CAT Tax Planning & Preparation 3

Question 1

Which of the following is NOT a requirement to deduct home office expenses under the exclusive-use test?

Accepted Answer

The space must be used occasionally for personal activities

Answer

The exclusive-use rule requires the home office area to be used ONLY for business; any personal use disqualifies the deduction entirely.

Question 2

The Section 179 expense election allows a business to:

Accepted Answer

Immediately deduct the full cost of qualifying property in the year placed in service

Answer

Section 179 allows businesses to expense the full purchase price of qualifying equipment and software in the year it is placed in service, up to the annual limit.

Question 3

A taxpayer who is single with no dependents and takes the standard deduction files using which primary form?

Accepted Answer

Form 1040

Answer

All individual taxpayers file their federal income tax return using Form 1040, regardless of filing complexity or age.

Question 4

The 'kiddie tax' rules apply to a child's unearned income when:

Accepted Answer

The child is under age 19 (or under 24 if a full-time student) and unearned income exceeds the threshold

Answer

Under the kiddie tax, a qualifying child's net unearned income above the annual threshold is taxed at the parent's marginal tax rate.

Question 5

Which of the following retirement plan contributions is made with after-tax dollars?

Accepted Answer

Roth 401(k)

Answer

Contributions to a Roth 401(k) are made with after-tax dollars, allowing qualified withdrawals in retirement to be tax-free.

(CAT) Certified Accounting Technician Practice Test

(CAT) Certified Accounting Technician Practice Test

CAT Tax Planning & Preparation 3