Accounting Tax

In: Business and Management

Submitted By mrico100
Words 18975
Pages 76
CHAPTER 3

* (F) Currently, the top Federal income tax rate in effect is the highest it has ever been.
-The income tax rate in effect in 1944-1945 ranged from 23% to 94%. * (T) As used in the income tax formula, gross income would not include the receipt of a loan the taxpayer obtained from a bank.
-Borrowing money does not result in gross income. * (F) Under the income tax formula, a taxpayer must choose between deductions for AGI and the standard deduction.
-The choice is between deductions from AGI and the standard deduction. * (T) An “above the line” deduction refers to a deduction for AGI. * (F) Because they appear on page 1 of Form 1040, itemized deductions are also referred to as “page 1 deductions.”
-What is described are deductions for AGI. Itemized deductions are also known as deductions from AGI and appear on page 2 of Form 1040. * (T) Most exclusions from gross income are not reported on Form 1040.
-Gifts and inheritances are two major exclusions not reported on Form 1040. * (F) Once TI (taxable income) is determined, the taxpayer must make a choice between itemizing or --claiming the standard deduction.
-The choice must be made after determining AGI (not TI). * (F) The filing status of a taxpayer (e.g., single, head of household) need not be identified until after taxable income is determined.
-The filing status is relevant in determining the amount of the standard deduction available. * (F) Kim, a resident of Korea, is a citizen of the U.S. Any income Kim receives from land he owns in Korea is not subject to the U.S. income tax.
-Under the global system of taxation followed by the U.S., foreign-sourced income is subject to tax. Although Kim is not a resident, he is a citizen of the U.S. * (T) An decrease in the amount of a taxpayer’s AGI can increase the amount of medical expenses allowed as a deduction.
-More medical…...

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