pg. 1 H&R Block Income Tax Course Newest Exam 2025 -2026 Test Bank/ Complete 550 Actual Exam / Updated Questions with Correct Verified Answers/ Graded A+
Two Factors of Tax Consequences of Property Ownership - Correct Answer
- (1) The type of property
(2) The purpose for which the property is used
Two Types of Property - Correct Answer - (1) Real (2) Personal
Real Property - Correct Answer - Includes land, buildings, and their structural components.
Two Types of Personal Property - Correct Answer - (1) Tangible (2) Intangible
Tangible Personal Property - Correct Answer - Has a physical existence and its value is intrinsic.
Intangible Personal Property - Correct Answer - Has no intrinsic value.
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pg. 2 Four Uses of Property - Correct Answer - (1) Personal-use property (2) Investment-use property (3) Business-use property (4) Stock-in-trade
Stock-in-Trade - Correct Answer - Property held for sale to customers.
Capital Assets - Correct Answer - Everything you own or use for either personal purposes or investment purposes is a capital asset.
Basis - Correct Answer - A measure of the taxpayer's investment in property for tax purposes.
Cost - Correct Answer - Includes the cash paid, the fair market value of services rendered, and the fair market value of property traded in exchange for the property.
Adjusted Basis - Correct Answer - The original basis PLUS the cost of improvements; the cost of restoration after a casualty; assessments for local improvements MINUS any discount, rebate, or reimbursement of any portion of the purchase price; insurance reimbursements for property damages; the amount of casualty or other losses deducted on the return for any year; depletion or depreciation allowed or allowable; any gain that is not reported in the year realized.
Holding Period - Correct Answer - The length of time an asset has been owned.
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pg. 3 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-
- directing the employer not to withhold federal income taxes from the
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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
Educator Expenses Deduction - Correct Answer - An above-the-line deduction of up to $250 for classroom supplies, books, and equipment, and available to eligible educators of students in kindergarten through 12th grade.
Eligible Educator - Correct Answer - Any educator who works at least 900 hours during a school year as a teacher, instructor, counselor, principal or aide in a public or private elementary or secondary school.
Health Savings Account (HSA) - Correct Answer - A trust or custodial account created exclusively for the purpose of paying the qualified medical expenses of a high deductible health plan of the account holder.
Necessary Expenses - Correct Answer - An expense that is appropriate and helpful in furthering the taxpayer's business or income-producing activity.
Ordinary Expenses - Correct Answer - Common and accepted in the general industry or type of activity in which the taxpayer is engaged.
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