Investment And Personal Financial Planning

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Questions Bank

Taxes and Taxing Jurisdictions
Policy Standards for a Good Tax
Taxes as Transaction Costs
Maxims of Income Tax Planning
Tax Research
Taxable Income from Business Operations
Property Acquisitions and Cost Recovery Deductions
Property Dispositions
Nontaxable Exchanges
Sole Proprietorships
The Corporate Taxpayer
The Choice of Business Entity
Jurisdictional Issues in Business Taxation
The Individual Tax Formula
Compensation and Retirement Planning
Investment and Personal Financial Planning
Tax Consequences of Personal Activities
The Tax Compliance Process

All Questions

Question 1

Free

True/False

The tax consequences of a business activity are generally the same as the tax consequences of an investment activity.

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Question 2

Free

True/False

Income generated from an investment activity is primarily attributable to invested capital rather than the owner's personal involvement in the activity.

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Question 3

Free

True/False

Electing to reinvest dividends in additional shares of stock does not defer income recognition.

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True

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Question 4

Free

True/False

The interest earned on a state or local government bond is exempt from federal taxation.

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True

False

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Question 5

Free

True/False

The interest earned on investments in U.S. debt obligations is subject to state taxation.

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Question 6

True/False

Qualified dividend income earned by individual taxpayers is taxed at a maximum income tax rate of 20%.

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True

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Question 7

True/False

Only accrual basis individuals are required to accrue original issue discount on a bond as annual interest income.

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Question 8

True/False

Cash basis individuals must accrue market discount on a bond as annual interest income over the life of the bond.

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Question 9

True/False

The cash surrender value of a life insurance policy is taxable to the policy beneficiary upon the death of the insured individual.

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True

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Question 10

True/False

Mr Adams paid $53,500 in premiums on a whole life insurance policy. When he canceled the policy, he received its cash surrender value of $61,600. He must recognize $61,600 income as a result of the cancellation.

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Question 11

True/False

An owner of a life insurance policy that includes an investment element must recognize income equal to the annual increase in the policy's cash surrender value.

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Question 12

True/False

Martin received $80,000 from a $100,000 life insurance policy as an accelerated death benefit. None of the $80,000 is taxable to her.

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True

False

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Question 13

True/False

Brokerage fees paid when stock is purchased are added to the basis of the stock.

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Question 14

True/False

If an investor sells some of the securities in a block but can't identify which ones were sold, she is presumed to have sold the securities with the latest acquisition date.

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Question 15

True/False

On April 19 of this year, Sandy learned that her stock investment had become worthless. The stock is deemed to be worthless on December 31 of this year.

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True

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Question 16

True/False

Two years ago, James loaned $60,000 to his friend. The debt is now uncollectible. If the loan created a bona fide debt, James recognizes a short-term capital loss.

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Question 17

True/False

The tax rate on capital gains is determined solely by reference to the capital asset's holding period.

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Question 18

True/False

Individual taxpayers may carry nondeductible capital losses forward indefinitely.

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Question 19

True/False

An individual with a 10% rate marginal tax rate on ordinary income will pay no tax on long-term capital gains.

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Question 20

True/False

Unrecaptured Section 1250 gain is taxed at a maximum rate of 28%.

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