Exam 2: Determination of Tax

A child credit is a partially refundable credit.

For purposes of the dependency exemption, a qualifying child may not provide more than one-half of his or her own support during the year.

A married person who files a separate return can claim a personal exemption for his spouse if the spouse is not the dependent of another and has

Paige is starting Paige's Poodle Parlor and is considering alternative organizational forms. She anticipates the business will earn $100,000 from operating before compensating her for her services and before charitable contributions. Page, who is single, has $3,000 of income from other sources and other itemized deductions of $12,000. Her compensation for services will be $50,000. Charitable contributions to be made by the business are expected to be $5,000. Other distributions (dividends)to her from the business are expected to be $14,000. Required: Compare her current income tax assuming she operates the business as a proprietorship, an S corporation, and a C corporation. Ignore payroll and other taxes.

The filing status in which the rates increase most rapidly is

Vincent, age 12, is a dependent of his parents. During 2014, Vincent's earned income from wages is $2,600 and Vincent received $3,000 of interest income. The parent's marginal rate is 28% and Vincent's marginal rate is 10%. Vincent's tax is

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

Refundable 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.

In 2014 Brett and Lashana (both 50 years old)file a joint tax return claiming as a dependent their son who is blind. Their standard deduction is

Gina Lewis, age 12, is claimed as a dependent on her parent's return. She is their only child. During 2014, 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 2014. b. Can Gina's parents take a child tax credit for her?

David's father is retired and receives $14,000 per year in social security benefits. David's father saves $4,000 of the benefits and spends the remaining $10,000 for his support. How much support must David provide for his father to meet the dependent support requirement?

A legally married same-sex couple can file a joint return.

For each of the following independent cases, indicate the total number of exemptions (personal and dependents)that may be claimed by the taxpayer in 2014. 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 2014, 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, 2014, 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.

For purposes of the dependency exemption, a qualifying child must be under age 19, a full-time student under age 24, or a permanently and totally disabled child.

A corporation has revenue of $350,000 and deductible business expenses of $240,000. What is the federal income tax, before credits?

Anita, who is divorced, maintains a home in which she and her 16 year old daughter live. Anita provides the majority of the support for her daughter and for a son, age 23, who is enrolled part-time at the university and lives in the dorm. The son also works in the campus bookstore and earns spending money of $4,500. How many personal and dependency exemptions may Anita claim?

Charlie is claimed as a dependent on his parents' tax return in 2014. He received $8,000 during the year from a part-time acting job, which was his only income. What is his standard deduction?

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

Edward, a widower whose wife died in 2011, maintains a household for himself and his daughter who qualifies as his dependent. Edward's most favorable filing status for 2014 is

Anna is supported entirely by her three sons John, James, and Joseph who provide for her support in the following percentages: Assuming a multiple support declaration exists, which of the brothers may claim his mother as a dependent?