Exam 2: Determination of Tax

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?

Dave, age 59 and divorced, is the sole support of his mother age 83, who is a resident of a local nursing home for the entire year. Dave's mother had no income for the year. Dave's filing status and exemptions claimed are

The child credit is for taxpayers with dependent children under the age of

Which of the following credits is considered a refundable credit?

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

When two or more people qualify to claim the same person as a dependent, a taxpayer who is entitled to the exemption through the qualified child rules has priority over a taxpayer who meets the requirements for other relatives.

Foreign exchange student Yung lives with Harold and Betty while he studies in the US. He moved into their home January 5, 2014 and has resided with them for the remainder of the year. Yung does not pay anything for his room and board. Harold and Betty provide all of Yung's meals. Yung receives a scholarship to pay for his tuition, books and fees. He works on campus, earning $4,000 a year. What tax issues should Harold and Betty consider?

Rob is a taxpayer in the top tax bracket, with over a million in taxable income. He plans to sell stock held long-term for a $100,000 gain. This sale will result in an increase to his tax liability of

In 2014 the standard deduction for a married taxpayer filing a joint return and who is 67 years old with a spouse who is 65 years old is

The person claiming a dependency exemption under a multiple support declaration must provide more than 25% of the dependent's support.

Steve Greene, age 66, is divorced with no dependents. In 2014 Steve had income and expenses as follows: Compute Steve's taxable income for 2014. Show all calculations.

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?

Liz and Bert divorce and Liz receives custody of their child. Bert is ordered by the court to pay child support of $10,000 per year, and Liz agrees in writing to allow Bert to claim the dependency exemption for the child. If Liz maintains the home in which she and her child live, her filing status and exemptions claimed will be

In order to shift the taxation of dividend income from a parent to a child,

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

A building used in a business is sold after five years of use for a gain. The gain will be treated as a long-term capital gain.

Adam attended college for much of 2014, during which time he was supported by his parents. Erin married Adam in December 2014. They live in a common law state. Adam graduated and will commence work in January 2015. Erin worked during 2014 and earned $20,000. Adam's only income was interest of $1,100. Adam's parents are in the 28% tax bracket. Thus, claiming Adam as a dependent would save them $1,106 ($3,950 × .28). a. What is Erin and Adam's tax liability if they file a joint return? b. What is Erin and Adam's total tax liability if they file separate returns and Adam's parents claim him as a dependent?

Generally, when a married couple files a joint return, each spouse is liable for one-half of the entire tax and any penalties incurred.