Question 1

Identify the statement below that is false.

Accepted Answer

A) If an employer is not required to withhold income taxes from an employee's wages, the wages are not taxable to the employee. 
B) In certain situations, income tax withholding by an employer is voluntary. 
C) An employer must deposit with the government an amount of FICA tax that is more than twice the amount withheld from the employee's salary (i.e., the employee's and employer's shares). 
D) If an excess amount of FICA has been withheld for an employee because the employee has multiple jobs, the employee may claim a credit for the excess amount withheld on his or her income tax return. 
E) None of the above. 
A) If an employer is not required to withhold income taxes from an employee's wages, the wages are not taxable to the employee. 
B) In certain situations, income tax withholding by an employer is voluntary. 
C) An employer must deposit with the government an amount of FICA tax that is more than twice the amount withheld from the employee's salary (i.e., the employee's and employer's shares). 
D) If an excess amount of FICA has been withheld for an employee because the employee has multiple jobs, the employee may claim a credit for the excess amount withheld on his or her income tax return. 
E) None of the above.

Question 2

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 3

Rex and Dena are married and have two children, Michelle (age 7) and Nancy (age 5).During 2012, Rex earned a salary of $24,000, received interest income of $300, and filed a joint income tax return.Dena had $0 gross income.Their earned income credit for the year is:

Accepted Answer

A) $0. 
B) $421. 
C) $4,815. 
D) $5,236. 
E) None of the above. 
A) $0. 
B) $421. 
C) $4,815. 
D) $5,236. 
E) None of the above.

Question 4

In March 2012, Gray Corporation hired two individuals, both of whom were certified as long-term recipients of family assistance benefits.Each employee was paid $11,000 during 2012.Only one of the individuals continued to work for Gray Corporation in 2013, earning $9,000 during the year.No additional workers were hired in 2013.Gray Corporation's work opportunity tax credit amounts for 2012 and 2013 are:

Accepted Answer

A) $4,000 in 2012, $4,000 in 2013. 
B) $8,000 in 2012, $4,500 in 2013. 
C) $8,000 in 2012, $5,000 in 2013. 
D) $8,000 in 2012, $9,000 in 2013. 
E) None of the above. 
A) $4,000 in 2012, $4,000 in 2013. 
B) $8,000 in 2012, $4,500 in 2013. 
C) $8,000 in 2012, $5,000 in 2013. 
D) $8,000 in 2012, $9,000 in 2013. 
E) None of the above.

Question 5

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.

Accepted Answer

@#IMG-DLM& In addition, $8,000 was expended by Gol

Question 6

If a taxpayer is required to recapture any tax credit for rehabilitation expenditures, the recapture amount need not be added to the adjusted basis of the rehabilitation expenditures.

Accepted Answer

A) True 
 B)False

Question 7

During the year, Green, Inc., incurs the following research expenditures:   Green's qualifying research expenditures for the year are:

Accepted Answer

A) $120,000. 
B) $150,000. 
C) $159,000. 
D) $180,000. 
E) None of the above. 
A) $120,000. 
B) $150,000. 
C) $159,000. 
D) $180,000. 
E) None of the above.

Question 8

The earned income credit, a form of a negative income tax, is a nonrefundable credit.

Accepted Answer

A) True 
 B)False

Question 9

In computing the foreign tax credit, the greater of the foreign income taxes paid or the overall limitation is allowed.

Accepted Answer

A) True 
 B)False

Question 10

Any unused general business credit must be carried back 1 year and then forward for 20 years.

Accepted Answer

A) True 
 B)False

Question 11

Employers are encouraged by the work opportunity tax credit to hire individuals who have been long-term recipients of family assistance welfare benefits.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

An individual generally may claim a credit for adoption expenses in the year in which the expenses are paid.

Accepted Answer

A) True 
 B)False

Question 14

George and Jill are husband and wife, ages 67 and 65 respectively.During the year, they receive Social Security benefits of $4,000 and have adjusted gross income of $11,000.Assuming they file a joint return, their tax credit for the elderly, before considering any possible limitation due to their tax liability, is:

Accepted Answer

A) $1,125. 
B) $750. 
C) $450. 
D) $375. 
E) None of the above. 
A) $1,125. 
B) $750. 
C) $450. 
D) $375. 
E) None of the above.

Question 15

Bradley has two college-age children, Clint, a freshman at State University, and Abigail, a junior at Northwest University.Both Clint and Abigail are full-time students.Clint's expenses during the 2012 fall semester are as follows: $2,400 tuition, $250 books and course materials, and $1,600 room and board.Abigail's expenses for the 2012 calendar year are as follows: $10,200 tuition, $1,200 books and course materials, and $3,600 room and board.Tuition and the applicable room and board costs are paid at the beginning of each semester.Bradley is married, files a joint tax return, claims both children as dependents, and has a combined AGI with his wife of $114,000 for 2012.Determine Bradley's available education tax credit for 2012.

Accepted Answer

In 2012, both Clint and Abigail qualify

Question 16

Kevin and Sue have two children, ages 8 and 14.They spend $6,200 per year on eligible employment related expenses for the care of their children after school.Kevin earned a salary of $20,000 and Sue earned a salary of $18,000.What is the amount of the credit for child and dependent care expenses?

Accepted Answer

A) $690. 
B) $713. 
C) $1,380. 
D) $1,426. 
E) None of the above. 
A) $690. 
B) $713. 
C) $1,380. 
D) $1,426. 
E) None of the above.

Question 17

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 18

A taxpayer may qualify for the credit for child and dependent care expenses if the taxpayer's dependent is age 13 or less.

Accepted Answer

A) True 
 B)False

Question 19

The earned income credit is available only if the taxpayer has at least one qualifying child in the household.

Accepted Answer

A) True 
 B)False

Question 20

Amber is in the process this year of renovating the office building (originally placed in service in 1976) used by her business.Because of current Federal Regulations that require the structure to be accessible to handicapped individuals, she incurs an additional $11,000 for various features, such as ramps and widened doorways, to make her office building more accessible.The $11,000 incurred will produce a disabled access credit of what amount?

Accepted Answer

A) $0. 
B) $5,000. 
C) $5,125. 
D) $5,500. 
E) None of the above. 
A) $0. 
B) $5,000. 
C) $5,125. 
D) $5,500. 
E) None of the above.

Exam 12: Tax Credits and Payments

Identify the statement below that is false.

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

Rex and Dena are married and have two children, Michelle (age 7) and Nancy (age 5).During 2012, Rex earned a salary of $24,000, received interest income of $300, and filed a joint income tax return.Dena had $0 gross income.Their earned income credit for the year is:

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.

If a taxpayer is required to recapture any tax credit for rehabilitation expenditures, the recapture amount need not be added to the adjusted basis of the rehabilitation expenditures.

During the year, Green, Inc., incurs the following research expenditures: Green's qualifying research expenditures for the year are:

The earned income credit, a form of a negative income tax, is a nonrefundable credit.

In computing the foreign tax credit, the greater of the foreign income taxes paid or the overall limitation is allowed.

Any unused general business credit must be carried back 1 year and then forward for 20 years.

Employers are encouraged by the work opportunity tax credit to hire individuals who have been long-term recipients of family assistance welfare benefits.

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

An individual generally may claim a credit for adoption expenses in the year in which the expenses are paid.

Kevin and Sue have two children, ages 8 and 14.They spend $6,200 per year on eligible employment related expenses for the care of their children after school.Kevin earned a salary of $20,000 and Sue earned a salary of $18,000.What is the amount of the credit for child and dependent care expenses?

A taxpayer may qualify for the credit for child and dependent care expenses if the taxpayer's dependent is age 13 or less.

The earned income credit is available only if the taxpayer has at least one qualifying child in the household.

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

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