Question 1

If a taxpayer chooses to claim a foreign tax credit,those foreign income taxes paid can also be claimed as a deduction.

Accepted Answer

A) True 
 B)False  False

Question 2

Qualifying tuition expenses paid from the proceeds of a tax-exempt scholarship do not give rise to an education tax credit.

Accepted Answer

A) True 
 B)False  True

Question 3

Bradley has two college-age children,Clint,a freshman at State University,and Abigail,a junior at Northwest University.Both Clint and Abigail are full-time students.Clint's expenses during the 2015 fall semester are as follows: $2,400 tuition,$250 books and course materials,and $1,600 room and board.Abigail's expenses for the 2015 calendar year are as follows: $10,200 tuition,$1,200 books and course materials,and $3,600 room and board.Tuition and the applicable room and board costs are paid at the beginning of each semester. ​ Bradley is married,files a joint tax return,claims both children as dependents,and reports a combined AGI with his wife Allie of $114,000 for 2015.Determine Bradley's available education tax credit for 2015.

Accepted Answer

In 2015,both Clint and Abigail qualify for the American Opportunity credit.Clint's qualifying expenses are $2,650 ($2,400 tuition and $250 books and course materials);Abigail's qualifying expenses are $11,400 ($10,200 tuition and $1,200 books and course materials).​
 Clint's American Opportunity credit is $2,162.50 [100% of the first $2,000 of qualifying expenses plus 25% of the next $2,000 of qualifying expenses;$2,000 + ($650 × 25%)].Abigail's American Opportunity credit is $2,500 (100% of the first $2,000 of qualifying expenses plus 25% of the next $2,000 of qualifying expenses;$2,000 + ($2,000 × 25%)].​
 Although the American Opportunity credits are subject to a phaseout for higher income taxpayers,Bradley's AGI of $114,000 is less than the phase-out starting point in 2015 ($160,000 for married taxpayers filing jointly).​
 So,the total education credit available for the year is $4,662.50 ($2,162.50 + $2,500).

Question 4

Susan generated $55,000 of net earnings from the conduct of a tax preparation business that she operated during the tax-filing season.She also received wages of $68,300 from her full-time job.Compute the self-employment taxes due for 2015.

Accepted Answer

Self-employment earnings and the self-em

Question 5

In May 2015,Blue Corporation hired Camilla,Jolene,and Tyrone,all of whom are certified as long-term family assistance recipients.Each employee is paid $12,000 during 2015.Camilla and Tyrone continued to work for Blue Corporation in 2016,earning $14,000 each.Blue hired no additional employees during 2016.
a.Compute Blue Corporation's work opportunity tax credits for 2015 and 2016.
b.Assume Blue Corporation pays total wages of $500,000 to its employees during 2015 and $560,000 during 2016.How much may Blue Corporation claim as a wage deduction for 2015 and 2016 if the work opportunity tax credit is claimed in both years?

Accepted Answer

​
 a.The work opportunity tax credit for

Question 6

Harry and Wilma are married and file a joint income tax return.On their tax return,they report $44,000 of adjusted gross income ($20,000 salary earned by Harry and $24,000 salary earned by Wilma) and claim two exemptions for their dependent children.During the year,they pay the following amounts to care for their 4-year old son and 6-year old daughter while they work. ABC Day Care Center $3,200 Blue Ridge Housekeeping Services 2,000 Mrs.Mason (Harry's mother) 1,000 ​ Harry and Wilma may claim a credit for child and dependent care expenses of:

Accepted Answer

A) $840. 
B) $1,040. 
C) $1,200. 
D) $1,240. 
E) None of the above. 
A) $840. 
B) $1,040. 
C) $1,200. 
D) $1,240. 
E) None of the above.

Question 7

John owns and operates a real estate agency as a sole proprietor.On a full-time basis,he employs his 17-year old daughter as a receptionist and his 22-year old son as a bookkeeper.Both children are subject to FICA withholding.

Accepted Answer

A) True 
 B)False

Question 8

The incremental research activities credit is 20% of the qualified research expenses that exceed the base amount.

Accepted Answer

A) True 
 B)False

Question 9

Cardinal Corporation hires two persons certified to be eligible employees for the work opportunity tax credit under the general rules (e.g. ,food stamp recipients),each of whom is paid $9,000 during the year.As a result of this event,Cardinal Corporation may claim a work opportunity credit of:

Accepted Answer

A) $1,440. 
B) $2,880. 
C) $4,800. 
D) $7,200. 
E) None of the above. 
A) $1,440. 
B) $2,880. 
C) $4,800. 
D) $7,200. 
E) None of the above.

Question 10

George and Jill are husband and wife,ages 67 and 65 respectively.During the year,they receive Social Security benefits of $4,000 and have adjusted gross income of $11,000.Assuming they file a joint return,their tax credit for the elderly,before considering any possible limitation due to their tax liability,is:

Accepted Answer

A) $1,125. 
B) $750. 
C) $450. 
D) $375. 
E) None of the above. 
A) $1,125. 
B) $750. 
C) $450. 
D) $375. 
E) None of the above.

Question 11

During the year,Purple Corporation (a U.S.Corporation) has U.S.-source income of $1,800,000 and foreign income of $600,000.The foreign-source income generates foreign income taxes of $150,000.The U.S.income tax before the foreign tax credit is $816,000.Purple Corporation's foreign tax credit is:

Accepted Answer

A) $112,500. 
B) $150,000. 
C) $204,000. 
D) $816,000. 
E) None of the above. 
A) $112,500. 
B) $150,000. 
C) $204,000. 
D) $816,000. 
E) None of the above.

Question 12

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 13

In describing FICA taxes,which (if any) of the following statements is incorrect?

Accepted Answer

A) The base amounts for 2016 probably will increase from the 2015 amounts. 
B) The base amounts for the Social Security and Medicare portions are the same. 
C) If both spouses work,excess FICA taxes need not result. 
D) Excess FICA taxes can be claimed as an income tax credit. 
E) None of the above. 
A) The base amounts for 2016 probably will increase from the 2015 amounts. 
B) The base amounts for the Social Security and Medicare portions are the same. 
C) If both spouses work,excess FICA taxes need not result. 
D) Excess FICA taxes can be claimed as an income tax credit. 
E) None of the above.

Question 14

All taxpayers are eligible to take the basic research credit.

Accepted Answer

A) True 
 B)False

Question 15

An individual generally may claim a credit for adoption expenses in the year in which the expenses are paid.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following correctly reflects current rules regarding estimated tax payments for individuals?

Accepted Answer

A) Employees are not subject to the estimated tax payment provisions. 
B) Any penalty imposed for underpayment is deductible for income tax purposes. 
C) Married taxpayers may not make joint estimated tax payments unless they file a joint income tax return. 
D) No quarterly payments are required if the taxpayer's estimated tax is under $1,000. 
E) None of the above. 
A) Employees are not subject to the estimated tax payment provisions. 
B) Any penalty imposed for underpayment is deductible for income tax purposes. 
C) Married taxpayers may not make joint estimated tax payments unless they file a joint income tax return. 
D) No quarterly payments are required if the taxpayer's estimated tax is under $1,000. 
E) None of the above.

Question 17

A taxpayer who meets the age requirement and receives no Social Security benefits will be entitled to the full tax credit for the elderly.

Accepted Answer

A) True 
 B)False

Question 18

During the year,Green,Inc. ,incurs the following research expenditures: In-house wages,supplies,computer time $60,000 Paid to Blue Foundation for research 30,000 ​ Green's qualifying research expenditures for the year are:

Accepted Answer

A) $60,000. 
B) $75,000. 
C) $79,500. 
D) $90,000. 
E) None of the above. 
A) $60,000. 
B) $75,000. 
C) $79,500. 
D) $90,000. 
E) None of the above.

Question 19

In May 2011,Cindy incurred qualifying rehabilitation expenditures of $500,000 on a certified historic structure and properly claimed the tax credit for rehabilitation expenditures.In March 2015,she sold the building at a loss.Calculate the rehabilitation expenditures credit recapture that she must report in 2015.

Accepted Answer

​
 Amount of original credit ($500,000 ×

Question 20

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

Exam 12: Tax Credits and Payments

If a taxpayer chooses to claim a foreign tax credit,those foreign income taxes paid can also be claimed as a deduction.

Qualifying tuition expenses paid from the proceeds of a tax-exempt scholarship do not give rise to an education tax credit.

Susan generated $55,000 of net earnings from the conduct of a tax preparation business that she operated during the tax-filing season.She also received wages of $68,300 from her full-time job.Compute the self-employment taxes due for 2015.

John owns and operates a real estate agency as a sole proprietor.On a full-time basis,he employs his 17-year old daughter as a receptionist and his 22-year old son as a bookkeeper.Both children are subject to FICA withholding.

The incremental research activities credit is 20% of the qualified research expenses that exceed the base amount.

Cardinal Corporation hires two persons certified to be eligible employees for the work opportunity tax credit under the general rules (e.g. ,food stamp recipients),each of whom is paid $9,000 during the year.As a result of this event,Cardinal Corporation may claim a work opportunity credit of:

During the year,Purple Corporation (a U.S.Corporation) has U.S.-source income of $1,800,000 and foreign income of $600,000.The foreign-source income generates foreign income taxes of $150,000.The U.S.income tax before the foreign tax credit is $816,000.Purple Corporation's foreign tax credit is:

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

In describing FICA taxes,which (if any) of the following statements is incorrect?

All taxpayers are eligible to take the basic research credit.

An individual generally may claim a credit for adoption expenses in the year in which the expenses are paid.

Which of the following correctly reflects current rules regarding estimated tax payments for individuals?

A taxpayer who meets the age requirement and receives no Social Security benefits will be entitled to the full tax credit for the elderly.

During the year,Green,Inc. ,incurs the following research expenditures: In-house wages,supplies,computer time $60,000 Paid to Blue Foundation for research 30,000 ​ Green's qualifying research expenditures for the year are:

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

An Introduction to Taxation and Understanding the 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 Nontaxabl

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

Alternative Minimum Tax

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

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

During the year,Green,Inc. ,incurs the following research expenditures: In-house wages,supplies,computer time $60,000 Paid to Blue Foundation for research 30,000 Green's qualifying research expenditures for the year are: