Finance exam 1

Income shifting refers to the process of transferring income from the taxpayer to the IRS False-it is the process of transferring income from taxpayer to relatives who belong in lower tax brackets
Qualified dividends are taxed at the highest capital gain rates False-they are taxed at lower capital gain rates
All taxpayers have an equal probability of having their tax returns audited false-the odds of a tax return being audited are very low (1%)
Tax credits are dollar for dollar reductions in taxable income false-they are dollar for dollar reductions in amount of taxes due
The ____ income is the gross income less the tax deductions and payments for insurance and retirement savings Take-home
If you are a professional who is likely to receive income that is not subject to withholding then you are required to _____ pay an estimated tax
The gross income minus the tax exempt income equals the adjusted gross income false-gross income minus allowable adjustments is AGI
Diana sold mutual fund shares, which she had owned for 4 years, so she could use the proceeds to travel. She is in the 35% marginal tax bracket and capital gains were $30,000. How much tax would Diana owe on those gains? $4,500
If your income is high then there is ____ probability of your income being audited. a high
A married couple filing a joint return has Ms. Cindy Cook, a CPA, complete their return. The IRS will hold only Ms. Cook responsible for any errors on the return False-taxpayers must accept primary responsibility for accuracy of their returns
A ______ would be most likely to have to pay estimated taxes. A self-employed plumber
What are estimated taxes? Tax payments requires on income not subject to withholding that are paid in for installments
The Robertsons have AGI of $28,500 and decided to contribute the max amount toward their IRA even through Mr. Rob had a pension plan at work. His wife was named beneficiary of IRA. Which tax strategy? Tax deferral-income that is not subject to taxes immediately will later be subject to taxed
Which of the following portions of the mortgage loan is recorded as a liability in the balance sheet? Principal portion only-only latest outstanding amount of a loan or mortgage should be listed as a liab on BS bc at any given time it is the balance still due that matters, not he initial balance.
An income statement includes income, expenditure, and cash surplus or deficit
Phil has $2,000 and he needs it to grow to $4,000 in 8 years. What rate of interest would he need to earn? 9%
Sonny and Cher have a net worth of $35,000 and total assets of $200,000. If their revolving credit and unpaid bills total $2,200 what will their long term liab be? $162,800-subtract $35,000 and $2,200 from $200,000
Michael and sandy purchased a home for $100,000 five years ago. Its value appreciated at 6% annually. What is it worth today? $133,823-use table a at 6% for 5 years to get 1.338. multiply that value by $100,000

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