Question 1

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 2

The standard deduction for single individuals equals one-half of the standard deduction for married individuals filing jointly.

Accepted Answer

A) True 
 B)False

Question 3

Charlie is single and provides 100% of the financial support for his dependent mother, Angela, who lives with Charlie. Charlie's filing status is head of household.

Accepted Answer

A) True 
 B)False

Question 4

Mr. and Mrs. Kay, ages 68 and 66, file a joint return. Mrs. Kay is legally blind. Compute their standard deduction.

Accepted Answer

A)  $11,900 
B)  $15,350 
C)  $14,200 
D)  $13,050

Question 5

Mr. and Mrs. Kline file a joint return on which they claim the standard deduction and two exemptions. If the taxable income on their return is $55,300, they are not paying a marriage penalty.

Accepted Answer

A) True 
 B)False

Question 6

In determining the standard deduction, which of the following statements is true?

Accepted Answer

A)  The standard deduction is a function of filing status. 
B)  An individual who is both blind and age 65 by the last day of the taxable year is entitled to one additional standard deduction amount. 
C)  An individual who is claimed as a dependent on another person's tax return is not allowed a standard deduction. 
D)  All of the above statements are true.

Question 7

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 8

An above-the-line deduction reduces both adjusted gross income and taxable income.

Accepted Answer

A) True 
 B)False

Question 9

Linda and Raj are engaged to be married. Linda's 2012 taxable income as a single individual would be $83,500. Raj's 2012 taxable income as a single individual would be $118,000. When they marry before the end of 2012, how much of a marriage penalty will they incur?

Accepted Answer

A)  $0 
B)  $388 
C)  $793 
D)  None of the above

Question 10

Ruth Anne, a single taxpayer, reported $152,600 alternative minimum taxable income before any exemption on her 2011 Form 1040. Calculate Ruth Anne's AMT exemption.

Accepted Answer

A)  $10,025 
B)  $38,425 
C)  $48,450 
D)  None of the above

Question 11

Ms. Dolan, an unmarried individual, invited her elderly uncle, Martin, to move into her home in January of this year. Martin's only income item was $2,390 of taxable interest on a savings account. Ms. Dolan provides over 90% of her uncle's financial support. What is Ms. Dolan'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

Which of the following statements concerning the individual alternative minimum tax (AMT) is true?

Accepted Answer

A)  The calculation of alternative minimum taxable income begins with taxable income for regular tax purposes. 
B)  A taxpayer with no tax preference items for the year can't be liable for AMT. 
C)  An individual is allowed the same exemption as a corporation in calculating the AMT base. 
D)  The individual AMT rate is a flat 28%.

Question 13

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)  $113,946 
B)  $134,792 
C)  $128,414 
D)  $138,292

Question 14

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

Accepted Answer

A)  Individuals can take both above-the-line and the standard deduction in the same year. 
B)  Individuals elect to itemize deductions in a tax year in which total itemized deductions exceed the standard deduction. 
C)  In a year in which an individual takes the standard deduction, any itemized deductions yield no tax benefit. 
D)  Individuals who pay self-employment tax can deduct the tax as an itemized deduction.

Question 15

Which of the following statements regarding the calculation of regular tax liability is false?

Accepted Answer

A)  The rate schedule for calculating regular tax liability depends on the taxpayer's filing status. 
B)  All taxpayer, regardless of the amount of their taxable income, pay a 10% tax on their first bracket of income. 
C)  The individual tax rate schedules are adjusted annually for inflation. 
D)  The tax brackets in the single rate schedule are one-half of the brackets in the married-filing-jointly rate schedule.

Question 16

Mr. Lenz died on May 4, 2011. His widow, Mrs. Lenz, maintains a home for her three children, ages 4, 6, and 11. Mrs. Lenz must file as a head of household in 2012.

Accepted Answer

A) True 
 B)False

Question 17

Mr. and Mrs. Eller's AGI last year was $287,300, and their total tax was $70,268. The couple's safe-harbor estimate of current year tax is $77,295.

Accepted Answer

A) True 
 B)False

Question 18

Only natural and adopted children or stepchildren can be a qualifying child for tax purposes.

Accepted Answer

A) True 
 B)False

Question 19

The highest individual marginal rate for regular tax purposes is 35%, while the highest individual marginal rate for alternative minimum tax (AMT) purposes is only 28%.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 14: The Individual Tax Formula

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.

The standard deduction for single individuals equals one-half of the standard deduction for married individuals filing jointly.

Charlie is single and provides 100% of the financial support for his dependent mother, Angela, who lives with Charlie. Charlie's filing status is head of household.

Mr. and Mrs. Kay, ages 68 and 66, file a joint return. Mrs. Kay is legally blind. Compute their standard deduction.

Mr. and Mrs. Kline file a joint return on which they claim the standard deduction and two exemptions. If the taxable income on their return is $55,300, they are not paying a marriage penalty.

In determining the standard deduction, which of the following statements is true?

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 above-the-line deduction reduces both adjusted gross income and taxable income.

Linda and Raj are engaged to be married. Linda's 2012 taxable income as a single individual would be $83,500. Raj's 2012 taxable income as a single individual would be $118,000. When they marry before the end of 2012, how much of a marriage penalty will they incur?

Ruth Anne, a single taxpayer, reported $152,600 alternative minimum taxable income before any exemption on her 2011 Form 1040. Calculate Ruth Anne's AMT exemption.

Which of the following statements concerning the individual alternative minimum tax (AMT) is true?

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.

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

Which of the following statements regarding the calculation of regular tax liability is false?

Mr. Lenz died on May 4, 2011. His widow, Mrs. Lenz, maintains a home for her three children, ages 4, 6, and 11. Mrs. Lenz must file as a head of household in 2012.

Mr. and Mrs. Eller's AGI last year was $287,300, and their total tax was $70,268. The couple's safe-harbor estimate of current year tax is $77,295.

Only natural and adopted children or stepchildren can be a qualifying child for tax purposes.

The highest individual marginal rate for regular tax purposes is 35%, while the highest individual marginal rate for alternative minimum tax (AMT) purposes is only 28%.

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