Reference no: EM132524886

Questions -

Q1. Cathy, a single taxpayer with no dependents, had a long-term capital gain of $12,000 from the sale of AT&T stock. Her taxable income for 2018 is $82,000. What tax rate will apply to her capital gain?

a) 15%

b) 20%

c) 0%

d) 28%

Q2. Sanjay owes federal taxes in the amount of $1,500 for the current tax year. Last year, Sanjay had a tax liability in the amount of $4,000; however, his tax liability this year is $6,250. Sanjay did not realize he would owe federal taxes this year; therefore, he did not make estimated tax payments. For what reason might he owe an underpayment penalty?

a) Sanjay's underpayment of tax was more than $1,000.

b) Sanjay's tax balance due is more than 20% of his total current tax year liability.

c) Sanjay owed more than 80% of the tax shown on his prior year return.

d) Sanjay plans to make estimated tax payments for next year.

Q3. Oswald received $9 in interest income from the IRS. Which of the following is a true statement?

a) Oswald is not required to report the interest income since it is from the IRS.

b) Oswald must report it only if it is more than $10.

c) Interest income (regardless of the source) must be reported on Oswald's tax return.

d) Oswald is required to report it only if he has other interest income to report