(Shark 3) Review Exam C3: 1 - 4

Which statement about capital gains is true?

• Capital gains equals the purchase price minus the market value.

• Capital gains equals the market value minus the purchase price.

• Taxes on capital gains cannot be cancelled out by investment losses.

• Capital gain taxes are levied by state governments.

What is market value?

• Market value is the value set by the appraiser.

• Market value is the price set by the federal government.

• Market value is the price buyers are willing to pay.

• Market value is the price set by sellers.

Aaron has worked all of his life and is ready to retire. Why is Aaron currently guaranteed some form of retirement benefit?

• Because he is an exempt employee so he gets retirement benefits.

• Because he is mandated to contribute to the company's 401(k) plan.

• Because social security tax has been taken as part of payroll taxes.

• Because sales taxes contribute to retirement programs.

Which statement is true about sales tax?

• Sales tax is a form of federal tax.

• Sales tax is levied against income to pay for federal services and programs.

• Sales tax is levied against purchases to pay for federal services and programs.

• Sales tax is levied against purchases to pay for state government programs and services.

Tina sells a candy bar of $1.08 which includes 8% sales tax. She buys the candy for $0.75 and needs to make a $0.30 profit. Is her current price point enough and why?

• Yes, because $0.75 + $0.30 = $1.05

• No, because while $0.75 + $0.30 = $1.05, 8% sales tax means Tina has to send $.08 for each candy bar to the state

• Yes, because $1.08 is the maximum legal price for candy

• No, because she needs to pay payroll taxes

All personal income taxes must be filed by which date?

• January 1st

• April 15th

• January 15th

• April 30th

Choose the best preparation method for a complex tax situation.

• The taxpayer should hire a certified tax preparer.

• The taxpayer should allow the IRS to file it for him.

• The taxpayer should file the taxes yourself using an electronic method.

• The taxpayer should file the taxes himself using the downloadable forms on the IRS website.

Which is true about filing taxes?

• The tax return is processed faster if mailed to the IRS.

• All electronic tax filings are free.

• Electronic filings may compromise your personal information.

• Refunds are processed quicker if the return is mailed to the IRS.

Americans pay federal income tax to support which programs and services?

• federal and state programs and services

• international programs and services

• federal programs and services

• state programs and services

Mrs. Smith filed her tax returns for the first time as a single person since the divorce. She has sole custody of the children. The IRS has decided to audit her. Why is she being audited?

• Changing filing status triggers audits.

• Changing the number of dependents will trigger an audit.

• Changing her income level will trigger an audit.

• It could be a random selection.