H&R Block Income Tax Course Questions
And Answers Graded A+.
Circular 230 - correct answer. Regulations governing the practice of attorneys,
certified public accountants, enrolled agents, enrolled actuaries, and appraisers before
the IRS.
Disclosure - correct answer. The release of tax information by an IRS employee.
Due Diligence - correct answer. Requirements that tax professionals must follow when
preparing income tax returns.
Noncompliance - correct answer. Failure or refusal to comply with the tax code.
Privilege - correct answer. Protection from being required to disclose confidential
communications between two parties, such as attorney and client.
Estimated Tax - correct answer. The amount of tax a taxpayer expects to owe for the
year after subtracting expected amounts withheld and certain refundable credits.
Estimated Tax Voucher - correct answer. A statement by an individual of (1) the
amount of income tax he estimates he will incur during the current taxable year on
income that is not subject to withholding, (2) the excess amount over that withheld on
income which is subject to withholding, and (3) his estimated self-employment tax.
Exemption from Withholding - correct answer. Status claimed on Form W-4 directing
the employer not to withhold federal income taxes from the employee.
Underpayment Penalty - correct answer. If a taxpayer did not pay enough tax on a
timely basis during the year, he may be required to pay an underpayment penalty.
Withholding Allowances - correct answer. An increase by which income tax
withholding on certain income is reduced.
,Two Ways to Pay as You Go - correct answer. Withholding and Estimated Tax
Payments
Form W-4 - correct answer. Employee's Withholding Allowance Certificate
Form 8815 - correct answer. Exclusion of Interest From Series EE and I U.S. Savings
Bonds Issued After 1989
Form 2210 - correct answer. Underpayment of Estimated Tax by Individuals, Estates,
and Trusts
Form 4868 - correct answer. Application for Automatic Extension of Time To File U.S.
Individual Income Tax Return
Form 8888 - correct answer. Allocation of Refund
Form 9465 - correct answer. Installment Agreement Request
Amended Return - correct answer. A tax return filed on Form 1040X after the original
return has been filed.
Closed Year - correct answer. A tax year for which the statute of limitations has
expired.
Open Year - correct answer. A taxable year for which the statute of limitations has not
yet expired.
Failure-to-File Penalty - correct answer. Generally 5% for each month or part of a
month the return is late, but not more than 25% of the tax not paid.
Failure to File - correct answer. Taxpayer fails to file the return by the due date, and
there is a balance due.
Failure to Pay - correct answer. Taxpayer fails to pay the tax owed by the due date.
Failure-to-Pay Penalty - correct answer. 0.5% of the unpaid taxes for each month or
part of a month after the due date, but not more than 25%.
Negligence or Intentional Disregard - correct answer. Taxpayer shows negligence or
disregard of the rules or regulations causing an underpayment.
Negligence-or-Intentional-Disregard Penalty - correct answer. 20% of the
underpayment.
Substantial Understatment - correct answer. Taxpayer understates their tax by the
larger of $5,000 or 10% of the correct tax.
,Substantial-Understatement Penalty - correct answer. 20% of the underpayment.
Form 1040X - correct answer. Amended U.S. Individual Income Tax Return
When can an amended return be filed? - correct answer. Within three years of the
date the original return was filed, or within two years of the date the tax was paid,
whichever is later.
Can the 1040X be e-filed? - correct answer. No.
Household Employee - correct answer. An individual who performs nonbusiness
services in a taxpayer's home.
Active Income and Losses - correct answer. Those for which a taxpayer performs
services.
Partnership - correct answer. A form of business in which two or more persons join
their money and skills in conducting the business as co-owners.
Passive Income and Losses - correct answer. Those from business activities in which
the taxpayer does not materially participate, and all rental activities.
Portfolio Income and Losses - correct answer. Those from such sources as dividends,
interest, capital gains and losses, and royalties.
Rental Income - correct answer. Income received by the taxpayer for allowing another
person's use of the taxpayer's property.
Royalty - correct answer. (1) A payment received for the right to exploit a taxpayer's
ownership of natural resources or a taxpayer's literary, musical, or artistic creation. (2)
An interest in the oil and gas in place that entitles the holder to a specified fraction, in
kind or in value, of the total production from the property, free of any expenses of
development and operation.
S Corporation - correct answer. A qualified small business corporation that has
elected special tax treatment under subchapter S of the Internal Revenue Code. S
corporations pass income, losses, and deductions through to shareholders to report on
their individual returns.
Trust - correct answer. A tax entity that distributes all or part of its income to
beneficiaries as instructed by the trust agreement.
Requirements for a Real Estate Professional - correct answer. 1. More than half of the
personal services performed by the taxpayer in all trades or businesses during the tax
, year were performed in real property trades or businesses in which the taxpayer
materially participated.
2. The taxpayer performed more than 750 hours of services during the year in real
property trades or businesses in which the taxpayer materially participated.
Trade or Business Activities - correct answer. Any activity that: Involves the conduct of
a trade or business; is conducted in anticipation of starting a trade or business; Involves
research or experimental expenditures that are deductible under IRS Code 174.
Nonpassive Income - correct answer. Income derived from activities that are not
passive.
Types of Nonpassive Income - correct answer. Portfolio income; personal service
income; other income.
Portfolio Income - correct answer. Includes interest, dividends, annuities, and royalties
not derived in the ordinary course of business.
Personal Service Income - correct answer. Salaries, wages, commissions, self-
employment income from trade or business in which the taxpayer materially
participates, deferred compensation, taxable social security and other retirement
benefits, and payments from partnerships to partners for personal services.
Rent - correct answer. Income received for the use of property.
Is rent earned or unearned income? - correct answer. Unearned.
Schedule E - correct answer. Supplemental Income and Loss
Deductible Maintenance and Repairs - correct answer. Those that do not appreciably
add to the value or useful life of the property.
Is the value of the owner's labor deductible when it comes to rental property? - correct
answer. No.
Rental Property Depreciable Basis - correct answer. Basis MINUS land value TIMES
the rental use percentage.
Vacation home - correct answer. A dwelling unit and may be a house, apartment,
condominium, mobile home, boat, or any other property that provides normal living
accomodations.
Used as a Residence - correct answer. A dwelling unit is used for personal purposes
during the year for whichever is greater: more than 14 days; more than 10% of the days
the house is rented at fair rental value.
