Question 1

A LIFO method is applied to general business credit carryovers, carrybacks, and utilization of credits earned during a particular year.

Accepted Answer

A) True 
 B)False

Question 2

Expenses that are reimbursed by a taxpayer's employer under a dependent care assistance program also can qualify for the credit for child and dependent care expenses.

Accepted Answer

A) True 
 B)False

Question 3

Certain high-income individuals are subject to three additional Medicare taxes on wages, unearned income, and tax credits claimed.

Accepted Answer

A) True 
 B)False

Question 4

During the year, Green, Inc., incurs the following research expenditure. $\begin{array}{llr}
  \text { In-house wages, supplies, computer time } &\$60,000\
 \text {Paid to Blue Foundation for research  } &30,000\
\end{array}$

Green's qualifying research expenditures for the year are:

Accepted Answer

A)  $60,000. 
B)  $75,000. 
C)  $79,500. 
D)  $90,000. 
A)  $60,000. 
B)  $75,000. 
C)  $79,500. 
D)  $90,000.

Question 5

Kevin and Shuang have two children, ages 8 and 14. They spend $6,200 per year on eligible employment related expenses for the care of their children after school. Kevin earned a salary of $20,000 and Shuang earned a salary of $18,000. What is the amount of the couple's credit for child and dependent care expenses?

Accepted Answer

A)  $690 
B)  $713 
C)  $1,380 
D)  $1,426 
A)  $690 
B)  $713 
C)  $1,380 
D)  $1,426

Question 6

Golden Corporation is an eligible small business for purposes of the disabled access credit. During the year, Golden makes the following expenditures on a structure originally placed in service in 1988: $\begin{array}{ll}
\text { Removal of architectural barriers } & \$ 8,500 \
\text { Acquired equipment for disabled persons } & \underline{6,250} \
&\$ 14,750
\end{array}$
 In addition, Golden expended $8,000 on a building originally placed in service in the current year to ensure easy accessibility by disabled individuals. Calculate the amount of the disabled access credit available to Golden.

Accepted Answer

The expenditures of $8,000 incurred on t

Question 7

Child and dependent care expenses include amounts paid for general household services.

Accepted Answer

A) True 
 B)False

Question 8

Only self-employed individuals are required to make estimated tax payments.

Accepted Answer

A) True 
 B)False

Question 9

The disabled access credit is computed at the rate of 50% of all access expenditures incurred by the taxpayer during the year.

Accepted Answer

A) True 
 B)False

Question 10

Julia is 30 years old, unmarried with a nine year-old daughter, and has earnings during 2019 of $19,700. Does she qualify for the earned income credit? If so, calculate the amount of credit that is available to her.

Accepted Answer

None

Question 11

The disabled access credit was enacted to encourage small businesses to make their businesses more accessible to disabled individuals.

Accepted Answer

A) True 
 B)False

Question 12

The base amount for the Social Security portion (old age, survivors, and disability insurance) is different from that for the Medicare portion of FICA.

Accepted Answer

A) True 
 B)False

Question 13

Child care payments to a relative are not eligible for the credit for child and dependent care expenses if the relative is a child (under age 19) of the taxpayer.

Accepted Answer

A) True 
 B)False

Question 14

Cardinal Company incurs $800,000 during the year to construct a facility that will be used exclusively for the care of its employees' preschool age children during normal working hours. Assuming that Cardinal claims the credit for employer-provided child care this year, its basis in the newly constructed facility is $640,000.

Accepted Answer

A) True 
 B)False

Question 15

The work opportunity tax credit is available only for wages paid to qualifying individuals during their first year of employment.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following, if any, correctly describes the earned income credit?

Accepted Answer

A)  Would be available regardless of the amount of the taxpayer's adjusted gross income. 
B)  Is not available to a surviving spouse. 
C)  Requires a taxpayer to have a qualifying child to take advantage of the credit. 
D)  Is a refundable credit. 
A)  Would be available regardless of the amount of the taxpayer's adjusted gross income. 
B)  Is not available to a surviving spouse. 
C)  Requires a taxpayer to have a qualifying child to take advantage of the credit. 
D)  Is a refundable credit.

Question 17

Ahmad is considering making a $10,000 investment in a venture whose promoter promises will generate immediate tax benefits for him. Ahmad, who normally itemizes his deductions, is in the 32% marginal tax bracket. If the investment is of a type where the taxpayer may claim either a tax credit of 25% of the amount of the expenditure or an itemized deduction for the amount of the investment, what treatment is likely most beneficial to Ahmad, and by how much will Ahmad's tax liability decline because of the investment?

Accepted Answer

A)  $-0-, take neither the itemized deduction nor the tax credit. 
B)  $2,500, take the tax credit. 
C)  $3,200, take the itemized deduction. 
D)  Both options produce the same benefit. 
A)  $-0-, take neither the itemized deduction nor the tax credit. 
B)  $2,500, take the tax credit. 
C)  $3,200, take the itemized deduction. 
D)  Both options produce the same benefit.

Question 18

The child tax credit is based on the number of the taxpayer's qualifying children under age 17.

Accepted Answer

A) True 
 B)False

Question 19

Pat generated self-employment income in 2019 of $76,000. The self-employment tax is:

Accepted Answer

A)  $0. 
B)  $5,369.23. 
C)  $10,738.46. 
D)  $11,628.00. 
A)  $0. 
B)  $5,369.23. 
C)  $10,738.46. 
D)  $11,628.00.

Question 20

In March 2019, Gray Corporation hired two individuals, both of whom were certified as long-term recipients of family assistance benefits. Each employee was paid $11,000 during 2019. Gray's work opportunity tax credit amounts for 2019 is:

Accepted Answer

A)  $2,400. 
B)  $4,800. 
C)  $6,000. 
D)  $12,000. 
A)  $2,400. 
B)  $4,800. 
C)  $6,000. 
D)  $12,000.

Exam 12: Tax Credits and Payments

A LIFO method is applied to general business credit carryovers, carrybacks, and utilization of credits earned during a particular year.

Expenses that are reimbursed by a taxpayer's employer under a dependent care assistance program also can qualify for the credit for child and dependent care expenses.

Certain high-income individuals are subject to three additional Medicare taxes on wages, unearned income, and tax credits claimed.

During the year, Green, Inc., incurs the following research expenditure. In-house wages, supplies, computer time \6 0,000 Paid to Blue Foundation for research 30,000 Green's qualifying research expenditures for the year are:

Child and dependent care expenses include amounts paid for general household services.

Only self-employed individuals are required to make estimated tax payments.

The disabled access credit is computed at the rate of 50% of all access expenditures incurred by the taxpayer during the year.

Julia is 30 years old, unmarried with a nine year-old daughter, and has earnings during 2019 of $19,700. Does she qualify for the earned income credit? If so, calculate the amount of credit that is available to her.

The disabled access credit was enacted to encourage small businesses to make their businesses more accessible to disabled individuals.

The base amount for the Social Security portion (old age, survivors, and disability insurance) is different from that for the Medicare portion of FICA.

Child care payments to a relative are not eligible for the credit for child and dependent care expenses if the relative is a child (under age 19) of the taxpayer.

The work opportunity tax credit is available only for wages paid to qualifying individuals during their first year of employment.

Which of the following, if any, correctly describes the earned income credit?

The child tax credit is based on the number of the taxpayer's qualifying children under age 17.

Pat generated self-employment income in 2019 of $76,000. The self-employment tax is:

In March 2019, Gray Corporation hired two individuals, both of whom were certified as long-term recipients of family assistance benefits. Each employee was paid $11,000 during 2019. Gray's work opportunity tax credit amounts for 2019 is:

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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