Exam (elaborations)
HR BLOCK TKA EXAM PREP
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HR BLOCK TKA EXAM PREPIRC - Answer Internal Revenue Code
Standard Deduction: ANSWER set by statute. Included in the calculation of
below-the-line deductions (for taxable income). The alternative is itemized
deduction.
Itemized Deduction: ANSWER The sum of permissible deductions used to
calculate below-the-line deductions (for taxable income). The alternative is
Standard Deduction.
Tax Rate (Individuals) - Ordinary Income: 10% - 37%
Individuals' tax rates for net gains and qualified dividends range from 0% to 20%.
20%-28% (typically)
Alternative Minimum Tax Rate - ANSWER: 26%-28%
Capital Gains - ANSWER Profit (or Loss) from the sale of property or investments
(preferred tax rate compared to ordinary income)
Adjusted Gross Income (AGI) - Answer: Gross Income - Deductions
Taxable Income - ANSWER AGI - (Larger than the standard or itemized
deduction)
Tentative Tax: ANSWER Taxable Income (x) Tax Rate
, Tax Due (+) or Refund (-) - ANSWER: Tentative Tax Credits.
Refundable Tax Credit - ANSWER Taxpayers can get money as a refund.
Nonrefundable Tax Credit - ANSWER Tax is reduced to a potential $0. But there is
no refund.
Title 26 (US Code): ANSWER The statutory foundation of all federal tax
legislation.
Gross revenue - ANSWER "All income from whatever source derived"
Haig-Simons Definition of Income: ANSWER Market Value of Consumption
Rights + Change in Property Rights Over Time.
Interpretation: Total value of consumer spending + net change in savings (e.g.,
bank accounts, stocks and bonds, real estate).
The alternative is to define economic benefits.
Economic Benefit Definition of Income: ANSWER The value of every economic
benefit obtained by the taxpayer, independent of its form.
An alternative is the Haig-Simons Definition.
Imputed Income: ANSWER *Not Income
Any services one does for oneself or family / the worth of used property that one
owns.
Loans - ANSWER Loans themselves are not taxable.
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