Question 1

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 2

An expatriate who works in a country with an income tax rate higher than the U.S.rate probably will find the foreign earned income exclusion preferable to the foreign tax credit.

Accepted Answer

A) True 
 B)False

Question 3

Phil and Audrey,husband and wife,are both employed by Laurel Corporation.Phil earns $125,000 in salary in 2015,and Audrey earns $70,000.How much FICA tax must they pay for 2015?

Accepted Answer

Phil will pay $9,159.50 [(6.2%

Question 4

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) $1,000. 
C) $1,500. 
D) $2,000. 
E) None of the above. 
A) $0. 
B) $1,000. 
C) $1,500. 
D) $2,000. 
E) None of the above.

Question 5

Ahmad is considering making a $10,000 investment in a venture which its promoter promises will generate immediate tax benefits for him.Ahmad,who normally itemizes his deductions,is in the 28% 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 normally would be 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) $2,800,take the itemized deduction. 
D) Both options produce the same benefit. 
E) None of the above. 
A) $0,take neither the itemized deduction nor the tax credit. 
B) $2,500,take the tax credit. 
C) $2,800,take the itemized deduction. 
D) Both options produce the same benefit. 
E) None of the above.

Question 6

Identify the statement below that is false.

Accepted Answer

A) If an employer is not required to withhold income taxes from an employee's wages,the wages are not taxable to the employee. 
B) In certain situations,income tax withholding by an employer is voluntary. 
C) For 2015,an employer must deposit with the government an amount of FICA tax that is twice the amount withheld from the employee's salary (i.e. ,the employee's and employer's shares). 
D) If an excess amount of FICA has been withheld for an employee because the employee has multiple jobs,the employee may claim a credit for the excess amount withheld on his or her income tax return. 
E) None of the above. 
A) If an employer is not required to withhold income taxes from an employee's wages,the wages are not taxable to the employee. 
B) In certain situations,income tax withholding by an employer is voluntary. 
C) For 2015,an employer must deposit with the government an amount of FICA tax that is twice the amount withheld from the employee's salary (i.e. ,the employee's and employer's shares). 
D) If an excess amount of FICA has been withheld for an employee because the employee has multiple jobs,the employee may claim a credit for the excess amount withheld on his or her income tax return. 
E) None of the above.

Question 7

The purpose of the work opportunity tax credit is to encourage employers to hire individuals from specified target groups traditionally subject to high rates of unemployment.

Accepted Answer

A) True 
 B)False

Question 8

For the current year,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 9

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 10

For purposes of computing the credit for child and dependent care expenses,the qualifying employment-related expenses are limited to an individual's actual or deemed earned income.

Accepted Answer

A) True 
 B)False

Question 11

Discuss the treatment of unused general business credits.

Accepted Answer

Unused general business credits are init

Question 12

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 13

Green Company,in the renovation of its building,incurs $9,000 of expenditures that qualify for the disabled access credit.The disabled access credit is:

Accepted Answer

A) $8,750. 
B) $4,500. 
C) $4,375. 
D) $4,250. 
E) None of the above. 
A) $8,750. 
B) $4,500. 
C) $4,375. 
D) $4,250. 
E) None of the above.

Question 14

Rex and Dena are married and have two children,Michelle (age 7) and Nancy (age 5).During 2015,Rex earned a salary of $24,500,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) $5,136. 
C) $5,302. 
D) $5,548. 
E) None of the above. 
A) $0. 
B) $5,136. 
C) $5,302. 
D) $5,548. 
E) None of the above.

Question 15

A taxpayer may qualify for the credit for child and dependent care expenses if the taxpayer's dependent is under age 17.

Accepted Answer

A) True 
 B)False

Question 16

The additional Medicare taxes assessed on high-income individuals carry differing tax rates depending on the tax base.

Accepted Answer

A) True 
 B)False

Question 17

Black Company paid wages of $180,000,of which $40,000 was qualified wages for the work opportunity tax credit under the general rules.Black Company's deduction for wages for the year is:

Accepted Answer

A) $140,000. 
B) $164,000. 
C) $166,000. 
D) $180,000. 
E) None of the above. 
A) $140,000. 
B) $164,000. 
C) $166,000. 
D) $180,000. 
E) None of the above.

Question 18

Because current U.S.corporate income tax rates are higher than many foreign corporate income tax rates only infrequently will the credit's,the overall limitation yield a lower foreign tax credit than the amount of foreign taxes actually paid.

Accepted Answer

A) True 
 B)False

Question 19

Julia is 30 years old,unmarried with a 9 year-old daughter,and has earnings during 2015 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

Maximum credit available for 2015 ($9,88

Question 20

Refundable tax credits include the:

Accepted Answer

A) Foreign tax credit. 
B) Tax credit for rehabilitation expenses. 
C) Credit for certain retirement plan contributions. 
D) Earned income credit. 
E) None of the above. 
A) Foreign tax credit. 
B) Tax credit for rehabilitation expenses. 
C) Credit for certain retirement plan contributions. 
D) Earned income credit. 
E) None of the above.

Exam 12: Tax Credits and Payments

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

An expatriate who works in a country with an income tax rate higher than the U.S.rate probably will find the foreign earned income exclusion preferable to the foreign tax credit.

Phil and Audrey,husband and wife,are both employed by Laurel Corporation.Phil earns $125,000 in salary in 2015,and Audrey earns $70,000.How much FICA tax must they pay for 2015?

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:

Identify the statement below that is false.

The purpose of the work opportunity tax credit is to encourage employers to hire individuals from specified target groups traditionally subject to high rates of unemployment.

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

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

For purposes of computing the credit for child and dependent care expenses,the qualifying employment-related expenses are limited to an individual's actual or deemed earned income.

Discuss the treatment of unused general business credits.

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

Green Company,in the renovation of its building,incurs $9,000 of expenditures that qualify for the disabled access credit.The disabled access credit is:

Rex and Dena are married and have two children,Michelle (age 7) and Nancy (age 5).During 2015,Rex earned a salary of $24,500,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 taxpayer may qualify for the credit for child and dependent care expenses if the taxpayer's dependent is under age 17.

The additional Medicare taxes assessed on high-income individuals carry differing tax rates depending on the tax base.

Black Company paid wages of $180,000,of which $40,000 was qualified wages for the work opportunity tax credit under the general rules.Black Company's deduction for wages for the year is:

Because current U.S.corporate income tax rates are higher than many foreign corporate income tax rates only infrequently will the credit's,the overall limitation yield a lower foreign tax credit than the amount of foreign taxes actually paid.

Julia is 30 years old,unmarried with a 9 year-old daughter,and has earnings during 2015 of $19,700.Does she qualify for the earned income credit? If so,calculate the amount of credit that is available to her.

Refundable tax credits include the:

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

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