Exam 2: Determination of Tax

Charishma is a taxpayer with taxable income exceeding $500,000.She sells a stock for a $50,000 gain.She acquired the stock 13 months earlier.The gain will be taxed at a total tax rate of 20%.

The filing status in which the rates increase most rapidly is

The oldest age at which the "Kiddie Tax" could apply to a dependent child is

A taxpayer is able to change his filing status from married filing jointly to married filing separately by filing amended return.

Suri,age 8,is a dependent of her parents and has unearned income of $6,000.She must file her own tax return.

A married couple in the top tax bracket has a new baby.Due to the birth of the baby their taxable income will be reduced in 2016 by $4,050.

If an individual with a marginal tax rate of 15% has a long-term capital gain,it is taxed at

Tax returns from individual taxpayers and partnerships are due on the 15th day of the fourth month following the close of the tax year.

Ben,age 67,and Karla,age 58,have two children who live with them and for whom they provide total support.Their daughter is 21 years old,blind,is not a full-time student and has no income.Her twin brother is 21 years old,has good sight,is a full-time student and has income of $4,500.Ben and Karla can claim how many personal and dependency exemptions on their tax return?

Alexis and Terry have been married five years and file joint tax returns.Alexis began embezzling funds from her employer during the third year of their marriage.Last year,Alexis suddenly left the country and Terry does not know where she is.In the current year,Terry learned that the IRS had assessed him $27,000 in unpaid taxes due to Alexis's embezzlement.What tax issue(s)are present in Terry's situation? What questions would you ask Terry to determine his appropriate response to the IRS?

Assuming a calendar tax year and the conventional 15th of the month due date,all of the following business entities must file their 2016 tax returns by the March 15,2017 except

Which of the following credits is considered a refundable credit?

Oscar and Diane separated in June of this year although they continue to live in the same town.They have twin sons,Blake and Cliff,who remain in the family home with Diane.Oscar's income this year was $45,000 while Diane worked only part-time and made $15,000.Oscar also gambles heavily but told Diane that he had no winnings this year.What tax issues should they consider?

Husband and wife,who live in a common law state,are eligible to file a joint return for 2016,but elect to file separately.They do not have dependents.Wife has adjusted gross income of $25,000 and has $2,200 of expenditures which qualify as itemized deductions.She is entitled to one exemption.Husband deducts itemized deductions of $11,200.What is the taxable income for the wife?

On June 1,2016,Ellen turned 65.Ellen has been a widow for five years and has no dependents.Her standard deduction is

Ivan Trent,age five,receive $2,900 of dividends per year from a mutual fund he owns;it is his own source of taxable income.Ivan's parents plan to gift a corporate bond they currently own to him.The bond pays $2,100 of interest income per year.The Trent family overall will save taxes if the bond is transferred to the child.

Sarah,who is single,maintains a home in which she,her 15-year old brother,and her 21-year-old niece live.Sarah provides the majority of the support for her brother,her niece,and her cousin,age 18,who is enrolled full-time at the university and lives in an apartment.While the niece and cousin have no income,her brother has a part-time job and earns $4,000 per year.How many personal and dependency exemptions may Sarah claim?

The amount of Social Security tax paid by the taxpayer will be a consideration in determining the refundable component of the child care credit for larger families.

If a 13-year-old has earned income of $500 and unearned income of $2,500,all of the income can be reported on the parent's return.

Hannah is single with no dependents and has a salary of $102,000 for 2016,along with tax exempt interest income of $3,000 from a municipality.Her itemized deductions total $6,600. Required: Compute her taxable income.