Question 1

Leon died on August 23,2016,and his wife Mary has not remarried.Since her husband's death,Mary has maintained a home for her two dependent children,who were ages 7 and 4 when their father died.Which of the following describes Mary's filing status for 2017,2018,and 2019?

Accepted Answer

A) Surviving spouse for 2017,2018,and 2019. 
B) Surviving spouse for 2017 and 2018; head of household for 2019. 
C) Head of household for 2017,2018,and 2019. 
D) Surviving spouse for 2017; head of household for 2018 and 2019.

Question 2

It is impossible for a progressive income tax system to be both marriage neutral and horizontally equitable.

Accepted Answer

A) True 
 B)False

Question 3

Eileen,a single individual,had $125,000 taxable income.Compute her income tax assuming that:
a.Taxable income includes no capital gains.
b.Taxable income includes $14,000 capital gain eligible for the 15% preferential rate.

Accepted Answer

The answer of Eileen,a single individual,had $125,000 taxable income.Compute her...

Question 4

Which of the following statements regarding tax payments is true?

Accepted Answer

A) Sole proprietors must make quarterly estimated payments of income tax,but self-employment tax is not due until the return is filed. 
B) Sole proprietors must make quarterly estimated payments of self-employment tax,but income tax is not due until the return is filed. 
C) Sole proprietors must make quarterly estimated payments of income tax and self-employment tax. 
D) Sole proprietors are not required to pay income tax or self-employment tax until the return is filed.

Question 5

Mr.Marshall was employed by IMP Inc.until October,when he accepted a new position with Turine Inc.Mr.Marshall earned $140,000 compensation from IMP and $36,000 compensation from Turine.Which of the following statements is false?

Accepted Answer

A) Turine must withhold Social Security tax from Mr.Marshall's $36,000 compensation. 
B) Turine must withhold Medicare tax from Mr.Marshall's $36,000 compensation. 
C) Mr.Marshall is entitled to an income tax credit for excess Social Security tax withheld by his employers this year. 
D) None of the above is false.

Question 6

In computing taxable income,an individual will deduct the lesser of itemized deductions or the standard deduction.

Accepted Answer

A) True 
 B)False

Question 7

Jay Blount,26-years old and a full-time student,lives in his parents' home.Although Jay earned $8,400 from a part-time job,his parents provide at least 75% of his financial support.For tax purposes,this year Jay is considered a dependent of his parents.

Accepted Answer

A) True 
 B)False

Question 8

Benjamin,who files as a single taxpayer,has $359,900 taxable income in 2019.Compute his regular tax liability.

Accepted Answer

A) $101,159 
B) $97,547 
C) $125,965 
D) None of the above

Question 9

Which of the following statements regarding filing status is false?

Accepted Answer

A) A widow or widower maintaining a home for a dependent child qualifies as surviving spouse for two tax years following the year of the spouse's death. 
B) Marital status for tax purposes is determined on the last day of the year. 
C) Any unmarried individual with a dependent child qualifies as head of household. 
D) An unmarried individual without children or other dependents files as a single taxpayer.

Question 10

An individual with $700,000 taxable income has the same marginal rate as a single taxpayer or as a head of household.

Accepted Answer

A) True 
 B)False

Question 11

Because a QBI deduction affects AGI,it may impact the ability to claim a deduction for unreimbursed medical expenses.

Accepted Answer

A) True 
 B)False

Question 12

The QBI deduction always has the impact of lowering taxable income.

Accepted Answer

A) True 
 B)False

Question 13

Miss Blixen's regular income tax is $77,390,and her tentative minimum tax is $74,100.Consequently,Miss Blixen's alternative minimum tax (AMT)is zero.

Accepted Answer

A) True 
 B)False

Question 14

Harry and Sally were married on December 23,2019.Should they choose to file jointly,their income for the entire year is reported on a joint return.

Accepted Answer

A) True 
 B)False

Question 15

Ms.Lewis maintains a household which is the principal place of residence for Kathy.Ms.Lewis provides more than 50% of Kathy's financial support.In which of the following cases can Ms.Lewis claim Kathy as a qualifying child?

Accepted Answer

A) Kathy is age 8 and the child of Ms.Lewis' best friend,who died three years ago. 
B) Kathy is Ms.Lewis' 15-year-old niece. 
C) Kathy is Ms.Lewis' 30-year-old unmarried sister. 
D) Both B.and C.

Question 16

In order to be considered a dependent,an individual must be either a qualifying child or a qualifying relative.

Accepted Answer

A) True 
 B)False

Question 17

The goal of the QBI deduction is to lower the effective tax rate on business profit earned by pass through entities.

Accepted Answer

A) True 
 B)False

Question 18

The tax rates for individuals who qualify as a head-of-household are lower than the tax rates for single individuals.

Accepted Answer

A) True 
 B)False

Question 19

Lennie and Margo spent $2,800 for child care for their 7-year-old son.Lennie's earned income was $41,000,Margo's earned income was $24,800,and the AGI on their joint return was $71,200.Calculate their dependent care credit.

Accepted Answer

A) $0 
B) $560 
C) $980 
D) $2,800

Question 20

An individual who files his own tax return but is claimed as a dependent on another individual's return is not allowed any standard deduction.

Accepted Answer

A) True 
 B)False

Exam 14: The Individual Tax Formula

Leon died on August 23,2016,and his wife Mary has not remarried.Since her husband's death,Mary has maintained a home for her two dependent children,who were ages 7 and 4 when their father died.Which of the following describes Mary's filing status for 2017,2018,and 2019?

It is impossible for a progressive income tax system to be both marriage neutral and horizontally equitable.

Eileen,a single individual,had $125,000 taxable income.Compute her income tax assuming that: a.Taxable income includes no capital gains. b.Taxable income includes $14,000 capital gain eligible for the 15% preferential rate.

Which of the following statements regarding tax payments is true?

Mr.Marshall was employed by IMP Inc.until October,when he accepted a new position with Turine Inc.Mr.Marshall earned $140,000 compensation from IMP and $36,000 compensation from Turine.Which of the following statements is false?

In computing taxable income,an individual will deduct the lesser of itemized deductions or the standard deduction.

Jay Blount,26-years old and a full-time student,lives in his parents' home.Although Jay earned $8,400 from a part-time job,his parents provide at least 75% of his financial support.For tax purposes,this year Jay is considered a dependent of his parents.

Benjamin,who files as a single taxpayer,has $359,900 taxable income in 2019.Compute his regular tax liability.

Which of the following statements regarding filing status is false?

An individual with $700,000 taxable income has the same marginal rate as a single taxpayer or as a head of household.

Because a QBI deduction affects AGI,it may impact the ability to claim a deduction for unreimbursed medical expenses.

The QBI deduction always has the impact of lowering taxable income.

Miss Blixen's regular income tax is $77,390,and her tentative minimum tax is $74,100.Consequently,Miss Blixen's alternative minimum tax (AMT)is zero.

Harry and Sally were married on December 23,2019.Should they choose to file jointly,their income for the entire year is reported on a joint return.

Ms.Lewis maintains a household which is the principal place of residence for Kathy.Ms.Lewis provides more than 50% of Kathy's financial support.In which of the following cases can Ms.Lewis claim Kathy as a qualifying child?

In order to be considered a dependent,an individual must be either a qualifying child or a qualifying relative.

The goal of the QBI deduction is to lower the effective tax rate on business profit earned by pass through entities.

The tax rates for individuals who qualify as a head-of-household are lower than the tax rates for single individuals.

Lennie and Margo spent $2,800 for child care for their 7-year-old son.Lennie's earned income was $41,000,Margo's earned income was $24,800,and the AGI on their joint return was $71,200.Calculate their dependent care credit.

An individual who files his own tax return but is claimed as a dependent on another individual's return is not allowed any standard deduction.