Question 1

The earned income credit, a form of a negative income tax, is a refundable credit.

Accepted Answer

A) True 
 B)False

Question 2

If the cost of a building constructed and placed into service by an eligible small business in the current year includes the cost of a wheelchair ramp, which qualifies for the disabled access credit.

Accepted Answer

A) True 
 B)False

Question 3

Only married taxpayers with children can claim the earned income credit.

Accepted Answer

A) True 
 B)False

Question 4

In 2019, George and Martha are married and file a joint tax return claiming their two children, ages 10 and 8 as dependents. Assuming their AGI is $119,650, George and Martha's child tax credit is:

Accepted Answer

A)  $0. 
B)  $2,000. 
C)  $3,000. 
D)  $4,000. 
A)  $0. 
B)  $2,000. 
C)  $3,000. 
D)  $4,000.

Question 5

Explain the purpose of the tax credit for rehabilitation expenditures and describe the general characteristics of its computation.

Accepted Answer

The rehabilitation expenditures credit i

Question 6

Steve records a tentative general business credit of $110,000 for the current year. His net regular tax liability before t general business credit is $125,000, and his tentative minimum tax is $100,000. Compute Steve's allowable general business credit for the year.

Accepted Answer

(nonrefund

Question 7

During 2019, Barry (who is single and has no children) earned a salary of $13,100. He is age 30. His earned income credit for the year is:

Accepted Answer

A)  $0. 
B)  $189. 
C)  $340. 
D)  $529. 
A)  $0. 
B)  $189. 
C)  $340. 
D)  $529.

Question 8

Molly has generated general business credits over the years that have not been utilized. The amounts generated and not utilized equal:
2015 $2,500
2016 7,500
2017 5,000
2018 4,000
In the current year, 2019, her business generates an additional $15,000 general business credit. In 2019, based on her tax liability before credits, she can utilize a general business credit of up to $20,000. After utilizing the carryforwards and the current year credits, how much of the general business credit generated in 2019 is available for future years?

Accepted Answer

A)  $0. 
B)  $1,000. 
C)  $14,000. 
D)  $15,000. 
A)  $0. 
B)  $1,000. 
C)  $14,000. 
D)  $15,000.

Question 9

Qualified rehabilitation expenditures include the cost of acquiring a building, but not the cost of acquiring the land.

Accepted Answer

A) True 
 B)False

Question 10

An employer calculates the amount of income tax withheld from salary or wages based on the information an employee provides on the:

Accepted Answer

A)  Form W-2. 
B)  Form W-3. 
C)  Form W-4. 
D)  Form 941. 
A)  Form W-2. 
B)  Form W-3. 
C)  Form W-4. 
D)  Form 941.

Question 11

Employers are encouraged by the work opportunity tax credit to hire individuals who have been long-term recipients of family assistance welfare benefits.

Accepted Answer

A) True 
 B)False

Question 12

The maximum child tax credit under current law is $1,500 per qualifying child.

Accepted Answer

A) True 
 B)False

Question 13

Rex and Dena are married and have two children, Michelle (age seven) and Nancy (age five). During 2019, Rex earned a salary of $26,500, received interest income of $300, and filed a joint income tax return with Dena. Dena had $0 gross income. Their earned income credit for the year is:

Accepted Answer

A)  $0. 
B)  $5,411. 
C)  $5,474. 
D)  $5,828. 
A)  $0. 
B)  $5,411. 
C)  $5,474. 
D)  $5,828.

Question 14

A small employer incurs $31,500 for consulting fees related to establishing a qualified retirement plan for its 75 employees. As a result, the employer may claim the credit for small employer pension plan startup costs for $750.

Accepted Answer

A) True 
 B)False

Question 15

Any unused general business credit must be carried back three years and then forward for 20 years.

Accepted Answer

A) True 
 B)False

Question 16

An employer's tax deduction for wages is affected by the work opportunity tax credit.

Accepted Answer

A) True 
 B)False

Question 17

Nonrefundable credits are those that reduce the taxpayer's tax liability but are not paid when the amount of the credit (or credits) exceeds the taxpayer's tax liability.

Accepted Answer

A) True 
 B)False

Question 18

The tax benefit received from a tax credit never is affected by the tax rate of the taxpayer.

Accepted Answer

A) True 
 B)False

Question 19

Both education tax credits are available for qualified tuition expenses, and in certain instances, also may be available for room and board.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements concerning the credit for child and dependent care expenses is not correct?

Accepted Answer

A)  A taxpayer is not allowed both an exclusion from income and the credit for child and dependent care expenses on the same amount. 
B)  A taxpayer is not allowed both a deduction as a medical expense and the credit for child and dependent care expenses on the same amount. 
C)  If a taxpayer's adjusted gross income exceeds $43,000, the rate for the credit for child and dependent care expenses is 20%. 
D)  If a taxpayer's adjusted gross income exceeds $15,000 but is not over $17,000, the rate for the credit for child and dependent care expenses is 35%. 
E)  All of these statements are correct. 
A)  A taxpayer is not allowed both an exclusion from income and the credit for child and dependent care expenses on the same amount. 
B)  A taxpayer is not allowed both a deduction as a medical expense and the credit for child and dependent care expenses on the same amount. 
C)  If a taxpayer's adjusted gross income exceeds $43,000, the rate for the credit for child and dependent care expenses is 20%. 
D)  If a taxpayer's adjusted gross income exceeds $15,000 but is not over $17,000, the rate for the credit for child and dependent care expenses is 35%. 
E)  All of these statements are correct.

Exam 12: Tax Credits and Payments

The earned income credit, a form of a negative income tax, is a refundable credit.

If the cost of a building constructed and placed into service by an eligible small business in the current year includes the cost of a wheelchair ramp, which qualifies for the disabled access credit.

Only married taxpayers with children can claim the earned income credit.

In 2019, George and Martha are married and file a joint tax return claiming their two children, ages 10 and 8 as dependents. Assuming their AGI is $119,650, George and Martha's child tax credit is:

Explain the purpose of the tax credit for rehabilitation expenditures and describe the general characteristics of its computation.

Steve records a tentative general business credit of $110,000 for the current year. His net regular tax liability before t general business credit is $125,000, and his tentative minimum tax is $100,000. Compute Steve's allowable general business credit for the year.

During 2019, Barry (who is single and has no children) earned a salary of $13,100. He is age 30. His earned income credit for the year is:

Qualified rehabilitation expenditures include the cost of acquiring a building, but not the cost of acquiring the land.

An employer calculates the amount of income tax withheld from salary or wages based on the information an employee provides on the:

Employers are encouraged by the work opportunity tax credit to hire individuals who have been long-term recipients of family assistance welfare benefits.

The maximum child tax credit under current law is $1,500 per qualifying child.

Rex and Dena are married and have two children, Michelle (age seven) and Nancy (age five). During 2019, Rex earned a salary of $26,500, received interest income of $300, and filed a joint income tax return with Dena. Dena had $0 gross income. Their earned income credit for the year is:

A small employer incurs $31,500 for consulting fees related to establishing a qualified retirement plan for its 75 employees. As a result, the employer may claim the credit for small employer pension plan startup costs for $750.

Any unused general business credit must be carried back three years and then forward for 20 years.

An employer's tax deduction for wages is affected by the work opportunity tax credit.

Nonrefundable credits are those that reduce the taxpayer's tax liability but are not paid when the amount of the credit (or credits) exceeds the taxpayer's tax liability.

The tax benefit received from a tax credit never is affected by the tax rate of the taxpayer.

Both education tax credits are available for qualified tuition expenses, and in certain instances, also may be available for room and board.

Which of the following statements concerning the credit for child and dependent care expenses is not correct?

Understanding and Working With the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses, Section 1231, and Recapture Provisions

Taxing Business Income

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

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