Question 1

Kirby is in the 15% tax bracket and had the following capital asset transactions during 2012:   Kirby's tax consequences from these gains are as follows:

Accepted Answer

A) (5% ´ $10,000) + (15% ´ $13,000). 
B) (15% ´ $13,000) + (28% ´ $11,000). 
C) (0% ´ $10,000) + (15% ´ $13,000). 
D) (15% ´ $23,000). 
E) None of the above. 
A) (5% ´ $10,000) + (15% ´ $13,000). 
B) (15% ´ $13,000) + (28% ´ $11,000). 
C) (0% ´ $10,000) + (15% ´ $13,000). 
D) (15% ´ $23,000). 
E) None of the above. C

Question 2

List at least three exceptions to the application of the kiddie tax.

Accepted Answer

· Unearned income of $1,900 or less.
· Age 19 (or age 24 if a full-time student) or older.
· Both parents deceased.
· Earned income in excess of 50% of support.
· Married and filing a joint return with spouse.

Question 3

Meg, age 23, is a full-time law student and is claimed by her parents as a dependent.During 2012, she received $1,400 interest income from a bank savings account and $5,800 from a part-time job.What is Meg's taxable income for 2012?

Accepted Answer

$1,250.Meg's standard deduction is the greater of $5,800 (earned income) + $300 or $950.But the $6,100 is limited to $5,950 (the standard deduction allowed a single person).Thus, $1,400 + $5,800 - $5,950 = $1,250 taxable income.

Question 4

During 2012, Trevor has the following capital transactions:   After the netting process, the following results:

Accepted Answer

A) Long-term collectible gain of $2,000. 
B) LTCG of $6,000, Long-term collectible gain of $2,000, and a STCL of $6,000. 
C) LTCG of $6,000, Long-term collectible gain of $2,000, and a STCL carryover to 2013 of $3,000. 
D) LTCG of $2,000. 
E) None of the above. 
A) Long-term collectible gain of $2,000. 
B) LTCG of $6,000, Long-term collectible gain of $2,000, and a STCL of $6,000. 
C) LTCG of $6,000, Long-term collectible gain of $2,000, and a STCL carryover to 2013 of $3,000. 
D) LTCG of $2,000. 
E) None of the above.

Question 5

Albert buys his mother a TV.For purposes of meeting the support test, Albert cannot include the cost of the TV.

Accepted Answer

A) True 
 B)False

Question 6

Katelyn is divorced and maintains a household in which she and her daughter, Crissa, live.Crissa, age 22, earns $11,000 during 2012 as a model.Katelyn does qualify for head of household filing status.

Accepted Answer

A) True 
 B)False

Question 7

In terms of the tax formula applicable to individual taxpayers, which, if any, of the following statements is correct?

Accepted Answer

A) In arriving at AGI, a taxpayer must elect between claiming deductions for AGI and deductions from AGI. 
B) In arriving at taxable income, a taxpayer must elect between claiming deductions for AGI and deductions from AGI. 
C) If a taxpayer has deductions for AGI, the standard deduction is not available. 
D) In arriving at taxable income, a taxpayer must elect between deductions for AGI and the standard deduction. 
E) None of the above. 
A) In arriving at AGI, a taxpayer must elect between claiming deductions for AGI and deductions from AGI. 
B) In arriving at taxable income, a taxpayer must elect between claiming deductions for AGI and deductions from AGI. 
C) If a taxpayer has deductions for AGI, the standard deduction is not available. 
D) In arriving at taxable income, a taxpayer must elect between deductions for AGI and the standard deduction. 
E) None of the above.

Question 8

An individual taxpayer uses a fiscal year March 1-February 28.The due date of this taxpayer's Federal income tax return is May 15 of each tax year.

Accepted Answer

A) True 
 B)False

Question 9

Ethan had the following transactions during 2012:
   What is Ethan's AGI for 2012?

Accepted Answer

$90,000.$90,000 (salary) + $5,000 (inter

Question 10

Clara, age 68, claims head of household filing status.If she has itemized deductions of $9,500 for 2012, she should not claim the standard deduction.

Accepted Answer

A) True 
 B)False

Question 11

Surviving spouse filing status begins in the year in which the deceased spouse died.

Accepted Answer

A) True 
 B)False

Question 12

Regarding the tax formula and its relationship to Form 1040, which, if any, of the following statements is correct?

Accepted Answer

A) Most exclusions from gross income are reported on page 2 of Form 1040. 
B) An "above the line deduction" refers to a deduction from AGI. 
C) A "page 1 deduction" refers to a deduction for AGI. 
D) The taxable income (TI) amount appears both at the bottom of page 1 and at the top of page 2 of Form 1040. 
E) None of the above. 
A) Most exclusions from gross income are reported on page 2 of Form 1040. 
B) An "above the line deduction" refers to a deduction from AGI. 
C) A "page 1 deduction" refers to a deduction for AGI. 
D) The taxable income (TI) amount appears both at the bottom of page 1 and at the top of page 2 of Form 1040. 
E) None of the above.

Question 13

In order to claim a dependency exemption for other than a qualifying child, a taxpayer must meet the support test.Generally, this is done by furnishing more than 50% of a dependent's support.What exceptions exist, if any, where the support furnished need not be more than 50%?

Accepted Answer

One exception involves the multiple supp

Question 14

Ellen, age 12, lives in the same household with her father, grandfather, and uncle.The cost of maintaining the household is provided by her grandfather (40%) and her uncle (60%).Disregarding tie-breaker rules, Ellen is a qualifying child as to:

Accepted Answer

A) Only her father. 
B) Only her grandfather and uncle. 
C) Only her uncle. 
D) All parties involved (i.e., father, grandfather, and uncle). 
E) None of the above. 
A) Only her father. 
B) Only her grandfather and uncle. 
C) Only her uncle. 
D) All parties involved (i.e., father, grandfather, and uncle). 
E) None of the above.

Question 15

Once a child reaches age 19, the kiddie tax no longer applies.

Accepted Answer

A) True 
 B)False

Question 16

The basic and additional standard deductions are not subject to an annual adjustment for inflation.

Accepted Answer

A) True 
 B)False

Question 17

Nelda is married to Chad, who abandoned her in early June of 2012.She has not seen or communicated with him since then. She maintains a household in which she and her two dependent children live.Which of the following statements about Nelda's filing status in 2012 is correct?

Accepted Answer

A) Nelda can use the rates for single taxpayers. 
B) Nelda can file a joint return with Chad. 
C) Nelda can file as a surviving spouse. 
D) Nelda can file as a head of household. 
E) None of the above statements is appropriate. 
A) Nelda can use the rates for single taxpayers. 
B) Nelda can file a joint return with Chad. 
C) Nelda can file as a surviving spouse. 
D) Nelda can file as a head of household. 
E) None of the above statements is appropriate.

Question 18

In terms of timing as to any one year, the Tax Tables are available before the Tax Rate Schedules.

Accepted Answer

A) True 
 B)False

Question 19

Under the Federal income tax formula for individuals, a choice must be made between claiming deductions for AGI and itemized deductions.

Accepted Answer

A) True 
 B)False

Question 20

Heloise, age 74 and a widow, is claimed as a dependent by her daughter.For 2012, she had income as follows: $2,500 interest on municipal bonds; $3,200 Social Security benefits; $3,000 income from a part-time job; and $2,800 dividends on stock investments.What is Heloise's taxable income for 2012?

Accepted Answer

$1,050.$3,000 (income from job) + $2,800

Exam 3: Computing the Tax

Kirby is in the 15% tax bracket and had the following capital asset transactions during 2012: Kirby's tax consequences from these gains are as follows:

List at least three exceptions to the application of the kiddie tax.

Meg, age 23, is a full-time law student and is claimed by her parents as a dependent.During 2012, she received $1,400 interest income from a bank savings account and $5,800 from a part-time job.What is Meg's taxable income for 2012?

During 2012, Trevor has the following capital transactions: After the netting process, the following results:

Albert buys his mother a TV.For purposes of meeting the support test, Albert cannot include the cost of the TV.

Katelyn is divorced and maintains a household in which she and her daughter, Crissa, live.Crissa, age 22, earns $11,000 during 2012 as a model.Katelyn does qualify for head of household filing status.

In terms of the tax formula applicable to individual taxpayers, which, if any, of the following statements is correct?

An individual taxpayer uses a fiscal year March 1-February 28.The due date of this taxpayer's Federal income tax return is May 15 of each tax year.

Ethan had the following transactions during 2012: What is Ethan's AGI for 2012?

Clara, age 68, claims head of household filing status.If she has itemized deductions of $9,500 for 2012, she should not claim the standard deduction.

Surviving spouse filing status begins in the year in which the deceased spouse died.

Regarding the tax formula and its relationship to Form 1040, which, if any, of the following statements is correct?

In order to claim a dependency exemption for other than a qualifying child, a taxpayer must meet the support test.Generally, this is done by furnishing more than 50% of a dependent's support.What exceptions exist, if any, where the support furnished need not be more than 50%?

Ellen, age 12, lives in the same household with her father, grandfather, and uncle.The cost of maintaining the household is provided by her grandfather (40%) and her uncle (60%).Disregarding tie-breaker rules, Ellen is a qualifying child as to:

Once a child reaches age 19, the kiddie tax no longer applies.

The basic and additional standard deductions are not subject to an annual adjustment for inflation.

Nelda is married to Chad, who abandoned her in early June of 2012.She has not seen or communicated with him since then. She maintains a household in which she and her two dependent children live.Which of the following statements about Nelda's filing status in 2012 is correct?

In terms of timing as to any one year, the Tax Tables are available before the Tax Rate Schedules.

Under the Federal income tax formula for individuals, a choice must be made between claiming deductions for AGI and itemized deductions.

Heloise, age 74 and a widow, is claimed as a dependent by her daughter.For 2012, she had income as follows: $2,500 interest on municipal bonds; $3,200 Social Security benefits; $3,000 income from a part-time job; and $2,800 dividends on stock investments.What is Heloise's taxable income for 2012?

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

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

Tax Credits and Payments

A: Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, 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

Income Taxation of Trusts and Estates

Filters