Wealth Building Under Changing Tax Laws (Second Edition) (00319947)

This course explores some of the key provisions of the U.S. tax code that can foster or hinder individual wealth building. As a taxpayer's income increases, the ability to reduce taxes through planning becomes more complex. Adding to the complexity is uncertainty over the long-term fate of reduced individual tax rates and capital gains/dividends tax rates, repeal or modification of the federal estate tax, new Medicare taxes for higher income individuals, and more.
Final Exam > Results Page

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Question 1
Correct
The Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) and subsequent legislation reduced the maximum tax rate on qualified capital gains from _____ percent to _____ percent for taxpayers in tax brackets above 15 percent.

30; 20

25; 10

(You Answered) (Correct Answer) 20; 15

15; 10

Question 2
Correct
Individuals age 50 and older by the end of the year can make an additional catch-up contribution to a Roth IRA of:

(You Answered) (Correct Answer) $1,000

1,500

$2,500

$500

Question 3
Correct
Itemized medical expenses are only deductible for AMT purposes to the extent they exceed ___ percent of adjusted gross income (AGI).

15

(You Answered) (Correct Answer) 10

7.5

Medical expenses are not deductible for AMT purposes.

Question 4
Correct
Under the JGTRRA and subsequent legislation, the zero-percent capital gains/dividends tax rate for taxpayers in the 10 and 15 percent income tax brackets sunsets after:

December 31, 2009

December 31, 2011

(You Answered) (Correct Answer) December 31, 2012

The tax rate for those brackets is permanent.

Question 5
Correct
For 2012, the wage base for the Social Security portion of the FICA tax is:

$106,800

(You Answered) (Correct Answer) $110,100

$200,000

Abolished for 2012

Question 6
Correct
Under the sunset provisions of EGTRRA (as extended by the Tax Relief Act of 2010), the top individual income tax rate will revert to ___ percent after December 31, 2012.

36

(You Answered) (Correct Answer) 39.6

45

50

Question 7
Incorrect
Under the sunset provisions in JGTRRA and subsequent legislation, qualified dividend income after 2012 will be taxed at:

10 percent

(You Answered) 15 percent

25 percent

(Correct Answer) The taxpayer’s ordinary income tax rate

Question 8
Correct
The health care reform package enacted a Medicare contribution tax of ___ percent on qualified unearned income of certain higher-income individuals effective for tax years beginning after_____ .

0.9; 2010

2.0; 2011

(You Answered) (Correct Answer) 3.8; 2012

4.0; 2013

Question 9
Correct
Taxpayers who made a Roth IRA conversion in 2010:

(You Answered) (Correct Answer) Recognized the conversion amount ratably in their taxable income on 2011 and 2012 returns, unless they elected to recognize the entire amount on a 2010 return

Recognized the conversion amount entirely on a 2010 return at a flat 20 percent rate

Pay no federal income tax on the amount being converted

Deferred any income tax payable until after 2015

Question 10
Correct
For 2012, an individual (self-only) plan is a high-deductible health plan for purposes of the health savings account (HSA) rules if it has at least a _____ annual deductible.

(You Answered) (Correct Answer) $1,200

$2,000

$6,050

$7,500

Question 11
Correct
After December 31, 2010, nonqualified distributions from a health savings account (HSA) are subject to an additional _____ tax.

(You Answered) (Correct Answer) 20 percent

25 percent

35 percent

50 percent

Question 12
Correct
The Tax Relief Act of 2010’s extension of EGTRRA’s provisions (also known as the “Bush-era tax cuts”) sunsets after:

(You Answered) (Correct Answer) December 31, 2012

January 1, 2013

December 31, 2014

December 31, 2015

Question 13
Correct
The federal estate tax “applicable exclusion amount” for a decedent dying in 2012 is:

$1,000,000

$3,500,000

$4,000,000

(You Answered) (Correct Answer) $5,120,000

Question 14
Correct
Under the Middle Class Tax Relief and Job Creation Act of 2012, the _____________tax reduction is extended through ____________ .

(You Answered) (Correct Answer) Payroll; 2012

Excise; 2012

Gift; 2013

Inheritance; 2012

Question 15
Correct
After 2012, if an employer does not withhold the additional 0.9-percent Medicare tax when required, who is liable for paying the tax?

(You Answered) (Correct Answer) Taxpayer

Employer

Social Security Administration