ACC 331 (Taxation) Test 1 Chapter 3 Questions and Answers Already Passed Latest Update
2025-2026
George's deductions from AGI are usually slightly below the standard deduction allowed for any
given tax year. Therefore, he has always taken the standard deduction. Under these
circumstances, George could reduce his tax liability by accelerating his usual charitable
contribution to his church into the current tax year.
True
False - Answers TRUE
Feedback: Correct. George may reduce his overall tax liability by bunching his itemized
deductions, allowing him to claim his itemized deductions in the current year and the standard
deduction in the following year.
Which of the following is not a deductible expense?
a. Alimony payments
b. Funeral expenses
c. Interest on student loans
d. College tuition
e. None of these choices are correct. - Answers B. FUNERAL EXPENSES
Feedback: Correct. Nondeductible expenses include personal living expenses, losses on the
sale of personal use property, hobby losses, life insurance premiums, gambling losses, child
support payments, fines and penalties, political contributions, funeral expenses, and capital
expenditures.
In 2017, Earl had the following transactions:
Salary $ 90,000
Short-term capital gain from a stock investment 4,000
Moving expense to change jobs (11,000)
Received repayment of $20,000 loan she made to her brother in 2010 (includes no interest)
,20,000
State income taxes (5,000)
Earl's AGI is:
a. $98,000.
b. $114,000.
c. $94,000.
d. $103,000.
e. $83,000. - Answers E. 83,000
Feedback: Correct. $90,000 (salary) + $4,000 (gain on stock investment) - $11,000 (moving
expenses) = $83,000. The loan repayment of $20,000 is a return of capital and has no effect on
gross income. State income taxes paid are a deduction from AGI (or a standard deduction) and
have no impact on the determination of AGI.
A dependent sometimes may claim a personal exemption on his or her return.
True
False - Answers FALSE
A dependent cannot claim a personal exemption on his or her return.
Donnie, age 15, is claimed as a dependent by his grandmother. During 2017, Donnie had interest
income from Google Corporation bonds of $1,000 and earnings from a part-time job of $700.
Donnie's taxable income is:
a. $1,000.
b. $1,700 - $700 - $1,000 = $0.
c. $1,700 - $1,050 = $650.
d. $1,700 - $1,000 = $700.
e. None of these choices are correct. - Answers C. $1,700 - $1,050 = $650.
, Donnie's standard deduction of $1,050 ($700 + $350) partially offsets his gross income of
$1,700, resulting in taxable income of $650.
Staci's spouse passed away in June 2017, and she is the executor of his estate. She will take
the standard deduction. How much will her standard deduction be, and why?
a. $6,350 - Because he passed away before July 1, she must file as single
b. $9,300 - Because she will file married, filing separately
c. $12,700 - Because she will file married, filing jointly
d. $12,700 - Because she will file as a surviving spouse
e. $9,300 - Because she is the head of household - Answers d. $12,700 - Because she will file as
a surviving spouse
Staci will file as a surviving spouse and get the same deduction as she would have had her
spouse survived the year.
When separate income tax returns are filed by married taxpayers, one spouse may still claim the
other spouse as an exemption.
True
False - Answers TRUE
An exemption is allowed if the spouse has no gross income and is not claimed as a dependent
by another.
Davin and Andrea are divorced in December of 2017. Since they were married for more than one
-half of the year, they are considered as married for 2017.
True
False - Answers FALSE
They must be married at the end of the year (unless one spouse dies) in order to be considered
married.
Which of the following situations does not constitute married status, in terms of tax filing status,
at the end of the 2017 tax year?
2025-2026
George's deductions from AGI are usually slightly below the standard deduction allowed for any
given tax year. Therefore, he has always taken the standard deduction. Under these
circumstances, George could reduce his tax liability by accelerating his usual charitable
contribution to his church into the current tax year.
True
False - Answers TRUE
Feedback: Correct. George may reduce his overall tax liability by bunching his itemized
deductions, allowing him to claim his itemized deductions in the current year and the standard
deduction in the following year.
Which of the following is not a deductible expense?
a. Alimony payments
b. Funeral expenses
c. Interest on student loans
d. College tuition
e. None of these choices are correct. - Answers B. FUNERAL EXPENSES
Feedback: Correct. Nondeductible expenses include personal living expenses, losses on the
sale of personal use property, hobby losses, life insurance premiums, gambling losses, child
support payments, fines and penalties, political contributions, funeral expenses, and capital
expenditures.
In 2017, Earl had the following transactions:
Salary $ 90,000
Short-term capital gain from a stock investment 4,000
Moving expense to change jobs (11,000)
Received repayment of $20,000 loan she made to her brother in 2010 (includes no interest)
,20,000
State income taxes (5,000)
Earl's AGI is:
a. $98,000.
b. $114,000.
c. $94,000.
d. $103,000.
e. $83,000. - Answers E. 83,000
Feedback: Correct. $90,000 (salary) + $4,000 (gain on stock investment) - $11,000 (moving
expenses) = $83,000. The loan repayment of $20,000 is a return of capital and has no effect on
gross income. State income taxes paid are a deduction from AGI (or a standard deduction) and
have no impact on the determination of AGI.
A dependent sometimes may claim a personal exemption on his or her return.
True
False - Answers FALSE
A dependent cannot claim a personal exemption on his or her return.
Donnie, age 15, is claimed as a dependent by his grandmother. During 2017, Donnie had interest
income from Google Corporation bonds of $1,000 and earnings from a part-time job of $700.
Donnie's taxable income is:
a. $1,000.
b. $1,700 - $700 - $1,000 = $0.
c. $1,700 - $1,050 = $650.
d. $1,700 - $1,000 = $700.
e. None of these choices are correct. - Answers C. $1,700 - $1,050 = $650.
, Donnie's standard deduction of $1,050 ($700 + $350) partially offsets his gross income of
$1,700, resulting in taxable income of $650.
Staci's spouse passed away in June 2017, and she is the executor of his estate. She will take
the standard deduction. How much will her standard deduction be, and why?
a. $6,350 - Because he passed away before July 1, she must file as single
b. $9,300 - Because she will file married, filing separately
c. $12,700 - Because she will file married, filing jointly
d. $12,700 - Because she will file as a surviving spouse
e. $9,300 - Because she is the head of household - Answers d. $12,700 - Because she will file as
a surviving spouse
Staci will file as a surviving spouse and get the same deduction as she would have had her
spouse survived the year.
When separate income tax returns are filed by married taxpayers, one spouse may still claim the
other spouse as an exemption.
True
False - Answers TRUE
An exemption is allowed if the spouse has no gross income and is not claimed as a dependent
by another.
Davin and Andrea are divorced in December of 2017. Since they were married for more than one
-half of the year, they are considered as married for 2017.
True
False - Answers FALSE
They must be married at the end of the year (unless one spouse dies) in order to be considered
married.
Which of the following situations does not constitute married status, in terms of tax filing status,
at the end of the 2017 tax year?
