Exam 13: Tax Credits and Payment Procedures

Henry,age 68,and Wilma,age 69,are married retirees who received the following income and retirement benefits during the year. Fully taxable pension from Henry's former employer $8,800 Taxable interest 4,500 Social Security benefits 2,400 ​ Assume Henry and Wilma file a joint return,have no deductions for AGI,and do not itemize their deductions.Are they eligible for the tax credit for the elderly? If so,calculate the amount of the credit,assuming the credit is not limited by their income tax liability.

Which of the following statements regarding the adoption expenses credit is not true?

Jermaine and Kesha are married,file a joint tax return,have AGI of $82,500,and have two children.Devona is beginning her freshman year at State University during Fall 2016,and Arethia is beginning her senior year at Northeast University during Fall 2016 after having completed her junior year during the spring of that year.Both Devona and Arethia are claimed as dependents on their parents' tax return. ​ Devona's qualifying tuition expenses and fees total $4,000 for the fall semester,while Arethia's qualifying tuition expenses and fees total $6,200 for each semester during 2016.Full payment is made for the tuition and related expenses for both children during each semester.The American Opportunity credit available to Jermaine and Kesha for 2016 is:

Rick spends $750,000 to build a qualified low-income housing project,which is placed in service on January 1,2016.He financed the project using his personal funds.What is the amount of the low-income housing credit that Rick may claim in 2016 (assuming a rate of 7.40%)? What is the total amount of the credit that Rick may claim as a result of the $750,000 expenditure?

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. Removal of architectural barriers $ 8,500 Acquired equipment for disabled persons 6,250 $14,750 ​ In addition,$8,000 was expended by Golden 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 Corporation.

The ceiling amounts and percentages for 2016 for the two portions of the self-employment tax are: ​ Social Security portion Medicare portion

A taxpayer's earned income credit is dependent on the number of his or her qualifying children.

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

Explain the purpose of the disabled access credit and describe the general characteristics of its computation.

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.

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

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

Summer Corporation's business is international in scope and is subject to income taxes in several countries.Summer's earnings and income taxes paid in the relevant foreign countries are: Country Income Taxes A $1,000,000 $500,000 B 300,000 30,000 C 400,000 120,000 Total $1,700,000 $650,000 ​ If Summer Corporation's worldwide income subject to taxation in the United States is $2,400,000 and the U.S.income tax due prior to the foreign tax credit is $816,000,compute the allowable foreign tax credit.If,instead,the total foreign income taxes paid were $550,000,compute the allowable foreign tax credit.

In January 2016,Tammy acquired an office building in downtown Syracuse,New York for $400,000.The building was constructed in 1932.Of the $400,000 cost,$40,000 was allocated to the land.Tammy immediately placed the building into service,but she quickly realized that substantial renovation would be required to keep and attract new tenants.The renovations,costing $600,000,were of the type that qualifies for the rehabilitation credit.The improvements were completed in October 2016. a.Compute Tammy's rehabilitation tax credit for the year of acquisition. b.Determine the cost recovery deduction for 2016. c.What is the basis in the property at the end of its first year of use by Tammy?

Rex and Dena are married and have two children,Michelle (age 7)and Nancy (age 5).During 2016,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:

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

Pat generated self-employment income in 2016 of $76,000.The self-employment tax is:

Which of the following best describes the treatment applicable to unused business credits?

The components of the general business credit include all of the following except:

In terms of the withholding procedures,which statement does not reflect current rules?