1. Look at the Form 1040 you prepared for Esther Wieder. What is the amount on Form 1040, Line 22?

A. $82,075.
B. $49,440.
C. $62,075.
D. $52,440.

2. Look at the Form 1040 you prepared for Esther Wieder. What is the amount owed or refunded?

A. $2,988 refund.
B. $402 owed.
C. $7,350 refund.
D. $3,210 refund.

3. Todd and Susan divorced on September 1, 2008. As part of the divorce decree, beginning in September, Todd was to make payments of $2,000 per month for the balance of the year to Susan's doctor for recent medical expenses; child support payments of $500 per month, and $1,500 a month for the mortgage payment on a jointly owned home. Susan and the children continue to live in the home. What is the amount that Todd can deduct as alimony for 2008?

A. $8,000.
B. $11,000.
C. $4,200.
D. $9,600.

4. Which of the following items may be considered alimony?

A. Noncash property settlement.
B. Payments you made under a written separation agreement for the mortgage and real estate taxes on a home you owned by yourself and in which your former spouse lived rent-free.
C. Payments made to a third party on behalf of the former spouse for the former spouse's medical expenses.
D. Payments that are your spouse's part of community income.

5. Alimony is a payment to or for a spouse or former spouse under a divorce or separation instrument. It does not include

A. Voluntary payments that are not made under a divorce or separation instrument.
B. Payments for your spouse's medical expenses.
C. Payments for your spouse's housing costs (rent, utilities, etc.), taxes, tuition.
D. Premiums you must pay under your divorce or separation instrument for insurance on your life to the extent your spouse owns the policy.

6. If you are requesting innocent spouse relief, separation of liability relief, or equitable relief, file Form 8857,

A. Two years after the date on which the IRS first began collection activities against you.
B. Two years after the date your first filed your return for which you are seeking relief.
C. No later than two years after the date on which the IRS first began collection activities against you.
D. At any time 10 years after you filed your return in question since the IRS has 10 years to collect an amount you owe.

7. A property transfer is incident to your divorce if the transfer occurs within one year after the date your marriage ends, or is related to the ending of your marriage. If the property transfer is made under your original or modified divorce or separation instrument and the transfer occurs within 6 years after the date your marriage ends, then the property transfer is

A. Is not alimony.
B. Related to the ending of marriage.
C. Not related to the ending of marriage.
D. None of the above.

8. If you must pay all the mortgage payments (principal and interest) on a jointly-owned home, and they otherwise qualify, you

A. Cannot deduct any of the payments as alimony.
B. Can deduct one-half of the total payments as alimony.
C. You can deduct one-half of the total payments as child support.
D. None of the above.

9. If you must pay all the real estate taxes or insurance on a home held as tenants in common, you

A. Can deduct one-half of these payments as alimony.
B. Cannot deduct any of the payments as alimony.
C. You can tell your spouse that she does not need to report her half of these payments as alimony received.
D. None of the above.

10. Not all payments under a divorce or separation instrument are alimony. Alimony does not include

A. Child support.
B. Noncash property settlements.
C. Payments that are your spouse's part of community income.
D. Any of the above.

11. A payment to or for a spouse under a divorce or separation instrument is alimony if the spouses do not file a joint return with each other. Which of the following is not one of the requirements that must be met.

A. The payment is in cash.
B. The instrument does not designate the payment as not alimony.
C. The spouses are not members of the same household at the time the payments are made only if they are legally separated under a decree of divorce or separate maintenance.
D. Must hold a valid divorce decree.

12. If you are not legally separated under a decree of divorce or separate maintenance, a payment under a written separation agreement, support decree, or other court order

A. Does not qualify as alimony if you are members of the same household when the payments are made.
B. May qualify as alimony even if you are members of the same household when the payments are made.
C. Qualifies as alimony if spouse includes it in income.
D. None of the above.

13. If the transfer of property between former spouses is because of divorce, there is

A. No recognized gain or loss on the transfer of property between spouses.
B. There is recognized gain and it is considered alimony.
C. A gain if the transfer was in exchange for cash.
D. A gain if the transfer was in exchange for assumption of liability.

14. You and your spouse can designate that otherwise qualifying payments are not alimony. You do this by including a provision in your divorce or separation instrument that states that payments are not deductible as alimony by you and are excludable from your spouse's income. Your spouse can exclude the payments from income only if

A. He or she faxes a copy to the IRS and writes "Attention IRS district director" and tell him to designate the payments.
B. He or she calls the IRS to let them know that alimony does not need to be included.
C. He or she attaches a copy of the instrument designating the payments as not alimony to his or her return.
D. He or she does not do anything because as long as a credit is not taken then income does not need to be included.

15. A payment that is specifically designated as child support or treated as specifically designated as child support under your divorce or separation instrument in not alimony. The designated amount or part may vary from time to time. Child support payments are

A. Taxable to the recipient.
B. Neither deductible by the payer nor taxable to the payee.
C. Deductible by the payer.
D. None of the above.

16. You must pay your former spouse $15,000 in cash each year for 10 years. The death of your spouse would not terminate these payments under state law. The $15,000 annual payments

A. Are alimony.
B. Are not alimony because the payments will not end upon former spouse's death.
C. Are alimony because they end at spouse's death.
D. None of the above.

17.  A contingency relates to your child if it depends on any event relating to that child. An event relating to your child is

A. A child becoming employed.
B. A child dying.
C. A child marrying.
D. Any of the above.

18. Your payments may be subject to the recapture rules if they

A. Decrease by more than $15,000 from the second year during the first three calendar years.
B. Decrease significantly in the 2nd or 3rd years from the alimony.
C. Decrease or terminate during the first five calendar years.
D. Either A or B above.

19. A payment will be treated as specifically designed as child support to the extent that the payment is reduced

A. On the happening of a contingency relating to your child.
B. At the time that can be clearly associated with the contingency.
C. Either A or B above.
D. None of the above.

20. The reason for a reduction or termination of alimony payments that can require a recapture is

A. A change in your divorce or separation instrument.
B. A failure to make timely payments.
C. A reduction in your ability to provide support or a reduction in your spouse's support needs.
D. Any of the above.

21. You are subject to the recapture rules in the third year if the alimony you pay in the third year decreases by more than

A. $10,000 from the second year.
B. $15,000 from the second year.
C. $5,000 from the second year.
D. $2,000 from the second year.

22. When you figure a decrease in alimony, do not include

A. Payments made under a temporary support order.
B. Payments required over a period of at least 3 calendar years that vary because they are a fixed part of your income.
C. Payments that decrease because of the death of either spouse or the re-marriage of the spouse receiving the payments before the end of the third year.
D. Any of the above.

23. Alimony is a payment to or for a spouse or former spouse under a divorce or separation instrument. It does not include payments that are not made under a divorce or separation agreement. Alimony

A. Is deductible by the payer.
B. Must be included in spouse's or former spouse's income.
C. Both A and B above.
D. None of the above.

24. You can deduct alimony you paid

A. Only if you itemize deductions on your return.
B. Whether or not you itemize deductions on your tax return.
C. On Form 1040A.
D. On Form 1040EZ.

25. When reporting alimony received, report it on

A. Line 11 of Form 1040.
B. Line 11 of Form 1040A.
C. Line 11 of Form 1040EZ.
D. Either A or B above.

26. If you are a U.S. citizen or resident and you pay alimony to a nonresident alien spouse, you may have to withhold income tax on each payment at a rate of

A. 15%.
B. 20%.
C. 25%.
D. 30%.

27. The following do not qualify as payment of alimony, except for

A. Transfers of services or property (including a debt instrument of a third party or an annuity contract).
B. Execution of a debt instrument by the payer.
C. The use of pager's property.
D. Cash, check and money orders payments.

28. A payment to or for a spouse under a divorce or separation instrument is alimony if

A. The spouses do not file a joint return with each other.
B. The instrument does not designate the payment as not alimony.
C. There is no liability to make any payment (in cash or in property) after death of the recipient spouse. 
D. All of the above.

29. If you get a final decree of divorce or separate maintenance by the end of your tax year, you

A. Cannot deduct contributions you make to your former spouse's traditional IRA.
B. Cannot deduct contributions to your own traditional IRA.
C. Can deduct contributions you make to your former spouse's traditional IRA.
D. Both A and B above.

30. Your transfer of property to your spouse or former spouse is not subject to gift tax if

A. It is made under a written agreement, and you are divorced within a specified period.
B. It does not qualify for the annual exclusion.
C. It is not made under a divorce decree.
D. It does not qualify for any marital deduction.

31. A transfer of property to your spouse before receiving a final decree of divorce or separate maintenance is not subject to gift tax. However, this does not apply to

A. Transfers of certain terminable interests.
B. Transfers to your spouse if your spouse is not a U.S. citizen.
C. A transfer of property under the decree of a divorce court having the power to prescribe a property settlement. 
D. Either A or B above.

32. If your domicile is in a community property state during any part of the year, you

A. May determine whether your income is separate or community income.
B. May have community income.
C. May choose which spouse will report all of the income on which tax return. 
D. Any of the above.

33. If you and your spouse file separate returns,

A. You must report half of any income described by state law as community income and all of your separate income.
B. Your spouse must report half of any community income plus all of his or her separate income.
C. Each of you can claim credit for half the income tax withheld from community income. 
D. All of the above.

34. Whether you have community property and community income depends on the state where you are domiciled.

True False

35. The amount of time spent in one place does not always explain the difference between home and domicile. A temporary home or residence may continue for months or years while a domicile may be established the first moment you occupy the property. The determining factor in proving where you have your domicile is

A. Where you pay state income tax.
B. Your intent.
C. Length of residence. 
D. Any of the above.

36. If you file a federal tax return separately from your spouse, you must report half of all community income and all of your separate income. Generally, community income is income from community property and

A. From salaries, wages, and other pay received for the services performed by you, your spouse, or both during your marriage.
B. From property that you or your spouse owned separately before your marriage.
C. From property bought with separate funds, or exchanged for separate property, during your marriage. 
D. From property that you and your spouse agreed to convert from community to separate property through an agreement valid under state law.

37. Generally, community property is property that

A. You, your spouse, or both acquire during your marriage while you and your spouse are domiciled in a community property state.
B. You and your spouse agreed to convert from separate to community property.
C. Cannot be identified as separate property. 
D. Any of the above.

38. A spouse's wages, earnings, and net profits from a sole proprietorship are community income and must be evenly split.

True False

39. If you file separate returns, you and your spouse must be able to identify your community and separate income, deductions, credits, and other amounts according to the laws of your state. All of the following are true, except:

A. Military retirement pay for services performed during marriage and domicile in a community property state is community income.
B. Payments that may otherwise qualify as alimony are deductible as alimony only to the extent they are more than that spouse's part of community income.
C. If you and your spouse pay estimated tax jointly then you cannot choose to file a separate income tax return.
D. Earned income does not include amounts paid by a corporation that are a distribution of earnings and profits rather than a reasonable allowance for personal services rendered.

40. Community property laws may not apply to an item of community income that you received but did not treat as community income. You are responsible for reporting all of that income item if you treat the item as if only you are entitled to the income, and

A. You notify your spouse of the nature and amount of the income by the due date for filing the return.
B. You do not notify your spouse of the nature and amount of the income by the due date for filing the return (including extensions).
C. You did not file a joint return for the tax year. 
D. You establish that you did not know of, and had no reason to know of, that community income.

41. If you are a registered domestic partner is California,

A. You can report half the combined income that you and your domestic partner earned as a married person filing separately in California.
B. You must report all wages, salaries, and other compensation received for your personal services on your own return.
C. You must be able to show with facts such a vehicle registration or rental lease, that you intend to be considered a married couple. 
D. You and your spouse may divide the number of dependent exemptions on your federal return.

42. In some cases, a spouse (or former spouse) will be relieved of the tax, interest, and penalties on a joint tax return. The type of relief available to married persons who file joint returns is (are)

A. Innocent spouse relief.
B. Separation of liability relief.
C. Equitable relief. 
D. All of the above.

43. Married persons who did not file joint returns, but who live in community property states, do not qualify for relief.

True False

44. After you file Form 8857, you may be able to petition the United States Tax Court to review your request for relief when  

A. The IRS sends you a final determination letter regarding your request for relief.
B. You do not receive a final determination letter from the IRS within six months from the date you filed Form 8857.
C. Both A and B above.
D. You entered into a closing agreement with the IRS that disposed of the same liability for which you want to seek relief.

45. The IRS will consider all of the facts and circumstances of the case in order to determine whether it is unfair to hold you responsible for the understated tax due to the item of community income. The following would be a factor the IRS would consider.

A. Whether you received a benefit, either directly or indirectly, from the omitted item of community income.
B. Whether your spouse (or former spouse) deserted you.
C. Whether you and your spouse have been divorced or separated. 
D. Any of the above.

46. Under a separation of liability relief, the understated tax (plus interest and penalties) on your joint return is allocated between you and your spouse (or former spouse). To request this relief, you must have filed a joint return and at the time you filed Form 8857, you are no longer married to, or are legally separated from, the spouse with whom you filed the joint return for which you are requesting relief, or

A. You were not a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 8857.
B. You were a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 8857.
C. You and your spouse reside in separate dwelling but are not estranged, and one of you is temporarily absent from the other's household. 
D. None of the above.

47. Even if you meet the requirements, a request for separation of liability relief will not be granted if

A. The IRS proves that you and your spouse transferred assets to one another as part of a fraudulent scheme.
B. The IRS proves that at the time you signed your joint return, you have actual knowledge of any erroneous items giving rise to the deficiency that are allocable to your spouse.
C. Your spouse (or former spouse) transferred property to you to avoid tax or the payment of tax. 
D. Any of the above.

48. Injured spouse relief is the same as innocent spouse relief.

True False

49. The term "divorce or separation instrument" means a decree of divorce or separate maintenance or a written instrument incident to that decree, a written separation agreement, or a decree or any type of court order requiring a spouse to make payments for support or maintenance of the other spouse.

True False