Taxation and Deduction Concepts: A Review of Key Tax Rules and Elections
Question 2 1 points Save
The tax benefit received from a tax credit is affected by the
tax rate of the taxpayer.
True
False
Question 3 1 points Save
If the shareholders of a calendar year C corporation elect S
status on April 13, 2007, the election is effective for all of
2007.
True
False
Question 4 1 points Save
Realized gain or loss is measured by the difference between
the amount realized from the sale or other disposition of
property and the property’s adjusted basis at the date of
disposition.
True
False
Question 5 1 points Save
In April 2007 Bertie, a calendar year cash basis taxpayer, had
to pay the state of Michigan additional income tax for 2006.
Even though it relates to 2006, for federal income tax purposes
the payment qualifies as a tax deduction for tax year 2007.
True
False
Question 6 1 points Save
An eligible taxpayer may elect to receive advance payments of
the earned income credit from his or her employer.
True

False
Question 7 1 points Save
Mindy paid an appraiser to determine how much a capital
improvement made for medical reasons increased the value of
her personal residence. The appraisal fee qualifies as a
deductible medical expense.
True
False
Question 8 1 points Save
The education tax credits are not available to help defray the cost
of higher education if the income level of the taxpayer exceeds
certain thresholds.
True
False
Question 9 1 points Save
When a taxpayer has purchased several lots of stock on different
dates at different purchase prices and cannot identify the lot of
stock that is being sold, he may choose which lot of stock is
deemed to be sold.
True
False
Question 10 1 points Save
Partnerships are considered to be separate taxable entities and,
consequently, do not avoid taxation at the entity level.
True
False
Question 11 1 points Save
An education expense deduction is not allowed if the education
results in a promotion or pay raise for the employee.
True
False
Question 12 1 points Save
The § 179 deduction can exceed $112,000 in 2007 if the

taxpayer had a § 179 amount that exceeded the taxable income
limitation in the prior year.
True
False
Question 13 1 points Save
In computing the NOL of a corporation, the dividends received
deduction can be claimed.
True
False
Question 14 1 points Save
A partner’s basis in the partnership interest is decreased by his
or her share of the tax-exempt income received by the
partnership.
True
False
Question 15 1 points Save
Although partnerships are not subject to income tax, they are
required to file income tax returns.
True
False
Question 16 1 points Save
Both education tax credits are available for qualified tuition
expenses and, in certain instances, may also be available for
room, board, and book costs.
True
False
Question 17 1 points Save
If Wal-Mart stock decreases in value during the tax year by
$4,500, the amount realized is a negative $4,500.
True
False
Question 18 1 points Save

Taxation and Deduction Concepts: A Review of Key Tax Rules and Elections

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