Exam 4: Determination of Tax

The annual tax reporting form filed with the IRS by C corporations is the Schedule C.

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?

Carter dies on January 1,2014.A joint return election is made in 2014 and Marjorie properly qualifies as a surviving spouse for the two following years.Marjorie has one child that she claims as a dependent for this same period.The number of personal and dependency exemptions allowed Marjorie in 2014 and in 2015 is,respectively

Lila and Ted are married and have AGI of $337,000 in 2015.They had their first children this year,twins.Lila and Ted will be allowed a deduction for personal and dependency exemptions of

Gross income is income from whatever source derived less exclusions.

Tom and Alice were married on December 31 of last year.What is their filing status for last year?

The standard deduction may not be claimed by one married taxpayer filing a separate return if the other spouse itemizes deductions.

Married couples will normally file jointly.Identify a situation where a married couple may prefer to file separately.

For each of the following independent cases,indicate the total number of exemptions (personal and dependents)that may be claimed by the taxpayer in 2015. a.Cassie is a single mother providing the sole support of her three children,who all live with her.Her 16 year-old daughter,Tammy,earned $15,200 modeling during the year and her two sons,R.J.and Will,ages 10 and 8,have no income. b.Olivia,35 years old,provided eighty percent of the support of her grandmother who lived in another state.Her grandmother's only income was from non-taxable social security of $6,500. c.Vanessa and Matt Reardon are married and under 65 years of age.During 2015,they furnish more than half of the support of their 25 year-old son,Bill,who lives with them.Bill earns $2,000 from a part-time job,most of which he sets aside for future college expenses.Bill is not currently a student.Vanessa's father,Henry,who died on January 3,2015,at age 80,had for many years qualified as their dependent. d.Douglas and Marjorie are husband and wife and file a joint return.Both are under 65 years of age.They provide more than half of the support of their daughter,Ellen (age 23),who is a full-time medical student.Ellen receives a $3,400 taxable scholarship covering her room and board at college.They furnish all of the support of Henry (Douglas's grandfather),who is age 70 and lives in a nursing home.They also support Meg (age 69),who is a friend of the family and lives with them. e.Blair,who is divorced,maintains a home in which she,her twin sons,and her baby daughter live all year.The children's father,Ross,provides over half their support.No special arrangements exist between Blair and Ross.

Nonrefundable tax credits are allowed to reduce or totally eliminate a taxpayer's tax liability but any credits in excess of the tax liability are lost.

Kate is single and a homeowner.In 2015,she has property taxes on her home of $3,000,makes charitable contributions of $2,000,and pays home mortgage interest of $7,000.Kate's adjusted gross income for 2015 is $77,000. Required: Compute her taxable income for 2015.

The only business entity that pays federal income taxes is the C corporation.

Which of the following types of itemized deductions are included in the category of miscellaneous expenses that are deductible only if the aggregate amount of such expenses exceeds 2% of the taxpayer's adjusted gross income?

Gina Lewis,age 12,is claimed as a dependent on her parent's return.She is their only child.She earned $2,300 from a summer job.She also earned interest of $2,750.Her parents' marginal tax rate is 28 percent. Required: a.Compute the amount of Gina's tax liability for 2015. b.Can Gina's parents take a child tax credit for her?

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?

Ryan and Edith file a joint return showing $130,000 of AGI (with no exclusions under Secs.911,931,and 933).They have three dependent children ages 7,9,and 13.What is the amount of their child credit?

Kelsey is a cash-basis,calendar-year taxpayer.Her salary is $30,000,and she is single.She plans to purchase a residence in 2016.She anticipates her property taxes and interest will total $8,000 in 2016.Each year,Kelsey contributes approximately $1,500 to charity.Her other itemized deductions total $2,000.For purposes of this problem,assume 2016 tax rates,exemptions,and standard deductions are the same as 2015. a.What will her gross tax be in 2015 and 2016 if she contributes $1,500 to charity in each year? b.What will her gross tax be in 2015 and 2016 if she contributes $3,000 to charity in 2015 but makes no contribution in 2016? c.What will her gross tax be in 2015 and 2016 if she makes no contribution in 2015 but contributes $3,000 to charity in 2016? d.Why does alternative "c" yield the lowest tax?

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?

The filing status in which the rates increase most rapidly is

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