Practice Test Geeks(CBS) Certified Business Strategist Practice Test
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Tax Planning & Preparation Flashcards

7 cards from real CBS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Tax Planning & Preparation flashcards as text

  1. A taxpayer sells a rental property held for 8 years at a $40,000 gain. Which tax rate applies to the long-term capital gain portion?

    Answer: 0%, 15%, or 20% depending on taxable income

    Long-term capital gains on real property are taxed at 0%, 15%, or 20% based on the taxpayer's taxable income bracket.

  2. What is the purpose of IRS Form 1040-ES?

    Answer: Filing estimated quarterly tax payments

    Form 1040-ES is used to calculate and submit estimated quarterly tax payments for income not subject to withholding.

  3. Which of the following retirement contributions reduces a taxpayer's adjusted gross income (AGI) even if they do not itemize?

    Answer: Traditional IRA contribution (if deductible)

    Deductible Traditional IRA contributions are an above-the-line deduction that reduces AGI regardless of whether the taxpayer itemizes.

  4. A married couple filing jointly has $30,000 of net investment income and $180,000 in modified AGI. What surtax may apply?

    Answer: 3.8% Net Investment Income Tax on the lesser of NII or MAGI over $250,000

    The 3.8% NIIT applies to the lesser of net investment income or the excess of MAGI over $250,000 for MFJ filers.

  5. Which tax strategy involves accelerating deductions into the current tax year and deferring income to the next year?

    Answer: Bunching deductions / deferral strategy

    Bunching deductions and deferring income reduces current-year taxable income by concentrating deductions now and pushing income forward.

  6. What is the 'kiddie tax' and to whom does it apply?

    Answer: A rule taxing a child's unearned income above a threshold at the parent's marginal rate

    The kiddie tax taxes unearned income above the annual threshold of children typically under age 19 (or 24 if full-time students) at the parent's tax rate.

  7. An employee contributes $3,000 to a Flexible Spending Account (FSA) for medical expenses. Which tax benefit does this provide?

    Answer: Contributions are excluded from federal income, Social Security, and Medicare taxes

    FSA contributions are made pre-tax, reducing the employee's gross income subject to federal income tax, Social Security, and Medicare taxes.

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