IRC TEST - ALL TERMS QUESTIONS WITH COMPLETE SOLUTIONS
Course
IRC
Question 1
Which of the following is not considered taxable income under the IRC?
a) Wages from employment
b) Interest from a savings account
c) Gifts received from family
d) Capital gains from the sale of a property
Solution:
Correct Answer: c) Gifts received from family
Rationale:
Gifts are excluded from gross income under IRC Section 102(a). Wages, interest, and capital
gains are all taxable income.
Question 2
Under IRC Section 179, what is the maximum deduction a business can take for equipment
placed in service in the tax year 2023?
a) $500,000
b) $1,080,000
c) $1,160,000
d) $2,500,000
Solution:
Correct Answer: c) $1,160,000
Rationale:
The maximum deduction under IRC Section 179 for the tax year 2023 is $1,160,000, adjusted
annually for inflation.
Question 3
,What is the penalty for failure to file a tax return by the due date, including extensions, under
IRC Section 6651(a)(1)?
a) 0.5% per month of the unpaid tax
b) 5% per month of the unpaid tax
c) 10% per month of the unpaid tax
d) No penalty
Solution:
Correct Answer: b) 5% per month of the unpaid tax
Rationale:
IRC Section 6651(a)(1) imposes a penalty of 5% of the unpaid tax per month or part of a month,
up to a maximum of 25%.
Question 4
Which of the following expenses is not deductible as a business expense under IRC Section 162?
a) Employee wages
b) Charitable contributions
c) Office supplies
d) Rent for office space
Solution:
Correct Answer: b) Charitable contributions
Rationale:
Charitable contributions are deductible under IRC Section 170, not Section 162, which applies to
ordinary and necessary business expenses.
Question 5
What is the current federal estate tax exemption for individuals in 2023?
a) $5.5 million
b) $11.7 million
c) $12.92 million
d) Unlimited
Solution:
Correct Answer: c) $12.92 million
, Rationale:
For 2023, the federal estate tax exemption is $12.92 million per individual due to inflation
adjustments.
Question 6
Under IRC Section 469, which of the following is considered a passive activity?
a) Wages earned as an employee
b) Income from a rental property
c) Active participation in a small business
d) Interest from savings
Solution:
Correct Answer: b) Income from a rental property
Rationale:
Rental activities are generally classified as passive under IRC Section 469 unless the taxpayer
meets the material participation requirements.
Question 7
What is the maximum contribution limit for a Roth IRA for individuals under age 50 in 2023?
a) $5,500
b) $6,000
c) $6,500
d) $7,000
Solution:
Correct Answer: c) $6,500
Rationale:
The maximum contribution to a Roth IRA for 2023 is $6,500 for individuals under age 50,
reflecting annual inflation adjustments.
Question 8
Which of the following is eligible for the Child Tax Credit under IRC Section 24 in 2023?
a) A 22-year-old full-time student
b) A 10-year-old dependent child
Course
IRC
Question 1
Which of the following is not considered taxable income under the IRC?
a) Wages from employment
b) Interest from a savings account
c) Gifts received from family
d) Capital gains from the sale of a property
Solution:
Correct Answer: c) Gifts received from family
Rationale:
Gifts are excluded from gross income under IRC Section 102(a). Wages, interest, and capital
gains are all taxable income.
Question 2
Under IRC Section 179, what is the maximum deduction a business can take for equipment
placed in service in the tax year 2023?
a) $500,000
b) $1,080,000
c) $1,160,000
d) $2,500,000
Solution:
Correct Answer: c) $1,160,000
Rationale:
The maximum deduction under IRC Section 179 for the tax year 2023 is $1,160,000, adjusted
annually for inflation.
Question 3
,What is the penalty for failure to file a tax return by the due date, including extensions, under
IRC Section 6651(a)(1)?
a) 0.5% per month of the unpaid tax
b) 5% per month of the unpaid tax
c) 10% per month of the unpaid tax
d) No penalty
Solution:
Correct Answer: b) 5% per month of the unpaid tax
Rationale:
IRC Section 6651(a)(1) imposes a penalty of 5% of the unpaid tax per month or part of a month,
up to a maximum of 25%.
Question 4
Which of the following expenses is not deductible as a business expense under IRC Section 162?
a) Employee wages
b) Charitable contributions
c) Office supplies
d) Rent for office space
Solution:
Correct Answer: b) Charitable contributions
Rationale:
Charitable contributions are deductible under IRC Section 170, not Section 162, which applies to
ordinary and necessary business expenses.
Question 5
What is the current federal estate tax exemption for individuals in 2023?
a) $5.5 million
b) $11.7 million
c) $12.92 million
d) Unlimited
Solution:
Correct Answer: c) $12.92 million
, Rationale:
For 2023, the federal estate tax exemption is $12.92 million per individual due to inflation
adjustments.
Question 6
Under IRC Section 469, which of the following is considered a passive activity?
a) Wages earned as an employee
b) Income from a rental property
c) Active participation in a small business
d) Interest from savings
Solution:
Correct Answer: b) Income from a rental property
Rationale:
Rental activities are generally classified as passive under IRC Section 469 unless the taxpayer
meets the material participation requirements.
Question 7
What is the maximum contribution limit for a Roth IRA for individuals under age 50 in 2023?
a) $5,500
b) $6,000
c) $6,500
d) $7,000
Solution:
Correct Answer: c) $6,500
Rationale:
The maximum contribution to a Roth IRA for 2023 is $6,500 for individuals under age 50,
reflecting annual inflation adjustments.
Question 8
Which of the following is eligible for the Child Tax Credit under IRC Section 24 in 2023?
a) A 22-year-old full-time student
b) A 10-year-old dependent child
