income of $400 or more must file a tax return.
16. All taxpayers may use the tax rate schedule to determine their tax liability.
17. Married taxpayers may double their standard deduction amount by filing separate returns.
18. If an unmarried taxpayer paid more than half the cost of keeping a home which is the principal place of
residence of a nephew, who is not her dependent, she may use the head of household filing status.
19. An individual, age 22, enrolled on a full-time basis at a trade school, is considered a student for purposes of
determining whether a dependency exemption is permitted.
20. A dependency exemption may be claimed by the supporting taxpayer in the year of death of a dependent.
21. The maximum official individual income tax rate for 2011 is 35 percent.
22. A dependent child with earned income in excess of the available standard deduction amount must file a tax
return.
23. Elderly taxpayers (65 and over) receive an additional standard deduction amount.
24. If a taxpayer’s adjusted gross income exceeds certain threshold amounts, he or she may be required to
reduce the amount of the otherwise allowable deductions for itemized deductions and personal and dependency
exemptions in 2011.
25. A child for whom a dependency exemption is claimed on the parents’ tax return may also claim a personal
exemption on his or her own tax return.
26. The head of household tax rates are higher than the rates for a single taxpayer.
27. Most taxpayers may deduct the standard deduction amount or the amount of their itemized deductions,
whichever is higher.
28. Most states are community property states.
29. If taxpayers are married and living together at the end of the year, they must file a joint tax return.
30. A taxpayer who maintains a household with an unmarried child may qualify to file as head of household
even if the child is not the taxpayer’s dependent.
31. An individual taxpayer with a net capital loss may deduct up to $3,000 per year against ordinary income.
32. Taxpayers can download tax forms from the IRS Internet site.
33. Which of the following is not a goal of the tax law?
34. Which of the following forms may be filed by individual taxpayers?
35. Which of the following taxpayers does not have to file a tax return for 2011?
36. William is a divorced taxpayer who provides a home for his dependent child, Edward. What filing status
should William indicate on his tax return?
38. Brian (60 years old) is single and legally blind. Brian supports his father, who is 88 years old and blind, by
paying the rent and other costs of his father’s residence. What is the total standard deduction amount that Brian
should claim on his 2011 tax return?
39. Martin, a 50-year-old single taxpayer, paid the full cost of maintaining his dependent mother in a home for
40. During 2011, Murray, who is 60 years old and unmarried, provided all of the support of his aged mother.
His mother was a resident of a home for the aged for the entire year and had no income. What is Murray’s filing
status for 2011, and how many exemptions should he claim on his tax return?
41. Irma, widowed in 2009, pays all costs related to the home in which she and her unmarried son live. Her son
does not qualify as her dependent. What is her filing status for 2011?
42. Mr. and Mrs. Vonce, both age 62, file a joint return for 2011. They provided all the support for their
daughter who is 19, legally blind, and who earns no income. Their son, age 21 and a full-time student at a
university, had $4,200 of income and provided 70 percent of his own support during 2011. How many
exemptions may Mr. and Mrs. Vonce claim on their 2011 tax return?
43. John, 45 years old and unmarried, contributed $1,000 monthly in 2011 to the support of his parents’
household. The parents lived alone and their income for 2011 consisted of $500 from dividends and interest.
What is John’s filing status and how many exemptions should he claim on his 2011 tax return?
44. During 2011, Anita was entirely supported by her three sons, Dudley, Carlton, and Isidore, who provided
support for her in the following percentages:
Dudley
8 percent
Carlton
45 percent
Isidore
47 percent
Which of the brothers may be allowed to claim his mother as a dependent, assuming a multiple support agreement exists?
45. Albert and Louise, ages 66 and 64 respectively, filed a joint return for 2011. They provided all of the
46. During 2011, Howard maintained his home in which he and his 16-year-old son resided. The son qualifies
as his dependent. Howard’s wife died in 2010. What is his filing status for 2011?
47. Eugene and Velma are married. For 2011, Eugene earned $25,000 and Velma earned $30,000. They have
decided to file separate returns and are each entitled to claim one personal exemption. They have no deductions
for adjusted gross income. Eugene’s itemized deductions are $9,400 and Velma’s are $1,700. Assuming Eugene
and Velma do not live in a community property state, what is Eugene’s taxable income?
48. Eugene and Velma are married. For 2011, Eugene earned $25,000 and Velma earned $30,000. They have
decided to file separate returns and are each entitled to claim one personal exemption. They have no deductions
for adjusted gross income. Eugene’s itemized deductions are $9,400 and Velma’s are $1,700. Assuming Eugene
and Velma do not live in a community property state, what is Velma‘s taxable income?
49. Which of the following relatives will not satisfy the relationship test for the dependency exemption?
50. Jill is a 16-year-old child who is claimed as a dependent by her parents. Jill’s only income is $1,400 from
her bank savings account. What is the amount of Jill’s standard deduction for 2011?
51. Which one of the following provisions was passed by Congress to meet a social goal of the tax law?
52. An unmarried taxpayer who maintains a household for a dependent child and whose spouse died in the prior
year should file as:
53. Ronald is 92 years old and in poor health. Clever investing earlier in his life has left him with a sizeable
income. He is able to support his son Ed. Ed is 67 years old and a bit “confused,” so he lives in a home for the
aged. Ed’s income is less than $2,000. How many exemptions should Ronald claim on his tax return?
54. Which of the following is a true statement with respect to the gross income test for the qualifying relative
dependency exemption?
E. All of the above statements are true.
55. John, age 25, is a full-time student at a state university. John lives with his sister, Ann, who provides over
half of his support. His only income is $4,000 of wages from a part-time job at the college book store. What is
Ann’s filing status for 2011?
56. All of the following factors are important in determining whether an individual is required to file an income
tax return, except:
A. The taxpayer’s filing status
57. Oscar and Mary have no dependents and file a joint income tax return for 2011. They have adjusted gross
income of $145,000 and itemized deductions of $32,000. What is the amount of taxable income that Oscar and
Mary must report on their 2011 income tax return?
58. Which of the following is not a capital asset?
59. Alan, whose wife died in 2010, filed a joint tax return for 2010. During 2011, he did not remarry and
continued to maintain his home in which his four dependent children lived. In the preparation of his tax return
for 2011, Alan should file as:
60. Clay purchased Elm Corporation stock 20 years ago for $10,000. In 2011, he sells the stock for $29,000.
What is Clay’s gain or loss?
61. Alexis has a long-term capital loss of $13,000 on the sale of stock in 2011. Her taxable income without this
62. Partnerships:
63. Which of the following is correct?
64. Internet users can sign on to http://www.irs.gov/ and
65. Electronic filing (e-filing)
66. Form 1040 allows a taxpayer to report which of the following items that are not allowed for taxpayers who
67. Partnership income is reported on:
68. Amended returns are filed on: