Exam 1: The Individual Income Tax Return

Fran bought stock in the FCM Corporation 4 years ago at a price of $18,000. She sold it this year for $22,225 and paid her broker $225 from the proceeds of the sale. a.What is Fran's amount realized? b.What is Fran's adjusted basis? c.What is Fran's realized gain or loss? d.What is Fran's recognized gain or loss? e.How much of the gain or loss should be included in her tax return?

In 2016, Len has a salary of $40,700 from his job. He also has interest income of $400. Len is single and has no dependents. During the year, Len sold stock held as an investment for a $10,000 loss. Calculate the following amounts for Len:

Determine from the tax table or the tax rate schedule, whichever is appropriate, the amount of the income tax for each of the following taxpayers for 2016.

Match the letter of the filing status to the taxpayers below. Items may be used more than once. -The unmarried taxpayer supports his dependent mother, who lives next door in a separate apartment.

Match the letter of the filing status to the taxpayers below. Items may be used more than once. -The taxpayer is married, but her husband disappeared with a girlfriend while on vacation in March of the current year. The taxpayer has no dependents.

The head of household tax rates are higher than the rates for a single taxpayer.

Mark a "Yes" to each of the following if it is an objective of the tax code. Otherwise mark with a "No." a.To provide a car to each American. b.To promote giving to charities. c.To encourage taxpayers to send their children to college. d.To raise money to operate the government. e.To promote the use of solar energy.

During 2016, Howard maintained his home in which he and his 16 year-old son resided. The son qualifies as his dependent. Howard's wife died in 2015. What is his filing status for 2016?

Electronic filing (e-filing):

Taxpayers can download tax forms from the IRS Internet site.

Jeri is single and supports her 45 year-old son who has income of $350 from working in a pumpkin patch during October and lives in his own apartment. a.Can she claim him as a dependent? b.Can she claim head of household filing status? Why or why not?

Taxpayers who do not qualify for married, head of household, or qualifying widow or widower filing status must file as single.

A taxpayer who maintains a household with an unmarried child may qualify to file as head of household even if the child is not the taxpayer's dependent.

A corporation is a reporting entity but not a tax-paying entity.

Mr. and Mrs. Vonce, both age 62, file a joint return for 2016. They provided all the support for their daughter who is 19 years old, legally blind, and who earns no income. Their son, age 21 and a full-time student at a university, had $4,200 of income and provided 70 percent of his own support during 2016. How many exemptions may Mr. and Mrs. Vonce claim on their 2016 tax return?

Brian is 60 years old, single and legally blind. Brian supports his father, who is 88 years old and blind, by paying the rent and other costs of his father's residence. What is the total standard deduction amount that Brian should claim on his 2016 tax return?

The Affordable Care Act (ACA) added a Medicare surtax of 3.8 percent on net investment income.

If an unmarried taxpayer paid more than half the cost of keeping a home which is the principal place of residence of a nephew, who is not her dependent, she may use the head of household filing status.

A dependent child with earned income in excess of the available standard deduction amount must file a tax return.

List each alternative filing status available to unmarried individual taxpayers.