Exam 6: Credits and Special Taxes

Betty and Steve have a 4-year-old child,Gwen.For 2017,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 2017.

An individual may claim both a credit and an exclusion from income in connection with the adoption of an eligible child,but may not claim both a credit and an exclusion for the same expense.

In all community property states,income from community property is community income.

In the case of the adoption of a child who is not a U.S.citizen or resident of the U.S. ,the credit for qualified adoption expenses is available:

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 $58,000,how much lifetime learning credit can she claim on her tax return? Explain.

List at least two AMT preferences and/or adjustments and show the simplified formula for calculating AMT.Do not include dollar exemption amounts or the tax rate schedule.

Glen and Mary have two children,Chad,age 12,and Linda,age 8.For 2017,Chad has $4,000 in net unearned income and Linda has net unearned income of $1,000.If the total parental tax for 2017 is $1,500,how would the tax be allocated between Chad and Linda?

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

Which of the following tax credits is not available for the 2017 tax year?

Edward has business operations in Country F and Country G.He pays tax to Country F of $12,000 on $30,000 of income and pays tax to Country G of $4,000 on $10,000 of income.In addition to the income from Country F and Country G,Edward has $100,000 of income from U.S.sources and a total U.S.tax liability,before the foreign tax credit,of $42,000. ​ What amount of foreign tax credit may Edward claim on his U.S.tax return?

In 2017,the child tax credit available to married taxpayers filing jointly is phased out,beginning at:

Daddy Warbucks is in the process of adopting Annie from a New York orphanage.He pays $7,000 in 2016,and $7,500 in 2017.Daddy Warbucks' AGI for 2017 is $165,000. ​ a.How much is the adoption credit that Daddy Warbucks may claim for 2017 if the adoption becomes final in 2017? b.How much is the adoption credit that Daddy Warbucks may claim for 2017 if the adoption becomes final in 2018? c.How much is the adoption credit that Daddy Warbucks may claim for 2017 if the adoption falls through and is never finalized?

Robert and Mary file a joint tax return for 2017 with adjusted gross income of $34,000.Robert and Mary earned income of $20,000 and $14,000,respectively,during 2017.In order for Mary to be gainfully employed,they pay the following child care expenses for their 4-year-old son,John: What is the amount of the child and dependent care credit they should report on their tax return for 2017?

Taxpayers are required to wait until they file their tax return to receive the premium tax credit.​

​Which of the following is not an exemption from minimum essential coverage for health insurance:

In 2017,Erin purchased a solar system to generate electricity for her home,at a cost of $5,000. a.How much is her tax credit in 2017? b.If she had purchased a solar heating system for her swimming pool at a cost of $3,500,how much could she claim as a tax credit? c.If she had purchased a $5,000 solar electric system and a $4,500 solar heating system for her principal home (not for the swimming pool),how much could she claim as a tax credit? d.If she had purchased the electric system for her principal residence and the solar heating system for a second residence,how much could she claim as a tax credit?

​Brad works at the local pizza shop as a delivery person.He is hoping to change to a position in the kitchen and takes a culinary course at the local community college for $1,400.Assuming he is eligible,Brad's lifetime learning credit is:

Net unearned income of certain minor children is taxed at their parents' tax rates.

Martin and Rachel are married and have a 3-year-old child.Martin is going to medical school full-time for 12 months of the year and Rachel earns $45,000.Their child is in day care so Martin can go to school while Rachel is at work.The cost of their day care is $10,000.What is their child and dependent care credit? Please show your calculations and explain.

Amounts paid to a relative generally do not qualify as child care expenses.