Exam 2: Determination of Tax

Mia is a single taxpayer with projected AGI of $259,000 in 2016.She is considering selling a long-term investment before year-end.She expects to realize a gain of $25,000.If Mia sells the investment by December 31,her 2016 taxable income will increase by $25,000.

Bill and Tessa have two children whom they support and who live in their home.Timmy is 17 and has earned income of $5,000 for the year.Their other child,Tommy,is 15.Tessa's mother also lives with them and may be claimed as their dependent.She is 89 years old.Their adjusted gross income is $130,000. Required: Compute Bill and Tessa's taxable income for 2016 if they file a joint return and they do not itemize deductions.

A single taxpayer provided the following information for 2016: What is taxable income?

In October 2016,Joy and Paul separated and have not lived with each other since,but they are still legally married.They do not file a joint return.Joy supports their children after the separation and pays the cost of maintaining their home.Joy's filing status in 2016 and 2017 is,respectively,

Lewis,who is single,is claimed as a dependent on his parents' tax return.He received $2,000 during the year in dividends,which was his only income.What is his standard deduction for 2016?

Rena and Ronald,a married couple,each earn a salary of $200,000.They will be required to pay additional payroll taxes in 2016 of

Ray is starting a new business and trying to decide between a C corporation,S corporation and partnership.Which of the following statements regarding his decision is correct?

John supports Kevin,his cousin,who lived with him throughout 2016.John also supports three other individuals who do not live with him: Assume that Donna,Melissa,Morris and Kevin each earn less than $4,050.How many personal and dependency exemptions may John claim?

Indicate for each of the following the most favorable filing status for the 2016 tax year. a.Kenny died on March 2,2015.Marge,his wife,and Bart,their son,survive.Marge filed a joint return in 2015.Bart,age 18 in 2016,is a part-time college student and continues to live at home with his mother.He works part-time,earning $6,200.What is Marge's filing status in 2016? b.Alan Spaulding is single and provides over 50% support of his niece Alicia who lives with him all year long.Alan maintains the household and claims Alicia as a dependent.Alicia makes $3,600 at a part-time job.She is a full-time student,age 18.What is Alan's filing status? c.Lily,who was divorced on July 27,2015,provides 100% of the support for her parents who live in a nursing home in Kansas and have no income.What is Lily's filing status? d.Holly was abandoned by her husband Fletcher in September of the current year.She has not seen or communicated with him since then.What is Holly's filing status? e.Rick,whose wife died in December 2013,filed a joint tax return for 2013.He did not remarry,but has continued to maintain his home in which his two dependent children live.What is Rick's filing status for 2016?

An individual may not qualify for the dependency exemption as a qualifying child but may still qualify as a dependent.

Steven and Susie Tyler have three dependent children ages 13,15,and 17.Their modified AGI is $108,000.What is the amount of the child credit to which they are entitled?