Question 1

Carlotta,Inc.,has $50,000 foreign-source income and $150,000 worldwide income.Its U.S.tax on its worldwide income is $42,000,and it paid foreign taxes of $12,000.What is the corporation's foreign tax credit?

Accepted Answer

A)  $4,000 
B)  $12,000 
C)  $14,000 
D)  $42,000

Question 2

Nonrefundable credits may offset tax liability but may not result in additional payments to the taxpayer.

Accepted Answer

A) True 
 B)False

Question 3

Joan earns $118,700 in her job as a physician's assistant.She also has her own business selling cosmetics.This business generated $10,000 of earnings.What is Joan's self-employment tax for 2017?

Accepted Answer

A)  $1,530 
B)  $1,322 
C)  $1,344 
D)  $268

Question 4

In computing AMTI,all of the following must be added back except

Accepted Answer

A)  home mortgage interest (on mortgage in effect since home was purchased). 
B)  state income taxes. 
C)  unreimbursed employee business expenses. 
D)  property taxes on an individual's home.

Question 5

For purposes of the limitation on qualifying expenses for the child and dependent care credit,a spouse who is either a full-time student or is incapacitated is deemed to have earned income of $250 per month,or $500 per month if there are two or more qualifying individuals in the household.

Accepted Answer

A) True 
 B)False

Question 6

Qualified tuition and related expenses eligible for the American Opportunity Tax Credit are limited to those incurred the first two years of postsecondary education.

Accepted Answer

A) True 
 B)False

Question 7

If an individual is liable for self-employment tax,a portion of the self-employment tax is

Accepted Answer

A)  a for AGI deduction. 
B)  from AGI as an itemized deduction. 
C)  a Schedule C business expense. 
D)  nondeductible.

Question 8

Kerry is single and has AGI of $25,000 in 2017.During the year he contributes $5,000 to his Roth IRA.What is the amount of qualified retirement savings contributions credit to which he is entitled?

Accepted Answer

A)  $200 
B)  $400 
C)  $800 
D)  $1,000

Question 9

A larger work opportunity credit is available for employers who hire any veteran of the U.S.military.

Accepted Answer

A) True 
 B)False

Question 10

A self-employed individual has earnings from his business of $300,000 in 2017.For the earnings in excess of $127,200,he will only have to pay the 2.9% Medicare Tax.

Accepted Answer

A) True 
 B)False

Question 11

For purposes of the child and dependent care credit,qualifying employment-related expenses cannot include payments to a relative.

Accepted Answer

A) True 
 B)False

Question 12

To claim the Lifetime Learning Credit,a student must take at least one-half of a full-time course load during the year.

Accepted Answer

A) True 
 B)False

Question 13

The general business credit includes all of the following with the exception of

Accepted Answer

A)  research credit. 
B)  disabled access credit. 
C)  foreign tax credit. 
D)  credit for rehabilitation expenditure.

Question 14

A corporation has $100,000 of U.S.source taxable income and $300,000 of foreign source taxable income from countries X and Y for a total worldwide taxable income of $400,000.Countries X and Y levy a total of $60,000 in foreign taxes upon the foreign source taxable income.U.S.taxes before credits are $140,000.The foreign tax credit limitation is

Accepted Answer

A)  $35,000. 
B)  $60,000. 
C)  $80,000. 
D)  $105,000.

Question 15

Mingming and Xavier,unrelated single taxpayers,have each incurred a $1,000 expenditure.Before considering this expenditure,Mingming has taxable income of $500,000 and Xavier has taxable income of $32,000.Assume the expenditure qualifies as either a tax deduction or a 25% credit.Which of the following statements is correct?

Accepted Answer

A)  Mingming will prefer the credit, but Xavier will prefer the deduction. 
B)  Mingming will prefer the deduction, but Xavier will prefer the credit. 
C)  Both taxpayers will prefer the credit. 
D)  Both taxpayers will prefer the deduction.

Question 16

Carlotta,Inc.,has $50,000 foreign-source income and $150,000 worldwide income.Its U.S.tax on its worldwide income is $42,000,and it paid foreign taxes of $16,000.What is the corporation's foreign tax credit?

Accepted Answer

A)  $2,000 
B)  $14,000 
C)  $16,000 
D)  $42,000

Question 17

Nonrefundable personal tax credits can only offset an individual's regular tax,not AMT.

Accepted Answer

A) True 
 B)False

Question 18

If an individual is classified as an employee,the employer is required to withhold the employee's share of the FICA tax and to provide a matching amount.

Accepted Answer

A) True 
 B)False

Question 19

Shafiq,age 16,works part-time at the local supermarket after school and on vacations.He plans to open a Roth IRA to save for his future.Shafiq makes less than $10,000 per year.He can take advantage of the qualified retirement savings contributions credit ("saver's credit").

Accepted Answer

A) True 
 B)False

Question 20

Suzanne,a single taxpayer,has the following tax information for the current year.
• Charitable contribution of real property with a FMV of $25,000 (adjusted basis $20,000) for which a $25,000 deduction was taken for regular tax.
• Research and experimental expenses of $40,000 deducted in full for regular tax.
Suzanne's total tax preferences and adjustments equals

Accepted Answer

A)  $5,000. 
B)  $36,000. 
C)  $41,000. 
D)  $45,000.

Exam 14: Special Tax Computation Methods, tax Credits, and Payment of Tax

Carlotta,Inc.,has $50,000 foreign-source income and $150,000 worldwide income.Its U.S.tax on its worldwide income is $42,000,and it paid foreign taxes of $12,000.What is the corporation's foreign tax credit?

Nonrefundable credits may offset tax liability but may not result in additional payments to the taxpayer.

Joan earns $118,700 in her job as a physician's assistant.She also has her own business selling cosmetics.This business generated $10,000 of earnings.What is Joan's self-employment tax for 2017?

In computing AMTI,all of the following must be added back except

For purposes of the limitation on qualifying expenses for the child and dependent care credit,a spouse who is either a full-time student or is incapacitated is deemed to have earned income of $250 per month,or $500 per month if there are two or more qualifying individuals in the household.

Qualified tuition and related expenses eligible for the American Opportunity Tax Credit are limited to those incurred the first two years of postsecondary education.

If an individual is liable for self-employment tax,a portion of the self-employment tax is

Kerry is single and has AGI of $25,000 in 2017.During the year he contributes $5,000 to his Roth IRA.What is the amount of qualified retirement savings contributions credit to which he is entitled?

A larger work opportunity credit is available for employers who hire any veteran of the U.S.military.

A self-employed individual has earnings from his business of $300,000 in 2017.For the earnings in excess of $127,200,he will only have to pay the 2.9% Medicare Tax.

For purposes of the child and dependent care credit,qualifying employment-related expenses cannot include payments to a relative.

To claim the Lifetime Learning Credit,a student must take at least one-half of a full-time course load during the year.

The general business credit includes all of the following with the exception of

Carlotta,Inc.,has $50,000 foreign-source income and $150,000 worldwide income.Its U.S.tax on its worldwide income is $42,000,and it paid foreign taxes of $16,000.What is the corporation's foreign tax credit?

Nonrefundable personal tax credits can only offset an individual's regular tax,not AMT.

If an individual is classified as an employee,the employer is required to withhold the employee's share of the FICA tax and to provide a matching amount.

Shafiq,age 16,works part-time at the local supermarket after school and on vacations.He plans to open a Roth IRA to save for his future.Shafiq makes less than $10,000 per year.He can take advantage of the qualified retirement savings contributions credit ("saver's credit").