Test Results
Your Score:
90%
Passing Score:
80%
You passed.
1. The deduction for federal estate tax on income in respect of a decedent is claimed as:
a.An adjustment to gross income
b.A miscellaneous itemized deduction not subject to the 2%-of-AGI floor
Correct:
2. If a beneficiary of a life insurance policy opts to receive a paymentof the proceeds in installments rather than in a lump sum, the taxtreatment is as follows:
a.All of the installments are tax free.
b.None of the installments are tax free.
c.A portion of the installments representing interest is taxable.
Correct:
3. An insured with a whole life policy borrows $10,000 from thepolicy and then gives the policy to his child. The child continuesto pay the premiums until the parent dies and he collects thepremiums. The tax result of this transaction are:
a.The child is not subject to any income tax on the proceeds.
b.The child is taxed on all of the proceeds minus the outstandingloan and amount of premiums he paid.
c.The child is taxed on all of the proceeds.
Correct:
4. In 2009, a taxpayer went to the race track. She wagered $100. Shehas one winner that day, which paid $1,000. She did not do anyother gambling during the year. What must she report on her taxreturn? Assume she claims the standard deduction.
a.$900 winning
b.$1,000 winnings
c.Neither of the above
Correct:
5. Income tax withholding on gambling winnings is:
a.Mandatory if winnings exceed a certain amount (except forbingo, keno or slot machines where the taxpayer properly gavehis tax ID number)
b.Voluntary; the taxpayer must complete a return to indicate theamount he or she wants to be withheld
Correct:
6. For income tax purposes, a structured settlement of a legal award is:
a.Never taxed
b.Always taxed
c.Tax free if the underlying award is tax free (e.g., for physicalinjury)
Correct:
7. The Fisher case about demutualization of life insurance companiesconcludes that shares received:
a.Have some basis
b.Have no basis
c.Must wait for an IRS ruling
Correct:
8. For income tax purposes, "treasure trove" is:
a.Always includible in gross income
b.Never taxable because is "found money"
Correct:
9. Paying estimated taxes to avoid penalties is advisable in whichsituation:
a.Inheriting stock
b.Winning big in the lottery
c.Finding lost treasure
Incorrect:
10. A lottery winner wants to minimize taxes so she plans to donate aportion of the payoff to a public charity. What is the annual adjustedgross income limit that would apply to donations in this case:
a.30%
b.50%
c.100%
Correct: