Question 1

Which one of the following conditions must be satisfied in order for a married taxpayer to be taxed on only his income if he resides in a community property state?

Accepted Answer

In community property states, for a married taxpayer to be taxed on only his income, the husband and wife must live apart for the entire year. This allows them to file separately and be taxed only on their own income.

Question 2

Lee and Pat are married taxpayers living in Louisiana. Lee earns wages of $40,000 and has $5,000 of dividend income from separate property. Lee and Pat have interest income from community property of $10,000. If Lee and Pat file separate income tax returns, what amount of income must be included on Lee's separate tax return?

Accepted Answer

Louisiana is a community property state, which means that income from community property is split 50/50 between spouses. Therefore, Lee must include 50% of the community property interest income on his separate tax return, which is $5,000. Additionally, Lee must include all of his separate dividend income on his separate tax return, which is $5,000. Therefore, the total amount of income that Lee must include on his separate tax return is $5,000 + $5,000 = $10,000. When added to his wages, Lee's total income for the year is $40,000 + $10,000 = $50,000. However, since the question asks for the amount of income to be included on Lee's separate tax return, the correct answer is $10,000, or choice C.

Question 3

Which of the following is not a true statement regarding community property law?

Accepted Answer

Colorado, Ohio, and Florida are not community property states.

Question 4

Molly and Steve are married and live in Texas. Molly earns a salary of $50,000 and Steve owns a rental property that gives him $35,000 of income. If they filed separate tax returns, what amount of income would Steve report?

Accepted Answer

The answer of Molly and Steve are married and live...

Question 5

Rachel and Rob are married and living together in California. Their income is: $\begin{array}{lr}
\text { Rob's salary } & \$ 120,000 \
\text { Rachel's net income from her business } & 130,000 \
\text { Interest (Rob's separate property investments) } & 4,000 \
\text { Interest (Rachel's separate property investments) } & 2,000 \
\text { Dividends (community property) } & 5,000\\text { Total income is } \$ 261,000
\end{array}$ 
a. If Rachel files a separate return, how much income should she report?
b. If Rob and Rachel live in Texas, what should Rachel report as income?

Accepted Answer

The answer of Rachel and Rob are married and living...

Question 6

Most states are community property states.

Accepted Answer

Only nine states in the U.S. are considered community property states, where property acquired during the marriage is considered jointly owned by both spouses. The majority of states follow equitable distribution rules.

Quiz 2: Gross Income and Exclusions

Which one of the following conditions must be satisfied in order for a married taxpayer to be taxed on only his income if he resides in a community property state?

Which of the following is not a true statement regarding community property law?

Molly and Steve are married and live in Texas. Molly earns a salary of $50,000 and Steve owns a rental property that gives him $35,000 of income. If they filed separate tax returns, what amount of income would Steve report?

Most states are community property states.