Question 1

In 2014, which of the following children would have income taxed at their parents' rates?

Accepted Answer

A) A 13-year-old child with salary income of $12,000 
B) A 12-year-old child with net unearned income of $2,000 
C) A non-student, 19-year-old child with net unearned income of $12,000 
D) A 9-year-old child with salary income of $1,000 
E) All of the above 
A) A 13-year-old child with salary income of $12,000 
B) A 12-year-old child with net unearned income of $2,000 
C) A non-student, 19-year-old child with net unearned income of $12,000 
D) A 9-year-old child with salary income of $1,000 
E) All of the above

Question 2

Which of the following is not a true statement regarding community property law?

Accepted Answer

A) For a married couple living in California, income derived from separate property is taxable to the owner of the property. 
B) For a married couple living in Texas, income derived from separate property produces community income. 
C) In all community property states, the salary of married spouses is allocated one-half to each spouse. 
D) Colorado, Ohio, and Florida are community property states. 
E) Property acquired before marriage in a community property state continues to be separate property. 
A) For a married couple living in California, income derived from separate property is taxable to the owner of the property. 
B) For a married couple living in Texas, income derived from separate property produces community income. 
C) In all community property states, the salary of married spouses is allocated one-half to each spouse. 
D) Colorado, Ohio, and Florida are community property states. 
E) Property acquired before marriage in a community property state continues to be separate property.

Question 3

In determining the amount of the child and dependent care credit, there is a limit of $2,000 on the amount of qualified expenses for one dependent.

Accepted Answer

A) True 
 B)False

Question 4

A parent may elect to include a child's income in the parent's return if:

Accepted Answer

A) The child is under age 18. 
B) The child's income is only from interest and dividend distributions. 
C) The child's gross income is more than $1,000 and less than $10,000. 
D) All of the above must be met for a parent to elect to include a child's income in the parent's return. 
A) The child is under age 18. 
B) The child's income is only from interest and dividend distributions. 
C) The child's gross income is more than $1,000 and less than $10,000. 
D) All of the above must be met for a parent to elect to include a child's income in the parent's return.

Question 5

For 2014, which of the following is a tax adjustment or tax preference item for the individual AMT computation?

Accepted Answer

A) Deduction of charitable contribution of tangible personal property 
B) IRA contribution deduction 
C) Miscellaneous itemized deductions 
D) Moving expense deduction 
E) None of the above 
A) Deduction of charitable contribution of tangible personal property 
B) IRA contribution deduction 
C) Miscellaneous itemized deductions 
D) Moving expense deduction 
E) None of the above

Question 6

The child credit is $1,000 per qualifying child unless it is phased out due to higher levels of parental income.

Accepted Answer

A) True 
 B)False

Question 7

What is the maximum investment income a taxpayer is allowed to have and still be allowed to claim the earned income credit? Why is there an earned income credit in the law?

Accepted Answer

A taxpayer may have a maximum of $3,350

Question 8

Glen and Mary have two children, Chad, age 12, and Linda, age 8. For 2014, Chad has $4,000 in net unearned income and Linda has net unearned income of $1,000. If the total parental tax for 2014 is $1,500, how would the tax be allocated between Chad and Linda?

Accepted Answer

A) $1,500 to Chad and $0 to Linda 
B) $1,200 to Chad and $300 to Linda 
C) $1,120 to Chad and $280 to Linda 
D) $750 to Chad and $750 to Linda 
E) None of the above 
A) $1,500 to Chad and $0 to Linda 
B) $1,200 to Chad and $300 to Linda 
C) $1,120 to Chad and $280 to Linda 
D) $750 to Chad and $750 to Linda 
E) None of the above

Question 9

Jasmine is a single marketing manager with a college degree. She continually updates her marketing knowledge and gets fresh ideas by taking classes at the local community college. This year she spent $1,500 on course tuition and fees. If Jasmine has AGI of $56,000, how much lifetime learning credit can she claim on her tax return? Explain.

Accepted Answer

$240. Jasmine's income is too high to qu

Question 10

Carla and Bob finalized an adoption in 2014. Their adoption fees totaled $9,500. They have AGI of $207,000 for 2014. What is their adoption credit?

Accepted Answer

A) $6,550 
B) $7,025 
C) $7,334 
D) $9,500 
A) $6,550 
B) $7,025 
C) $7,334 
D) $9,500

Question 11

Other things equal, would a tax credit or a tax deduction reduce income taxes more?

Accepted Answer

Tax credits reduce taxes more than deduc

Question 12

John and Susan file a joint income tax return for 2014. They have two dependent children, students, ages 19 and 20. John earns wages of $104,000 and they have interest income of $2,000. In 2014, they settle a state tax audit and pay $50,000 for back state taxes due to an overly aggressive tax-sheltered investment.
Their other expenses for the year include:
​
   
a.Calculate John and Susan's 2014 regular tax and tentative minimum tax on the schedule provided.​​   
b.How much is the total tax liability shown on John and Susan's 2014 Form 1040?

Accepted Answer

The answer of John and Susan file a joint income...

Question 13

Betty and Steve have a 4-year-old child, Gwen. For 2014, Betty and Steve file married filing jointly and have taxable income of $150,000. Gwen has interest income of $10,000 from a bond portfolio her grandfather gave her and no investment expenses. No election is made to include Gwen's income on Betty and Steve's return.
a.For purposes of the parental tax, calculate Gwen's net unearned income.
b.Calculate the amount of Gwen's parental tax.
c.Calculate Gwen's total tax for 2014.

Accepted Answer

The answer of Betty and Steve have a 4-year-old child,...

Question 14

Molly and Steve are married and live in Texas. Molly earns a salary of $50,000 and Steve owns a rental property that gives him $35,000 of income. If they filed separate tax returns, what amount of income would Steve report?

Accepted Answer

A) $35,000 
B) $85,000 
C) $42,500 
D) $60,000 
E) None of the above 
A) $35,000 
B) $85,000 
C) $42,500 
D) $60,000 
E) None of the above

Question 15

What is the purpose of the alternative minimum tax?

Accepted Answer

The purpose is to ensure that

Question 16

Choose the correct statement: ​

Accepted Answer

A) A taxayer may receive a 30-percent credit for installing energy-efficient window shades. 
B) A taxpayer may receive a 30-percent credit for installing a windmill, which generates electricity, at his vacation home. 
C) A taxpayer may receive a 30-percent credit for installing a solar water-heating panel for his swimming pool. 
D) A taxpayer may receive a 30-percent credit for the purchase of a plug-in electric vehicle. 
A) A taxayer may receive a 30-percent credit for installing energy-efficient window shades. 
B) A taxpayer may receive a 30-percent credit for installing a windmill, which generates electricity, at his vacation home. 
C) A taxpayer may receive a 30-percent credit for installing a solar water-heating panel for his swimming pool. 
D) A taxpayer may receive a 30-percent credit for the purchase of a plug-in electric vehicle.

Question 17

Denice is divorced and files a single tax return claiming her two children, ages 7 and 9, as dependents. Her AGI for 2014 is $81,500. Denice's Child Credit for 2014 is:

Accepted Answer

A) $0 
B) $350 
C) $1,000 
D) $1,650 
E) $2,000 
A) $0 
B) $350 
C) $1,000 
D) $1,650 
E) $2,000

Question 18

Assume Karen is 12 years old and her only income is $2,500 of interest income from a bank account with money her parents have given her to save for college. What are the options Karen has for filing her tax return?

Accepted Answer

A) Karen must file a separate tax return and report all of her interest income at her separate rate of tax. 
B) Karen must file a separate tax return and report all of her interest income at her parents' rate of tax. 
C) Karen can file a separate tax return or her parents can elect to include her in their tax return, paying tax on $500 of her interest income at their rate of tax. 
D) Karen can file a separate return or her parents can elect to include her in their tax return, paying tax on the full $2,500 of her interest income at their rate of tax. 
A) Karen must file a separate tax return and report all of her interest income at her separate rate of tax. 
B) Karen must file a separate tax return and report all of her interest income at her parents' rate of tax. 
C) Karen can file a separate tax return or her parents can elect to include her in their tax return, paying tax on $500 of her interest income at their rate of tax. 
D) Karen can file a separate return or her parents can elect to include her in their tax return, paying tax on the full $2,500 of her interest income at their rate of tax.

Question 19

The total expenses that can be taken as a credit for all tax years for adoption of a child without "special needs" is $6,000.

Accepted Answer

A) True 
 B)False

Question 20

For 2014, the maximum amount of expenses that qualify for the child and dependent care credit is the same for three dependents as it is for two dependents.

Accepted Answer

A) True 
 B)False

In 2014, which of the following children would have income taxed at their parents' rates?

Which of the following is not a true statement regarding community property law?

In determining the amount of the child and dependent care credit, there is a limit of $2,000 on the amount of qualified expenses for one dependent.

A parent may elect to include a child's income in the parent's return if:

For 2014, which of the following is a tax adjustment or tax preference item for the individual AMT computation?

The child credit is $1,000 per qualifying child unless it is phased out due to higher levels of parental income.

What is the maximum investment income a taxpayer is allowed to have and still be allowed to claim the earned income credit? Why is there an earned income credit in the law?

Glen and Mary have two children, Chad, age 12, and Linda, age 8. For 2014, Chad has $4,000 in net unearned income and Linda has net unearned income of $1,000. If the total parental tax for 2014 is $1,500, how would the tax be allocated between Chad and Linda?

Carla and Bob finalized an adoption in 2014. Their adoption fees totaled $9,500. They have AGI of $207,000 for 2014. What is their adoption credit?

Other things equal, would a tax credit or a tax deduction reduce income taxes more?

Molly and Steve are married and live in Texas. Molly earns a salary of $50,000 and Steve owns a rental property that gives him $35,000 of income. If they filed separate tax returns, what amount of income would Steve report?

What is the purpose of the alternative minimum tax?

Choose the correct statement:

Denice is divorced and files a single tax return claiming her two children, ages 7 and 9, as dependents. Her AGI for 2014 is $81,500. Denice's Child Credit for 2014 is:

Assume Karen is 12 years old and her only income is $2,500 of interest income from a bank account with money her parents have given her to save for college. What are the options Karen has for filing her tax return?

The total expenses that can be taken as a credit for all tax years for adoption of a child without "special needs" is $6,000.

For 2014, the maximum amount of expenses that qualify for the child and dependent care credit is the same for three dependents as it is for two dependents.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Business Income and Expenses, Part II

Itemized Deductions and Other Incentives

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 6: Credits and Special Taxes

In 2014, which of the following children would have income taxed at their parents' rates?

Which of the following is not a true statement regarding community property law?

In determining the amount of the child and dependent care credit, there is a limit of $2,000 on the amount of qualified expenses for one dependent.

A parent may elect to include a child's income in the parent's return if:

For 2014, which of the following is a tax adjustment or tax preference item for the individual AMT computation?

The child credit is $1,000 per qualifying child unless it is phased out due to higher levels of parental income.

What is the maximum investment income a taxpayer is allowed to have and still be allowed to claim the earned income credit? Why is there an earned income credit in the law?

Glen and Mary have two children, Chad, age 12, and Linda, age 8. For 2014, Chad has $4,000 in net unearned income and Linda has net unearned income of $1,000. If the total parental tax for 2014 is $1,500, how would the tax be allocated between Chad and Linda?

Carla and Bob finalized an adoption in 2014. Their adoption fees totaled $9,500. They have AGI of $207,000 for 2014. What is their adoption credit?

Other things equal, would a tax credit or a tax deduction reduce income taxes more?

Molly and Steve are married and live in Texas. Molly earns a salary of $50,000 and Steve owns a rental property that gives him $35,000 of income. If they filed separate tax returns, what amount of income would Steve report?

What is the purpose of the alternative minimum tax?

Choose the correct statement: ​

Denice is divorced and files a single tax return claiming her two children, ages 7 and 9, as dependents. Her AGI for 2014 is $81,500. Denice's Child Credit for 2014 is:

Assume Karen is 12 years old and her only income is $2,500 of interest income from a bank account with money her parents have given her to save for college. What are the options Karen has for filing her tax return?

The total expenses that can be taken as a credit for all tax years for adoption of a child without "special needs" is $6,000.

For 2014, the maximum amount of expenses that qualify for the child and dependent care credit is the same for three dependents as it is for two dependents.

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses, Part I

Business Income and Expenses, Part II

Itemized Deductions and Other Incentives

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding, Estimated Payments, and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Choose the correct statement: