Question 1

Maude's parents live in another state and she cannot claim them as her dependents.If Maude pays their medical expenses, can she derive any tax benefit from doing so? Explain.

Accepted Answer

If Maude could otherwise claim

Question 2

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

Accepted Answer

$158,000.$80,000 (salary) + $4,000 (alim

Question 3

A child who is married can be subject to the kiddie tax.

Accepted Answer

A) True 
 B)False

Question 4

The filing status of a taxpayer (e.g., single, head of household) must be identified before taxable income is determined.

Accepted Answer

A) True 
 B)False

Question 5

Adjusted gross income (AGI) sets the ceiling or the floor for certain deductions.Explain and illustrate what this statement means.

Accepted Answer

By a ceiling what is meant is that the d

Question 6

Under the Federal income tax formula for individuals, the determination of adjusted gross income (AGI) follows that of taxable income (TI).

Accepted Answer

A) True 
 B)False

Question 7

Wilma, age 70 and single, is claimed as a dependent on her daughter's tax return.During 2012, she had interest income of $2,400 and $800 of earned income from baby sitting.Wilma's taxable income is:

Accepted Answer

A) $700. 
B) $850. 
C) $1,800. 
D) $2,250. 
E) None of the above. 
A) $700. 
B) $850. 
C) $1,800. 
D) $2,250. 
E) None of the above.

Question 8

The Hutters filed a joint return for 2012.They provide more than 50% of the support of Carla, Melvin, and Aaron.Carla (age 18) is a cousin and earns $5,000 from a part-time job.Melvin (age 25) is their son and is a full-time law student.He received from the university a $3,800 scholarship for tuition.Aaron is a brother who is a citizen of Israel but resides in France.Carla and Melvin live with the Hutters.How many personal and dependency exemptions can the Hutters claim on their Federal income tax return?

Accepted Answer

A) Two. 
B) Three. 
C) Four. 
D) Five. 
E) None of the above. 
A) Two. 
B) Three. 
C) Four. 
D) Five. 
E) None of the above.

Question 9

During the year, Kim sold the following assets: business auto for a $1,000 loss, stock investment for a $1,000 loss, and pleasure yacht for a $1,000 loss.Presuming adequate income, how much of these losses may Kim claim?

Accepted Answer

A) $0. 
B) $1,000. 
C) $2,000. 
D) $3,000. 
E) None of the above. 
A) $0. 
B) $1,000. 
C) $2,000. 
D) $3,000. 
E) None of the above.

Question 10

Mr.Lee is a citizen and resident of Hong Kong, while Mr.Anderson is a citizen and resident of the U.S.In the taxation of income, Hong Kong uses a territorial approach, while the U.S.follows the global system.In terms of effect, explain what this means to Mr.Lee and Mr.Anderson.

Accepted Answer

Mr.Lee is taxed only on the income he re

Question 11

An "above the line" deduction refers to a deduction for AGI.

Accepted Answer

A) True 
 B)False

Question 12

Sarah furnishes more than 50% of the support of her son and daughter-in-law who live with her.If the son and daughter-in-law file a joint return, Sarah cannot claim them as dependents.

Accepted Answer

A) True 
 B)False

Question 13

A child who has unearned income of $1,900 or less cannot be subject to the kiddie tax.

Accepted Answer

A) True 
 B)False

Question 14

For tax purposes, married persons filing separate returns are treated the same as single taxpayers.

Accepted Answer

A) True 
 B)False

Question 15

A decrease in a taxpayer's AGI could decrease the amount of charitable contribution that can be claimed.

Accepted Answer

A) True 
 B)False

Question 16

In 2012, Ed is 66 and single.If he has itemized deductions of $7,300, he should claim the standard deduction alternative.

Accepted Answer

A) True 
 B)False

Question 17

Debby, age 18, is claimed as a dependent by her mother.During 2012, she earned $1,100 in interest income on a savings account.Debby's standard deduction is $1,400 ($1,100 + $300).

Accepted Answer

A) True 
 B)False

Question 18

Which, if any, of the following statements relating to the standard deduction is correct?

Accepted Answer

A) If a taxpayer dies during the year, his (or her) standard deduction must be prorated. 
B) If a taxpayer is claimed as a dependent of another, his (or her) additional standard deduction is allowed in full (i.e., no adjustment is necessary). 
C) If spouses file separate returns, both spouses must claim the standard deduction (rather than itemize their deductions from AGI). 
D) If a taxpayer is claimed as a dependent of another, no basic standard deduction is allowed. 
E) None of the above. 
A) If a taxpayer dies during the year, his (or her) standard deduction must be prorated. 
B) If a taxpayer is claimed as a dependent of another, his (or her) additional standard deduction is allowed in full (i.e., no adjustment is necessary). 
C) If spouses file separate returns, both spouses must claim the standard deduction (rather than itemize their deductions from AGI). 
D) If a taxpayer is claimed as a dependent of another, no basic standard deduction is allowed. 
E) None of the above.

Question 19

Once they reach age 65, many taxpayers will switch from itemizing their deductions from AGI and start claiming the standard deduction.

Accepted Answer

A) True 
 B)False

Question 20

A dependent cannot claim a personal exemption on his or her own return.

Accepted Answer

A) True 
 B)False

Exam 3: Computing the Tax

Maude's parents live in another state and she cannot claim them as her dependents.If Maude pays their medical expenses, can she derive any tax benefit from doing so? Explain.

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

A child who is married can be subject to the kiddie tax.

The filing status of a taxpayer (e.g., single, head of household) must be identified before taxable income is determined.

Adjusted gross income (AGI) sets the ceiling or the floor for certain deductions.Explain and illustrate what this statement means.

Under the Federal income tax formula for individuals, the determination of adjusted gross income (AGI) follows that of taxable income (TI).

Wilma, age 70 and single, is claimed as a dependent on her daughter's tax return.During 2012, she had interest income of $2,400 and $800 of earned income from baby sitting.Wilma's taxable income is:

During the year, Kim sold the following assets: business auto for a $1,000 loss, stock investment for a $1,000 loss, and pleasure yacht for a $1,000 loss.Presuming adequate income, how much of these losses may Kim claim?

Mr.Lee is a citizen and resident of Hong Kong, while Mr.Anderson is a citizen and resident of the U.S.In the taxation of income, Hong Kong uses a territorial approach, while the U.S.follows the global system.In terms of effect, explain what this means to Mr.Lee and Mr.Anderson.

An "above the line" deduction refers to a deduction for AGI.

Sarah furnishes more than 50% of the support of her son and daughter-in-law who live with her.If the son and daughter-in-law file a joint return, Sarah cannot claim them as dependents.

A child who has unearned income of $1,900 or less cannot be subject to the kiddie tax.

For tax purposes, married persons filing separate returns are treated the same as single taxpayers.

A decrease in a taxpayer's AGI could decrease the amount of charitable contribution that can be claimed.

In 2012, Ed is 66 and single.If he has itemized deductions of $7,300, he should claim the standard deduction alternative.

Debby, age 18, is claimed as a dependent by her mother.During 2012, she earned $1,100 in interest income on a savings account.Debby's standard deduction is $1,400 ($1,100 + $300).

Which, if any, of the following statements relating to the standard deduction is correct?

Once they reach age 65, many taxpayers will switch from itemizing their deductions from AGI and start claiming the standard deduction.

A dependent cannot claim a personal exemption on his or her own return.

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