Certified Financial Planner Tax Planning

1.Nora's taxable income is $80,000 and her tax is $12,000. The rate on her next dollar of income is 22%. What is her effective tax rate?

2.Adrian may claim the larger of his standard deduction and his itemized deductions, not both. His standard deduction is $14,600 and his itemized deductions are $11,200. What deduction does he claim?

3.Camille sold stock she had held for three years. The long-term gain is $10,000, and she has no capital loss. That long-term gain is taxed at 15%. The same dollars would be taxed at 24% if they were ordinary income. What tax does she owe on the gain?

4.Jonah sold shares at a $1,500 loss and bought replacement shares 12 days later for $4,000. A wash sale covers the 30 days before and after the sale, and the disallowed loss is added to the basis of the new shares. What is that new basis?

5.Samira sold her principal residence for an amount realized of $500,000. She paid $300,000 for it, spent $40,000 on a kitchen remodel, and spent $5,000 painting the interior. The remodel is a capital improvement and the paint is an ordinary repair. She may exclude up to $250,000 of gain. What is her taxable gain?

6.Elena received a $1,800 dividend in a brokerage account. A brokerage dividend is taxed in the year received. Traditional IRA growth waits until a taxable distribution, and a qualified Roth distribution is tax-free. How much of this dividend is included in her income this year?

7.Andre owns a sole proprietorship that earned $40,000. He left every dollar in the business checking account and took nothing home. Who is taxed on those earnings?

8.Helen created a grantor trust, and the trust received $4,000 of bank interest. Income of a grantor trust is reported on the grantor's return. Whose return reports the $4,000?

9.Colin gives a public charity stock he has held for three years. His basis is $2,000 and the fair market value is $10,000. A gift of long-term appreciated stock is deducted at fair market value, and he does not recognize the gain. What is his charitable deduction?

10.Seth sells land for $100,000 with a basis of $60,000, so his gross profit percentage is 40%. He collects $20,000 of principal this year. Taxable gain this year equals that percentage times principal collected. What gain does he recognize?

11.Luis's required annual estimated-tax payment is $8,000. He paid $5,500 of estimates, and nothing else counts toward that requirement. What is his shortfall?

12.Diane exchanges an apartment held for investment for another investment apartment and receives no cash. Her realized gain is $90,000. Like-kind exchange treatment applies to real property, not to stocks, and this no-cash exchange of real property defers the gain. How much gain does she recognize?

13.Elliot's taxable income is $100,000 and his tax is $18,000. The marginal rate on his next dollar of salary is 24%. What rate applies to one additional dollar of salary?

14.Bianca may claim the larger of her standard deduction and her itemized deductions, not both. Her standard deduction is $14,600 and her itemized deductions are $19,850. What deduction does she claim?

15.Aisha has a $12,000 long-term capital gain and a $4,000 long-term capital loss. Net long-term gain is taxed at 15%. A capital loss offsets capital gain before any ordinary-income offset. What tax does she owe on the net gain?

16.Keisha bought replacement shares for $3,200 and, eight days later, sold her original shares at a $900 loss. A wash sale covers the 30 days before and after the sale, and the disallowed loss is added to the basis of the replacement shares. What is that basis?

17.Tara sold her principal residence for an amount realized of $800,000. She paid $420,000 for the home and $30,000 for a new deck, which is a capital improvement. She may exclude up to $250,000 of gain. What is her taxable gain?

18.Omar's traditional IRA grew by $6,400 this year, and he took no distribution. Growth in a traditional IRA is not taxed until a taxable distribution. A brokerage account would tax the income currently. How much of the $6,400 is included this year?

19.Grace is a one-third partner in a partnership that earned $90,000. Partnership earnings are taxed to the partners on their own returns, not to the partnership. How much of the earnings does Grace report?

20.Nolan is the beneficiary of a nongrantor trust. The trust received $6,500 of dividends and distributed nothing. Income of a nongrantor trust is reported on the trust's return. Whose return reports the $6,500?

21.Dana gives long-term stock to a public charity. Her basis is $5,000 and the fair market value is $14,000. She may deduct fair market value, and she does not recognize the gain. How much gain does she recognize on the gift?

22.Thea sells property for $50,000 with a basis of $30,000, so her gross profit percentage is 40%. This year she collects $5,000 of principal and $1,000 of interest. Installment gain equals that percentage times principal collected. Interest is not principal. What is her installment gain?

23.Mei's child has $4,000 of investment income and no other income. Under the rule that applies here, unearned income above $2,600 is taxed at Mei's 24% rate. How much tax does that 24% rate impose on the excess?

24.Patrick sells stock for an amount realized of $25,000. His adjusted basis is $16,000. Like-kind exchange treatment applies to real property, not to stocks. What gain does he recognize?

25.Priya's taxable income is $50,000 and her tax is $6,000. A deduction reduces taxable income, and the rate on her next dollar is 22%. How much tax does a $1,000 deduction save?

26.Carlo may claim the larger of the standard deduction and itemized deductions, not both. On his joint return the standard deduction is $29,200 and itemized deductions are $21,400. How much larger is the deduction he should claim than his itemized total?

27.Ravi realized a $9,000 capital loss and no capital gain. A realized capital loss offsets capital gain and then up to $3,000 of ordinary income. How much ordinary income can this loss offset this year?

28.Malik sold shares at a $2,400 loss and bought the same stock 20 days later. A wash sale covers the 30 days before and after the sale, and the disallowed loss is added to the basis of the new shares. How much of the loss may he deduct this year?

29.Uma is computing the adjusted basis of her principal residence before she applies a $250,000 gain exclusion. She paid $180,000 for the house, $45,000 to build an addition, and $6,000 for a plumbing repair. The addition is a capital improvement and the repair is ordinary. What is her adjusted basis?

30.Ruth took a $9,000 qualified distribution from her Roth IRA. A qualified Roth distribution is tax-free. A traditional IRA distribution of the same amount would be ordinary income. How much of the $9,000 is included in her income?

31.Felix owns all of the stock of an S corporation that earned $55,000. An S corporation's earnings are taxed to its shareholders, and the corporation does not pay federal income tax on those earnings. Who reports the $55,000?

32.Ida is the grantor of a grantor trust that sold stock for a $12,000 long-term gain. Income of a grantor trust, including that gain, is reported on the grantor's return. Whose return reports the $12,000?

33.Evan gives long-term appreciated stock to a public charity. Basis is $3,000 and fair market value is $11,000. He deducts fair market value and does not recognize the gain. What are his deduction and his recognized gain?

34.Uri sells property for $80,000 with a basis of $48,000. This year he collects $10,000 of principal. Gross profit percentage is gross profit divided by selling price, and this year's gain is that percentage times principal collected. What gain does he recognize?

35.Ned's required annual payment is $12,000. Withholding of $9,000 counts toward that requirement, and he has paid no estimates. What shortfall remains?

36.Amira exchanges investment land for other investment land and receives no cash. Her realized gain is $40,000. Like-kind exchange treatment applies to real property, not to stocks, and this no-cash land exchange defers the gain. What is her recognized gain?

37.Marcus has taxable income of $200,000 and tax of $40,000. The marginal rate on his next dollar is 32%. By how many percentage points does that marginal rate exceed his effective rate?

38.Dina may claim the larger of her standard deduction and her itemized deductions, not both. Her standard deduction is $14,600 and her itemized deductions are $16,100. How much more does she deduct by itemizing?

39.Nina has a $7,000 capital gain and an $11,000 capital loss. A realized capital loss offsets capital gain and then up to $3,000 of ordinary income. After the loss offsets the gain, how much ordinary income can she offset this year?

40.Mina's $800 loss was disallowed as a wash sale, and that loss was added to the basis of replacement shares that cost $2,500. The next year she sells those shares for $3,000. Gain is amount realized minus adjusted basis. What is the result of that later sale?

41.Victor sold his principal residence for an amount realized of $450,000. Adjusted basis is $310,000, already including a capital improvement and excluding ordinary repairs. He may exclude up to $250,000 of gain. What is the gain before that exclusion?

42.Peter wants this year's $2,000 stock dividend taxed now. A brokerage account taxes a dividend when received. A traditional IRA defers it until a taxable distribution. A dividend inside a Roth IRA is not taxed on a later qualified distribution. Which account matches his wish?

43.Paula owns every share of a C corporation that earned $70,000 and paid no dividend. A C corporation pays tax on its own earnings. A shareholder is not taxed on those earnings merely for owning the stock. Who pays tax on the $70,000?

44.Carl created a nongrantor trust. The trust earned $3,300 of interest. A nongrantor trust reports its income on the trust's return, not on the grantor's return. Whose return reports the $3,300?

45.Farah gives long-term stock to a public charity. Basis is $6,000 and fair market value is $15,000. She does not recognize the gain. Her long-term capital gain rate is 15%. How much tax does she avoid on the gain she does not recognize?

46.Violet's installment-sale gross profit percentage is 25%. She collects $16,000 of principal this year. Taxable gain equals that percentage times principal collected. What gain does she recognize?

47.Opal's child has $1,800 of investment income and $3,000 of wages. Under the rule that applies here, only unearned income above $2,500 is taxed at the parent's rate. Wages are not taxed under that rule. How much investment income is taxed at the parent's rate?

48.Boris sells shares for $60,000. His basis is $22,000. He buys different shares the same week and asks to defer the gain as a like-kind exchange. Like-kind exchange treatment applies to real property, not to stocks. What gain does he recognize?

49.Willa's taxable income is $60,000 and her tax is $7,200. Her marginal rate is 22%. A $2,000 bonus is taxed at that marginal rate. How much of the bonus does she keep after that tax?

50.Edward may claim the larger of his standard deduction and his itemized deductions, not both. Each total is $14,600. What is the largest deduction he may claim?

51.Leo bought shares on March 1, 2024, and sold them on February 1, 2025, for a $5,000 gain. A holding period of more than one year is long-term and would be taxed here at 15%. One year or less is short-term and is taxed as ordinary income at 32%. What tax does he owe on the gain?

52.Nate sold 50 shares at a $1,000 loss and bought 50 replacement shares 25 days later for $1,500. A wash sale covers the 30 days before and after the sale, and the disallowed loss is added to the basis of the new shares. What is the basis per new share?

53.Wendy and her spouse sold their principal residence for an amount realized of $700,000. Adjusted basis is $280,000, including a $40,000 bathroom rebuild and excluding ordinary repairs. They may exclude up to $500,000 of gain. What is their taxable gain?

54.Nadia takes a $7,500 distribution from her traditional IRA, and the facts state that the distribution is fully taxable ordinary income. She takes no Roth distribution. How much does this distribution add to her ordinary income?

55.Henry's sole proprietorship collected $80,000 of revenue and paid $45,000 of deductible expenses. The owner is taxed on the earnings. How much does Henry report from the business?

56.Pearl transferred a rental house into a grantor trust. Rent received by the trust this year is $18,000. Income of a grantor trust is reported on the grantor's return. Whose return reports the $18,000?

57.Gus gives long-term stock to a public charity instead of selling it. Basis is $8,000 and fair market value is $20,000. He deducts fair market value and does not recognize the gain. How much gain does he avoid recognizing?

58.Walt sells property for $200,000 with a basis of $120,000. His gross profit percentage is 40%. He collects no principal this year. Taxable gain this year equals that percentage times principal collected. What installment gain does he recognize?

59.Quentin's required annual estimated-tax payment is $6,400. He paid estimates of $6,400, and no other payment is needed to meet that figure. What is his shortfall?

60.Cora exchanges a rental house held for investment for a rental duplex and receives no cash. Amount realized is $500,000 and adjusted basis is $320,000. Like-kind exchange treatment applies to this real property, so the realized gain is deferred. What are her realized gain and her recognized gain?

61.Pablo's taxable income is $90,000 and his tax is $13,500. The marginal rate on his next dollar is 24%. Which pair of rates matches these facts?

62.Fiona may claim the larger of the standard deduction and itemized deductions, not both. Before a gift, itemized deductions are $12,000 and the standard deduction is $14,600. A $4,000 deductible gift raises itemized deductions to $16,000. What does she claim after the gift?

63.Sofia bought shares on January 10, 2023, and sold them on January 15, 2025, for a $20,000 gain. A holding period of more than one year is long-term and is taxed here at 15%. A shorter holding period would be ordinary income at 24%. What tax does she owe on the gain?

64.Olga sold shares for $3,000. Her basis in those shares was $5,500. Six days later she bought replacement shares for $3,200. A wash sale covers the 30 days before and after the sale, and the disallowed loss is added to the new basis. What is the basis of the replacement shares?

65.Xavier sold his principal residence for an amount realized of $430,000. Adjusted basis is $250,000, including capital improvements and excluding ordinary repairs. He may exclude up to $250,000 of gain. How much of his gain is excluded?

66.Simon sold stock inside his Roth IRA for a $4,000 gain and took no distribution. Gain inside a Roth IRA is not taxed currently, and a later qualified distribution is tax-free. The same sale in a brokerage account would tax the realized gain this year. How much of this gain is included this year?

67.Joy and Ken are partners who share profits 60% and 40%. The partnership earned $50,000. Partnership earnings are taxed to the partners, not paid as income tax by the partnership. How much does Joy report?

68.Steve is the trustee of a nongrantor trust. He is not the grantor or the beneficiary. The trust earned $2,200 of interest. A nongrantor trust reports its income on the trust's return. Whose return reports the $2,200?

69.Iris donates stock she has held for five years. Basis is $4,000 and fair market value is $16,000. A gift of long-term appreciated stock is deducted at fair market value, and the gain is not recognized. A friend says she may deduct only the gain. What is the correct deduction?

70.Xena's installment-sale gross profit percentage is 30%. She collects $10,000 of principal this year and will collect $10,000 of principal next year. This year's gain equals the percentage times principal collected this year. What gain does she recognize this year?

71.Renee's child has $5,500 of interest and no earned income. Under the rule that applies here, the first $2,500 of unearned income is taxed at the child's 10% rate, and the excess is taxed at Renee's 32% rate. What is the tax on the excess?

72.Hal exchanges stock worth $8,000, in which his basis is $8,000, for other stock worth $11,000, and he receives no cash. Like-kind exchange treatment applies to real property, not to stocks. What gain does he recognize?

73.Lila's taxable income is $40,000 and her tax is $4,000. Her marginal rate on the next dollar is 12%. How many dollars of tax did she pay for each $100 of taxable income?

74.George may claim the larger of the standard deduction and itemized deductions, not both. His standard deduction is $21,900 and his itemized deductions are $17,250. He claims the standard deduction. How many dollars of itemized deductions does he leave unclaimed?

75.Jamal has a $2,200 net capital loss and no capital gain. A realized capital loss offsets capital gain and then up to $3,000 of ordinary income. How much of the loss may he deduct against ordinary income this year?

76.Paul sold shares at a $600 loss and bought replacement shares 29 days later for $2,000. A wash sale covers the 30 days before and after the sale, and the disallowed loss is added to the basis of the new shares. What loss does he recognize this year, and what is the new basis?

77.Yara paid $260,000 for her principal residence, $18,000 for a new roof, and $2,200 for a plumbing repair. The roof is a capital improvement and the repair is ordinary. Amount realized on a sale would be $410,000. What is her gain before any exclusion?

78.Imani contributed $6,000 of after-tax money to a Roth IRA. The account is now worth $10,000, and she takes a qualified distribution of the full $10,000. A qualified Roth distribution is tax-free. How much of the $10,000 is included in her income?

79.Tomas owns 25% of an S corporation that earned $80,000. S corporation earnings are taxed to the shareholders, and the corporation pays no federal income tax on those earnings. How much does Tomas report?

80.Rita has two trusts. Trust G is a grantor trust and earned $1,500. Trust N is a nongrantor trust and earned $1,500. Grantor-trust income is reported on the grantor's return. Nongrantor-trust income is reported on the trust's return. How much does Rita report on her own return?

81.Jules donates stock held for six years to a public charity. Basis is $7,000 and fair market value is $25,000. He deducts fair market value and does not recognize the gain. His long-term capital gain rate is 15%. What deduction and avoided tax does the gift produce?

82.Yuri sells property for $40,000 with a basis of $10,000. He collects $8,000 of principal this year. Gross profit percentage is gross profit divided by the selling price, and this year's gain is that percentage times principal collected. What gain does he recognize?

83.Sam must pay $4,000 of estimated tax each quarter, so the year's requirement is $16,000. He paid $4,000, $4,000, $2,500, and $4,000. What is his shortfall for the year?

84.Ines owns investment real estate with an adjusted basis of $150,000. She exchanges it for other investment real estate worth $210,000 and receives no cash. Like-kind exchange treatment applies to real property, not to stocks, and this no-cash exchange defers the gain. What gain does she recognize?

85.Grant's taxable income is $150,000 and his tax is $30,000. The rate on his next dollar of income is 24%. Of one additional dollar of income, how much does he keep after tax?

86.Hana may claim the larger of the standard deduction and itemized deductions, not both. Her standard deduction is $29,200. Itemized amounts are mortgage interest of $18,000, state income tax of $9,000, and gifts of $6,400. What deduction does she claim?

87.Wesley has an $18,000 capital loss and a $5,000 capital gain. A realized capital loss offsets capital gain and then up to $3,000 of ordinary income. How much of the loss carries forward after this year's ordinary-income offset?

88.Quinn sold 100 shares at a $4,000 loss and, 18 days later, bought 25 shares of the same stock. A wash sale covers the 30 days before and after the sale. When fewer shares are replaced, the disallowed loss is the replaced fraction of the loss. How much of Quinn's loss is disallowed?

89.Zack sold his principal residence for an amount realized of $600,000. Adjusted basis is $350,000. He may exclude up to $250,000 of gain. What is his taxable gain?

90.Hugo earned $500 of interest in a brokerage account and $500 of interest inside a traditional IRA. He took no IRA distribution. Brokerage interest is taxed when received. Traditional IRA growth is untaxed until a distribution. How much interest is included this year?

91.A C corporation earned $100,000 and paid Maria, its only shareholder, a $10,000 dividend. The corporation pays tax on its earnings. Maria is taxed on the dividend she receives, not on the corporation's full earnings. Who is taxed on the $100,000 of earnings?

92.Alan created a grantor trust and is also its beneficiary. The trust earned $5,000 of dividends. Because it is a grantor trust, the income is reported on the grantor's return. Whose return reports the $5,000?

93.Kim donates long-term stock to a public charity. Basis is $9,000 and fair market value is $9,800. She deducts fair market value and does not recognize the gain. How much gain does she avoid recognizing?

94.Zara's installment-sale gross profit percentage is 20%. She collects $50,000 of principal this year. Gain equals that percentage times principal collected. How much of this year's principal is a recovery of basis rather than gain?

95.Tina's child received $6,200 of dividends and no other income. Under the rule that applies here, unearned income above $3,000 is taxed at Tina's 22% rate. How much of the dividends is taxed at Tina's rate?

96.Jon sells stock for $45,000. His basis is $20,000. He uses the $45,000 to buy different stock the same day. Like-kind exchange treatment applies to real property, not to stocks. What gain does he recognize?

97.Celeste's taxable income is $75,000 and her tax is $9,000. Her marginal rate is 22%. If she multiplied taxable income by that marginal rate, how much would that figure exceed her actual tax?

98.Ivan may claim the larger of the standard deduction and itemized deductions, not both. His standard deduction is $14,600 and his itemized deductions are $13,050. If he claims the standard deduction, how many more dollars does he deduct than if he itemized?

99.Owen has a $6,000 long-term capital gain and a $6,000 capital loss. A loss offsets capital gain and then up to $3,000 of ordinary income. The long-term rate on any net gain would be 15%. After the loss offsets the gain, how much ordinary income can he offset this year?

100.Rosa sold shares at a $1,200 loss and bought replacement shares for $8,000 inside the 30-day wash-sale window. The disallowed loss is added to the basis of the new shares. How much of the $1,200 is permanently nondeductible?

101.Abby sold her principal residence for an amount realized of $1,000,000. She paid $400,000 for it and $75,000 for a renovation, which is a capital improvement. Lawn care of $4,000 was an ordinary repair. She may exclude up to $250,000 of gain. What is her taxable gain?

102.Vera will withdraw $8,000 and wants that withdrawal included in income at $0. A qualified Roth withdrawal is tax-free. A traditional IRA withdrawal is ordinary income. Cash taken from a brokerage account is not tax-free merely because it is withdrawn. Which account does what she wants?

103.Nell wants the business itself, rather than its owner, to pay federal income tax on the earnings. A sole proprietorship, a partnership, and an S corporation tax those earnings to the owners. A C corporation pays tax on its earnings. Which form does what she wants?

104.Bea is the beneficiary of a nongrantor trust that earned $7,800. Under the rule that applies here, that nongrantor trust reports the income on the trust's return. How much of the $7,800 does Bea report solely because she is the beneficiary?

105.Pia gives a charity stock she has held for four years. Basis is $1,000 and fair market value is $6,000. She may deduct fair market value and recognizes no gain. If she deducted only her basis, by how many dollars would the deduction be too low?

106.Adam sells property for $90,000 with a basis of $63,000. He collects $12,000 of principal this year. Gross profit percentage is gross profit divided by the selling price, and this year's gain is that percentage times principal collected. What gain does he recognize?

107.Ulysses's required annual payment is $15,000. He paid $4,000 of estimates, and withholding of $7,500 also counts toward the requirement. What is his shortfall?

108.Kara exchanges investment land for other investment land, with a realized gain of $30,000 and no cash received. Like-kind exchange treatment applies to that real property, so she recognizes none of the land gain now. She also sells stock for $12,000 with a basis of $5,000. Like-kind treatment does not apply to the stock. How much gain does she recognize in total?