Question 1

Which, if any, of the following correctly describes the earned income credit?

Accepted Answer

A) Would be available regardless of the amount of the taxpayer's adjusted gross income. 
B) Not available to a surviving spouse. 
C) A taxpayer must have a qualifying child to take advantage of the credit. 
D) Is a refundable credit. 
E) None of the above. 
A) Would be available regardless of the amount of the taxpayer's adjusted gross income. 
B) Not available to a surviving spouse. 
C) A taxpayer must have a qualifying child to take advantage of the credit. 
D) Is a refundable credit. 
E) None of the above.

Question 2

Realizing that providing for a comfortable retirement is up to them, Jim and Julie commit to making regular contributions to their IRAs, beginning this year.Consequently, they each make a $2,000 contribution to their traditional IRA.If their AGI is $35,000 on their joint return, what is the amount of their credit for certain retirement plan contributions?

Accepted Answer

A) $800. 
B) $600. 
C) $400. 
D) $200. 
E) None of the above. 
A) $800. 
B) $600. 
C) $400. 
D) $200. 
E) None of the above.

Question 3

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

Accepted Answer

A) Unused amounts are carried forward indefinitely. 
B) Unused amounts are first carried back one year and then forward for 20 years. 
C) Unused amounts are first carried back one year and then forward for 10 years. 
D) Unused amounts are first carried back three years and then carried forward for 15 years. 
E) None of the above. 
A) Unused amounts are carried forward indefinitely. 
B) Unused amounts are first carried back one year and then forward for 20 years. 
C) Unused amounts are first carried back one year and then forward for 10 years. 
D) Unused amounts are first carried back three years and then carried forward for 15 years. 
E) None of the above.

Question 4

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:
   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.

Accepted Answer

Overall limitation:
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Question 5

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 6

Some (or all) of the tax credit for rehabilitation expenditures will have to be recaptured if the rehabilitated property is disposed of prematurely or if it ceases to be qualifying property.

Accepted Answer

A) True 
 B)False

Question 7

Cheryl is single, has one child (age 6), and files as head of household during 2012.Her salary for the year is $19,000.She qualifies for an earned income credit of the following amount:

Accepted Answer

A) $0. 
B) $305. 
C) $2,864. 
D) $3,169. 
E) None of the above. 
A) $0. 
B) $305. 
C) $2,864. 
D) $3,169. 
E) None of the above.

Question 8

In May 2012, 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 2012.Camilla and Tyrone continued to work for Blue Corporation in 2013, earning $14,000 each.Blue hired no additional employees during 2013.

Accepted Answer

The answer of In May 2012, Blue Corporation hired Camilla,...

Question 9

Which, if any, of the following correctly describes the research activities credit?

Accepted Answer

A) The research activities credit is the greater of the incremental research credit, the basic research credit, or the energy research credit. 
B) If the research activities credit is claimed, no deduction is allowed for research and experimentation expenditures. 
C) The credit is not available for research conducted outside the United States. 
D) All corporations qualify for the basic research credit. 
E) None of the above. 
A) The research activities credit is the greater of the incremental research credit, the basic research credit, or the energy research credit. 
B) If the research activities credit is claimed, no deduction is allowed for research and experimentation expenditures. 
C) The credit is not available for research conducted outside the United States. 
D) All corporations qualify for the basic research credit. 
E) None of the above.

Question 10

The maximum credit for child and dependent care expenses is $2,100 if only one spouse is employed and the other spouse is a full-time student.

Accepted Answer

A) True 
 B)False

Question 11

Rick spends $750,000 to build a qualified low-income housing project, which is placed in service on January 1, 2012.He financed the project using his personal funds.What is the amount of the low-income housing credit that Rick may claim in 2012 (assuming a rate of 7.42%)? What is the total amount of the credit that Rick may claim as a result of the $750,000 expenditure?

Accepted Answer

Rick may claim a credit of $55,650 in 20

Question 12

Qualified research and experimentation expenditures are not only eligible for the 20% tax credit, but also can be expensed in the year incurred.

Accepted Answer

A) True 
 B)False

Question 13

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 14

During 2012, Eleanor earns $120,000 in wages as an employee of an accounting firm.She also earns $26,000 in gross income from an outside consulting service she operates.Deductible expenses paid in connection with the consulting service amount to $6,000.Eleanor also has a recognized long-term capital gain of $1,000 from the sale of a stock investment.She must pay a self-employment tax on:

Accepted Answer

A) $0. 
B) $20,000. 
C) $26,000. 
D) $27,000. 
E) None of the above. 
A) $0. 
B) $20,000. 
C) $26,000. 
D) $27,000. 
E) None of the above.

Question 15

Child care payments to a relative are not eligible for the credit for child and dependent care expenses if the relative is a child (under age 19) of the taxpayer.

Accepted Answer

A) True 
 B)False

Question 16

Some foreign taxes do not qualify for the foreign tax credit.

Accepted Answer

A) True 
 B)False

Question 17

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 18

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 19

Which of the following statements concerning the credit for child and dependent care expenses is not correct?

Accepted Answer

A) A taxpayer is not allowed both an exclusion from income and the credit for child and dependent care expenses on the same amount. 
B) A taxpayer is not allowed both a deduction as a medical expense and the credit for child and dependent care expenses on the same amount. 
C) If a taxpayer's adjusted gross income exceeds $43,000, the rate for the credit for child and dependent care expenses is 20%. 
D) If a taxpayer's adjusted gross income exceeds $15,000 but is not over $17,000, the rate for the credit for child and dependent care expenses is 35%. 
E) All of the above are correct. 
A) A taxpayer is not allowed both an exclusion from income and the credit for child and dependent care expenses on the same amount. 
B) A taxpayer is not allowed both a deduction as a medical expense and the credit for child and dependent care expenses on the same amount. 
C) If a taxpayer's adjusted gross income exceeds $43,000, the rate for the credit for child and dependent care expenses is 20%. 
D) If a taxpayer's adjusted gross income exceeds $15,000 but is not over $17,000, the rate for the credit for child and dependent care expenses is 35%. 
E) All of the above are correct.

Question 20

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

Accepted Answer

The disabled access credit is designed t

Exam 12: Tax Credits and Payments

Which, if any, of the following correctly describes the earned income credit?

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

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:

Some (or all) of the tax credit for rehabilitation expenditures will have to be recaptured if the rehabilitated property is disposed of prematurely or if it ceases to be qualifying property.

Cheryl is single, has one child (age 6), and files as head of household during 2012.Her salary for the year is $19,000.She qualifies for an earned income credit of the following amount:

Which, if any, of the following correctly describes the research activities credit?

The maximum credit for child and dependent care expenses is $2,100 if only one spouse is employed and the other spouse is a full-time student.

Qualified research and experimentation expenditures are not only eligible for the 20% tax credit, but also can be expensed in the year incurred.

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

Child care payments to a relative are not eligible for the credit for child and dependent care expenses if the relative is a child (under age 19) of the taxpayer.

Some foreign taxes do not qualify for the foreign tax credit.

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:

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:

Which of the following statements concerning the credit for child and dependent care expenses is not correct?

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

An Introduction to Taxation and Understanding the Federal 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

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