Exam 17: Determination of Tax

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 2016. b. Can Gina's parents take a child tax credit for her?

Kelly is age 23 and a full-time student with interest and dividend income of $2,600 in the current year. The total cost of her support for the year is $19,000. She is not subject to the kiddie tax.

Kate is single and a homeowner. In 2016, 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 2016 is $77,000. Required: Compute her taxable income for 2016.

All of the following items are included in gross income except

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?

For each of the following taxpayers indicate the applicable filing status, the number of personal and dependency exemptions available, and the number of children who qualify for the child credit. a. Jeffrey is a widower, age 71, who receives a pension of $10,000, nontaxable social security benefits of $12,000, and interest of $2,000. He has no dependents. b. Selma is a single, full-time college student, age 20, who earned $6,800 working part-time. She has $1,700 of interest income and received $1,000 support from her parents. c. Olivia is married, but her husband left her three years ago and she has not seen or heard from him since. She supports herself and her six-year-old daughter. She paid all the household expenses. Her income consists of salary of $18,500 and interest of $800. d. Ruben is a single, full-time college student, age 20, who earned $6,800 working part-time. He has $250 of interest income and received $10,000 support from his parents. e. Cathy is divorced and received $12,000 alimony from her former husband and earned $35,000 working as an administrative assistant. She also received $2,500 of child support for her daughter who lives with her. Cathy filed the appropriate IRS form and gave up the dependency exemption to her former husband.

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.

A child credit is a partially refundable credit.

If a 13-year-old has earned income of $500 and unearned income of $2,500, all of the income can be reported on the parent's return.

Frank, age 17, received $4,000 of dividends and $1,500 from a part-time job. Frank is a dependent of his parents who are in the 28% percent bracket. Frank's 2016 taxable income is

An individual who is claimed as a dependent by another person is not entitled to a personal exemption on his or her own return.