Question 1

A husband and wife are allowed only one exemption on a jointly filed return.

Accepted Answer

A) True 
 B)False

Question 2

Mr.and Mrs.Dell,ages 29 and 26,file a joint return and have no dependents for the year.Here is their relevant information.Standard Deduction Table.   Compute their adjusted gross income (AGI)and taxable income.

Accepted Answer

A) AGI $64,900; taxable income $42,800. 
B) AGI $58,700; taxable income $36,600. 
C) AGI $58,700; taxable income $38,000. 
D) AGI $64,900; taxable income $36,600.

Question 3

Which of the following statements describing individual tax deductions is false?

Accepted Answer

A) In a year in which an individual takes the standard deduction,any itemized deductions yield no tax benefit. 
B) The majority of individual taxpayers itemize rather than taking the standard deduction. 
C) Individuals elect to itemize deductions in a tax year in which total itemized deductions exceed the standard deduction. 
D) Individuals who pay self-employment tax can deduct one half of the tax as an above-the-line deduction.

Question 4

Which of the following statements regarding the calculation of taxable income is false?

Accepted Answer

A) The first step in the calculation of taxable income is determining the taxpayer's total income. 
B) Adjusted gross income is equal to total income less above-the-line deductions. 
C) Adjusted gross income can be reduced by the greater of the standard deduction or itemized deductions. 
D) Taxpayers are allowed to deduct the greater of itemized deductions or above-the-line deductions in calculating taxable income.

Question 5

Mr.and Mrs.King's regular tax liability on their joint return was $111,850.Which of the following statements is true?

Accepted Answer

A) If the Kings' tentative minimum tax is $103,300,their total tax liability is $103,300. 
B) If the Kings' tentative minimum tax is $103,300,their total tax liability is $111,850. 
C) If the Kings' tentative minimum tax is $143,800,their total tax liability is $143,800. 
D) Both B.and C.are true.

Question 6

Mr.and Mrs.Harvey's tax liability before credits was $1,675.Their income tax withholding was $1,050,and they are entitled to a $1,189 earned income credit.Which of the following statements is true?

Accepted Answer

A) The Harveys are entitled to a $1,050 tax refund. 
B) The Harveys are entitled to a $1,189 tax refund. 
C) The Harveys are entitled to a $564 tax refund. 
D) The Harveys owe no additional tax but they are not entitled to a refund.

Question 7

Mr.and Mrs.Toliver's AGI on their jointly filed return is $339,000.Regardless of the number of their children,the Tolivers are not eligible for a child credit.

Accepted Answer

A) True 
 B)False

Question 8

Every individual taxpayer is entitled to an AMT exemption,the amount of which varies with filing status.

Accepted Answer

A) True 
 B)False

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

Last year,Mr.Corbett's AGI was $141,000,and his total tax liability was $33,650.This year,his total tax liability is $35,290.Compute the minimum amount of current year tax that Mr.Corbett had to prepay (withholding and estimated payments)to avoid an underpayment penalty.

Accepted Answer

A) $31,761 
B) $33,650 
C) $30,285 
D) $35,290

Question 11

Kent,an unmarried individual,invited his widowed father,Martin,to move into his home in January of this year.Martin's only income item was a $14,000 taxable pension from his former employer.Kent provides about 75% of his father's financial support.What is Kent's filing status and number of exemptions for the year?

Accepted Answer

A) Single and one exemption 
B) Single and two exemptions 
C) Head of household and one exemption 
D) Head of household and two exemptions

Question 12

Mr.and Mrs.Kain reported $80,000 AGI on their joint return.The couple has four dependent children: Beatrice,age 19; Bruce,age 16; Angie,age 11,and Arnold,age 8.Compute the Kains' child credit.

Accepted Answer

A) $1,000 
B) $2,000 
C) $3,000 
D) $4,000

Question 13

Mr.and Mrs.David file a joint tax return.They have $169,300 taxable income in 2017,$120,300 of which is ordinary income and $49,000 of which is taxed at a 15% preferential rate.Compute their tax savings from the preferential rate.

Accepted Answer

A) $6,370 
B) $5,386 
C) $4,900 
D) None of the above.

Question 14

Mr.and Mrs.Reid reported $435,700 ordinary taxable income for regular tax purposes and had $58,200 positive AMT adjustments and preferences.Compute their tentative minimum tax.

Accepted Answer

A) $134,536 
B) $128,414 
C) $138,292 
D) $113,946

Question 15

Julie,an unmarried individual,lives in a home with her 13-year-old dependent son,Oscar.This year,Julie had the following tax information.Standard Deduction Table.   Compute Julie's adjusted gross income (AGI)and taxable income.

Accepted Answer

A) AGI $97,800; taxable income $69,388. 
B) AGI $97,800; taxable income $76,100. 
C) AGI $91,088; taxable income $73,688. 
D) AGI $91,088; taxable income $69,388.

Question 16

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 17

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 or personal exemption.

Accepted Answer

A) True 
 B)False

Question 18

Leon died on August 23,2015,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 2016,2017,and 2018?

Accepted Answer

A) Surviving spouse for 2016,2017,and 2018. 
B) Surviving spouse for 2016 and 2017; head of household for 2018. 
C) Head of household for 2016,2017,and 2018. 
D) Surviving spouse for 2016; head of household for 2017 and 2018.

Question 19

The highest individual marginal rate for regular tax purposes is 39.6%,while the highest individual marginal rate for alternative minimum tax (AMT)purposes is only 28%.

Accepted Answer

A) True 
 B)False

Question 20

Mr.and Mrs.Liddy,ages 39 and 41,file a joint return and have no dependents for the year.Here is their relevant information.Standard Deduction Table.   Compute their adjusted gross income (AGI)and taxable income.

Accepted Answer

A) AGI $50,200; taxable income $29,400. 
B) AGI $52,000; taxable income $31,300. 
C) AGI $52,000; taxable income $29,400. 
D) AGI $50,200; taxable income $40,200.

Exam 14: The Individual Tax Formula

A husband and wife are allowed only one exemption on a jointly filed return.

Mr.and Mrs.Dell,ages 29 and 26,file a joint return and have no dependents for the year.Here is their relevant information.Standard Deduction Table. Compute their adjusted gross income (AGI) and taxable income.

Which of the following statements describing individual tax deductions is false?

Which of the following statements regarding the calculation of taxable income is false?

Mr.and Mrs.King's regular tax liability on their joint return was $111,850.Which of the following statements is true?

Mr.and Mrs.Harvey's tax liability before credits was $1,675.Their income tax withholding was $1,050,and they are entitled to a $1,189 earned income credit.Which of the following statements is true?

Mr.and Mrs.Toliver's AGI on their jointly filed return is $339,000.Regardless of the number of their children,the Tolivers are not eligible for a child credit.

Every individual taxpayer is entitled to an AMT exemption,the amount of which varies with filing status.

Which of the following statements regarding filing status is false?

Last year,Mr.Corbett's AGI was $141,000,and his total tax liability was $33,650.This year,his total tax liability is $35,290.Compute the minimum amount of current year tax that Mr.Corbett had to prepay (withholding and estimated payments) to avoid an underpayment penalty.

Mr.and Mrs.Kain reported $80,000 AGI on their joint return.The couple has four dependent children: Beatrice,age 19; Bruce,age 16; Angie,age 11,and Arnold,age 8.Compute the Kains' child credit.

Mr.and Mrs.David file a joint tax return.They have $169,300 taxable income in 2017,$120,300 of which is ordinary income and $49,000 of which is taxed at a 15% preferential rate.Compute their tax savings from the preferential rate.

Mr.and Mrs.Reid reported $435,700 ordinary taxable income for regular tax purposes and had $58,200 positive AMT adjustments and preferences.Compute their tentative minimum tax.

Julie,an unmarried individual,lives in a home with her 13-year-old dependent son,Oscar.This year,Julie had the following tax information.Standard Deduction Table. Compute Julie's adjusted gross income (AGI) and taxable income.

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

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 or personal exemption.

Leon died on August 23,2015,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 2016,2017,and 2018?

The highest individual marginal rate for regular tax purposes is 39.6%,while the highest individual marginal rate for alternative minimum tax (AMT)purposes is only 28%.

Mr.and Mrs.Liddy,ages 39 and 41,file a joint return and have no dependents for the year.Here is their relevant information.Standard Deduction Table. Compute their adjusted gross income (AGI) and taxable income.