Exam 1: The Individual Income Tax Return

Mark a "Yes" to each of the following if it is an objective of the tax code. Otherwise mark with a "No." a. To provide a car to each American. b. To promote giving to charities. c. To encourage taxpayers to send their children to college. d. To raise money to operate the government. e. To promote the use of solar energy.

Alexis has a long-term capital loss of $13,000 on the sale of stock in the current year. She has no other capital gains or losses for the year. Her taxable income without this transaction is $60,000. What is her current year taxable income considering this capital loss?

All taxpayers may use the tax rate schedule to determine their tax liability.

The US federal tax law's sole purpose is to raise revenue.

Karl's father, Vronsky, is a 60-year-old Russian citizen who lived in Russia for the full year. Karl supported Vronsky while he looked for work. Vronsky had no income. Can Karl claim Vronsky as a dependent?

An individual taxpayer with a net capital loss may deduct up to $3,000 per year against ordinary income.

What is the difference between the standard deduction and itemized deductions?

Match the letter of the filing status to the taxpayers below. Items may be used more than once. -The taxpayer is married, but her husband disappeared with a girlfriend while on vacation in March of the current year. The taxpayer has no dependents.

Your standard deduction will be $12,200 in 2019 if you are:

Eugene and Velma are married. For 2019, Eugene earned $25,000 and Velma earned $30,000. They have decided to file separate returns. They have no deductions for adjusted gross income. Velma's itemized deductions are $14,200 so she is going to itemize. Eugene's itemized deductions are $4,000. Assuming Eugene and Velma do not live in a community property state, what is Eugene's taxable income?

Mike purchased stock in MDH Corporation 5 years ago for $15,500. This year he sold it for $12,650 and then paid a $250 sales commission to his broker. He had no other capital gains or losses during the year. a. What is Mike's amount realized? b. What is Mike's adjusted basis? c. What is Mike's realized gain or loss? d. What is Mike's recognized gain or loss? e. How much of the gain or loss can Mike report in his tax return?

Which of the following is correct?

In 2019, depending on the amounts of income and other tax information, some individuals may report their income on:

Most taxpayers may deduct the standard deduction amount or the amount of their itemized deductions, whichever is higher.

All of the following factors are important in determining whether an individual is required to file an income tax return, except:

Ronald is 92 years old and in poor health. Clever investing earlier in his life has left him with a sizeable income. He is able to support his son Ed. Ed is 67 years old and a bit "confused," so he lives in a nursing home. Ed's income is less than $2,000. How many dependents should Ronald claim on his tax return?

Brian is 60 years old, single, and legally blind. Brian supports his father, who is 88 years old and blind, by paying the rent and other costs of his father's residence. What is the total standard deduction amount that Brian should claim on his 2019 tax return?

Which of the following relatives will not satisfy the relationship test for the dependency?

Married taxpayers may double their standard deduction amount by filing separate returns.

Which of the following is a true statement with respect to the gross income test for the qualifying relative dependency exemption?