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Exam 4: Managing Income Taxes

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Question 81

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Most tax shelters are methods permitting an investor to avoid taxes forever.

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Question 82

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The tax credit(s) for qualifying higher education expenses is

A) the American Opportunity credit.
B) the earned income credit.
C) the lifetime learning credit.
D) the American Opportunity credit and lifetime learning credit.

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Question 83

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Which of the following deductible expenses can be prepaid for tax purposes?

A long-term capital gain (or loss) occurs when the asset is held for over one year.

Adjustments to gross income

The health insurance premium tax credit can help anyone defray the cost of health insurance.

Estimating taxes requires taxpayers to send quarterly installment payments to the IRS.

Qualified tuition programs include

Which of the following investments normally produce(s) tax-exempt income?

Flexible spending accounts reduce taxes because contributions to these accounts are made with pretax dollars.

An extra benefit of a defined-contribution retirement plan is that most employers offer full or partial ____ to employees accounts.

A taxpayer in the 35 percent marginal tax bracket would pay less tax by holding an investment with capital gains over one year.

Figure 4-1 -Refer to Figure 4-1.Tony and Liz have just inherited $25,000.Which of the following statements is true?

A single individual pays $7,813 on a taxable income of $47,810 and $7,838 on a taxable income of $47,910.What is the marginal tax rate?

A casualty or theft loss is difficult to qualify for because the loss must

All of the income received from Social Security benefits must be reported as gross income on your federal income tax return.

A taxpayer with a taxable income greater than $100,000 must use the tax-rate schedules rather than the tax tables to find his or her tax liability.

An employed taxpayer's effective marginal tax rate on income is higher than his or her federal marginal tax rate.

The key to reducing one's tax liability is to reduce taxable income rather than gross income.

You just sold your comic book collection that you had worked on for the past ten years for a capital gain of $7,500.Assuming you are in the 15 percent marginal tax bracket,how much federal income tax will be due on this gain?