Exam 17: 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.

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.

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

An unmarried taxpayer may file as head of household if he maintains a home for his qualifying child.

Paul and Sally file a joint return showing $87,000 of AGI. They have three dependent children ages 6, 8, and 13. What is the amount of their child credit?

Generally, deductions for (not from) adjusted gross income are personal expenses specifically allowed by tax law.

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

Annisa, who is 28 and single, has adjusted gross income of $55,000 and itemized deductions of $5,000. In 2016, Annisa will have taxable income of

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%.

Taxpayers have the choice of claiming either the personal and dependency exemption or itemized deductions.

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?

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.

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?

Generally, in the case of a divorced couple, the parent who has physical custody of a child for the greater part of the year is entitled to the dependency exemption.

Parents must provide more than half the support of their child under the age of 19 in order to claim her as a dependent qualifying child.

One requirement for claiming a dependent as a qualifying relative is that the taxpayer provides more than 50 percent of the dependent's support (assuming it is not a multiple support agreement situation).

In order to qualify to file as surviving spouse, all of the following criteria must be met by the widow or widower except

If an individual with a marginal tax rate of 25% has a long-term capital gain, it is taxed at

Artco Inc. is a C corporation. This year it earned $50,000 of taxable income and paid a $10,000 distribution (dividend) to Lily, its sole shareholder. Lily has a marginal tax rate of 25%. Due to the corporation's results and the distribution paid, the IRS will receive total taxes of

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.