Exam 1: The Individual Income Tax Return

Bob owns a rental property that he bought several years ago for $250,000.He has taken depreciation on the house of $35,000 since buying it.He sells it in 2018 for $290,000.His selling expenses are $12,000 for the year.What is Bob's realized gain on the sale?

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?

Taxpayers who do not qualify for married, head of household, or qualifying widow or widower filing status must file as single.

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?

What is the formula for computing taxable income, as summarized in the text?

Which of the following is not considered one of the five basic taxable or reporting entities?

Mr.and Mrs.Vonce, both age 62, file a joint return for 2018.They provided all the support for their daughter who is 19 years old, legally blind, and who earns no income.Their son, age 21 and a full-time student at a university, had $4,200 of income and provided 70 percent of his own support during 2018.What is the other dependent credit Mr.and Mrs.Vonce may claim on their 2018 tax return?

An 18-year-old full-time student child who is claimed on the parents' tax return as a dependent is eligible for the child tax credit.

Eugene and Velma are married.For 2018, Eugene earned $25,000 and Velma earned $30,000.They have decided to file separate returns.They have no deductions for adjusted gross income.Eugene's itemized deductions are $14,200 so he is going to itemize.Velma's itemized deductions are $4,000.Assuming Eugene and Velma do not live in a community property state, what is Velma's taxable income?

An item is not included in gross income unless the tax law specifies that the item is subject to taxation.

Match the letter of the filing status to the taxpayers below. Items may be used more than once. a.Single b.Married filing a joint return c.Married filing separate returns d.Head of household e.Qualifying widow(er) f.Married filing joint or married filing separate -The taxpayer is unmarried and is living with his girlfriend.

For 2018, personal and dependency exemption deductions are $4,150 each.

For each of the following situations, indicate whether the taxpayer(s)is(are)required to file a tax return for 2018.Explain your answer a.Debra, age 68, and Jerry, age 70, are married and file a joint return.They received $24,500 in interest income from a savings account. b.Margie is a single taxpayer with wages in 2018 of $8,400 and interest income of $200. c.Janie, age 30, and Scott, age 28, are married and file a joint tax return.They had $17,000 in earnings from wages. d.Kim, age 20, is a single college student who is claimed as a dependent by her parents.She earned $2,000 from a part-time job and has $450 in interest income. e.Stefanie, a 25-year-old single taxpayer, has wages of $1,500, from which $80 of federal income tax was withheld.

Theodore, age 74, and Maureen, age 59, are married taxpayers with two dependents.Their adjusted gross income for the 2018 tax year is $43,600, and they have itemized deductions of $7,800.Determine the following for Theodore and Maureen's 2018 income tax return:​ a.The greater of the amount of their standard deduction or their itemized deductions b.Their taxable income

Rod, age 50, and Ann, age 49, are married taxpayers who file a joint return for 2018.They have gross income of $150,700.Their deductions for adjusted gross income are $5,100 and they have itemized deductions of $18,000, consisting of $10,000 in state income taxes and $8,000 in mortgage interest expense.If they have no dependents for 2018, calculate the following amounts:​ a.Their adjusted gross income b.The greater of the amount of their standard deduction or their itemized deductions c.Their taxable income

If your spouse dies during the tax year and you do not remarry, you must file as single for the year of death.

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

Jessica, a 17-year-old guitarist in a successful band, earns $100,000 a year and is completely self-supporting although she lives with her parents.Can her parents claim her as a dependent? Why or why not?

Taxpayers with self-employment income of $400 or more must file a tax return.

Match the letter of the filing status to the taxpayers below. Items may be used more than once. a.Single b.Married filing a joint return c.Married filing separate returns d.Head of household e.Qualifying widow(er) f.Married filing joint or married filing separate -The taxpayer's husband died last year.Her 13-year-old dependent daughter lives with her.