Exam 8: Taxation of Individuals

Which of the following individuals can be claimed as a dependent in the current year? (Assume any test not mentioned has been satisfied). I.Carl and Diane are divorced. Carl has custody of their 6-year-old son. Diane pays Carl $500 per month in child support. Carl pays the other $400 per month it costs to support their son. The divorce decree does not stipulate who gets custody of the son. Carl claims his son as a dependent. II.Lorraine is a 25-year-old college student. She lives with her parents, who also provide her with $500 monthly support. Lorraine earns $4,600 working part-time for other support. She may be claimed as a dependent of her parents. ​

Bruce, 65, supports his mother who lives with him. What is the maximum amount of the 2018 standard deduction that Bruce qualifies for?

Tisha's husband died in 2015. She has not remarried and maintains a home for herself and her dependent son. What is Tisha's filing status for 2018?

Match each statement with the correct term below. -Standard deduction

Cecelia, a single taxpayer, has adjusted gross income for the current year of $80,000. Cecelia pays the following amounts during the current year: ? Mortgage interest on residence \ 5,500 Interest on car loan 500 Credit Card interest 600 Property taxes on residence 2,500 State income tax withheld from wages 3,400 Federal income tax withheld from wages 9,500 FICA taxes withheld from wages 6,120 Cash contributions to Salvation Army 800 Donation of clothes to Goodwill (Value =\ 400; Cost =\ 1,500) What is the amount of Cecelia's total itemized deductions?

Baylen, whose adjusted gross income is $60,000, purchases a new home during the year, borrowing $300,000 from Century National Bank to finance the purchase. He also pays $3,000 in points and $4,500 in loan origination fees. During the year he pays interest of $14,000 on the loan. What is Baylen's allowable interest deduction?

Lynnette is a single individual who receives a salary of $36,000. During 2018, she has $6,800 withheld for payment of her federal income taxes and $2,900 for her 2018 state income taxes. In 2019, she receives a $450 refund after filing her 2018 federal tax return and a $750 refund after filing her 2018 state tax return. ? I. If Lynnette has total itemized deductions of $\$ 6,000$ on her 2018 federal tax return, she must include the entire $\$ 750$ refund in her 2018 gross income. II. If Lynnette uses the standard deduction in filing her 2018 federal income tax return, the $\$ 750$ refund is not taxable in 2019 .

Patricia contributes artwork to the art museum at Tech University. Her AGI is $50,000. She paid $10,000 for the artwork in 1987, but its fair market value at the contribution date is $30,000. What is Patricia's maximum current year charitable deduction?

Thomas has adjusted gross income of $228,000, total itemized deductions of $39,000 and has a standard deduction of $24,000. Which is his filing status?

In 2005, Victor acquires an Andy Warhol painting for $32,000. During the current year he donates the painting to the city museum. Its fair market value at the date of the contribution is $38,000. If Victor's adjusted gross income is $66,000 and he elects to reduce the contribution to its basis, his deductible contribution is

Philip has been working in Spain for the last three years. He and his wife Barbara adopted Juan who will not qualify as a dependent since he is not a U.S citizen.

Which of the following taxes is deductible from adjusted gross income when paid by an individual taxpayer? I.State income tax. II.State excise tax on gasoline. ​

Match each statement with the correct term below. -Home equity loan interest

Howard is single and has a son age 15. Howard's adjusted gross income for 2018 is $16,000 so he has no taxable income or tax liability. What amount can he claim for the refundable child tax credit?

Will and Brenda of New York City are both age 66 and always file a joint tax return. During the current year they provide all the support for their son who is 20, has no income, and is a part-time college student. Their daughter, age 22 and a full-time student at Columbia University, has $4,800 of income. Which of the following is true related to Will and Brenda's tax return?

Irene is 47 years old, unmarried, and has no children. Irene's mother lives in a nursing home. I.Irene can file as head of household because her mother lives in a nursing home. II.Because Irene's mother is a lineal descendent, Irene automatically qualifies for head of household status. ​

Darlene and Joseph are married and have two children ages 17 and 15. Their adjusted gross income for 2018 is $108,000. What total amount can they claim for the child tax credit plus the family tax credit?

Which of the following will prevent a couple from filing as married filing joint in 2018? I.One spouse dies on June 6, 2018. II.The couple is legally married, but is living apart throughout the year. ​

Children under 18 and full time students under 24 are taxed differently than other taxpayers if I.Their unearned income exceeds $2,100. II.Their parents' marginal tax rate exceeds 15%. ​

Chad pays $2,000 of interest on $20,000 of debt incurred for the purchase of municipal bonds and corporate bonds. Chad receives $800 of interest on the municipal bonds and $800 of interest on the corporate bonds. What is his allowable deduction on the $2,000 of interest? Explain your answer and show all calculations.