B. Acy Bachelor of Accountancy Tax Accounting (REG) 2

Question 1

Under US tax law, what is the long-term capital gains tax rate for taxpayers in the 22% ordinary income bracket?

Accepted Answer

15%

Answer

Taxpayers in the 22% to 35% ordinary income brackets pay a 15% rate on long-term capital gains.

Question 2

Which of the following items is included in a taxpayer's gross income?

Accepted Answer

Wages from employment

Answer

Wages are always included in gross income under IRC Section 61, while the other items are specifically excluded.

Question 3

The alternative minimum tax (AMT) was primarily designed to ensure that:

Accepted Answer

High-income taxpayers pay at least a minimum amount of tax

Answer

AMT ensures that high-income taxpayers who use deductions and credits cannot reduce their tax liability to zero.

Question 4

In a like-kind exchange under IRC Section 1031, which of the following is true?

Accepted Answer

Gain is recognized only to the extent of boot received

Answer

In a Section 1031 exchange, gain is recognized only to the extent of boot (cash or non-like-kind property) received.

Question 5

Which form do sole proprietors use to report business income and expenses on their individual tax return?

Accepted Answer

Schedule C

Answer

Sole proprietors report business profit or loss on Schedule C, which flows to Form 1040.

B. Acy Bachelor of Accountancy Practice Test