Question 1

The general business credit includes all of the following with the exception of

Accepted Answer

A)  research credit. 
B)  disabled access credit. 
C)  foreign tax credit. 
D)  credit for rehabilitation expenditure. 
A)  research credit. 
B)  disabled access credit. 
C)  foreign tax credit. 
D)  credit for rehabilitation expenditure. C

Question 2

Harley's tentative minimum tax is computed by multiplying the AMT tax rates by her

Accepted Answer

A)  taxable income. 
B)  alternative minimum tax base. 
C)  alternative minimum taxable income. 
D)  tentative alternative taxable income. 
A)  taxable income. 
B)  alternative minimum tax base. 
C)  alternative minimum taxable income. 
D)  tentative alternative taxable income. B

Question 3

Mingming and Xavier, unrelated single taxpayers, have each incurred a $1,000 expenditure. Before considering this expenditure, Mingming has taxable income of $500,000 and Xavier has taxable income of $32,000. Assume the expenditure qualifies as either a tax deduction or a 25% credit. Which of the following statements is correct?

Accepted Answer

A)  Mingming will prefer the credit, but Xavier will prefer the deduction. 
B)  Mingming will prefer the deduction, but Xavier will prefer the credit. 
C)  Both taxpayers will prefer the credit. 
D)  Both taxpayers will prefer the deduction. 
A)  Mingming will prefer the credit, but Xavier will prefer the deduction. 
B)  Mingming will prefer the deduction, but Xavier will prefer the credit. 
C)  Both taxpayers will prefer the credit. 
D)  Both taxpayers will prefer the deduction. B

Question 4

In computing AMTI, adjustments are

Accepted Answer

A)  limited. 
B)  added only. 
C)  subtracted only. 
D)  either added or subtracted. 
A)  limited. 
B)  added only. 
C)  subtracted only. 
D)  either added or subtracted.

Question 5

The adoption credit based on qualified adoption expenses is generally allowed in the year the adoption is finalized.

Accepted Answer

A) True 
 B)False

Question 6

In lieu of a foreign tax credit, a taxpayer may elect to take a deduction for foreign taxes paid or accrued.

Accepted Answer

A) True 
 B)False

Question 7

For purposes of the child and dependent care credit, qualifying employment-related expenses cannot include payments to a relative.

Accepted Answer

A) True 
 B)False

Question 8

ChocoHealth Inc. is developing new chocolate products providing abundant health benefits at low calorie counts. For the past three years, it spent an average of $500,000 per year on research. ChocoHealth has spent $900,000 on research. The company has elected the simplified credit. For the current year, it will earn a research credit of

Accepted Answer

A)  $54,000. 
B)  $126,000. 
C)  $80,000. 
D)  $91,000. 
A)  $54,000. 
B)  $126,000. 
C)  $80,000. 
D)  $91,000.

Question 9

Amelida expects to earn $145,000 of AGI and $125,000 of taxable income this year. She is concerned about underpayment penalties. Because of a substantial bonus, her prior year AGI was $155,000 and her taxable income was $135,000. She will not be subject to underpayment penalties for the current year if her estimated taxes equal or exceed any of the following criteria except

Accepted Answer

A)  the estimated payments total at least 90% of the tax due for the current year. 
B)  the estimated payments total at least 100% of the tax due for the prior year. 
C)  the estimated payments total at least 110% of the tax due for the prior year. 
D)  the estimated tax is less than $1,000. 
A)  the estimated payments total at least 90% of the tax due for the current year. 
B)  the estimated payments total at least 100% of the tax due for the prior year. 
C)  the estimated payments total at least 110% of the tax due for the prior year. 
D)  the estimated tax is less than $1,000.

Question 10

In the fall of 2016, James went back to school to earn a master of accountancy degree. He incurred $7,000 of qualified educational expenses and his modified AGI for the year was $40,000. His Lifetime Learning Credit is

Accepted Answer

A)  $1,000. 
B)  $1,400. 
C)  $1,800. 
D)  $2,500. 
A)  $1,000. 
B)  $1,400. 
C)  $1,800. 
D)  $2,500.

Question 11

Tom and Anita are married, file a joint return with an AGI of $165,000, and have one dependent child, Tim, who is a first-time freshman in college. The following expenses are incurred and paid in 2016:
 $\begin{array}{ll}
\text { Tuition, fees and textbooks } & \$ 11,000 \
\text { Room and board } & \$ 5,000
\end{array}$
 What is the maximum education credit allowed to Tom and Anita?

Accepted Answer

Tim is eligible for the American Opportu

Question 12

Claire accepts a new job. She will have access to health insurance coverage through her employer. The employer's policy meets the criteria for affordable minimum essential coverage. Claire prefers to purchase her own insurance policy through the state or federal exchange so she can retain access to her doctor. Assuming Claire's income is within the parameters specified, she will be eligible for the health insurance premium assistance credit.

Accepted Answer

A) True 
 B)False

Question 13

George and Meredith who are married, have a regular tax liability of $22,783 based on regular taxable income of $125,000. This year they generated tax preferences of $25,000, and positive adjustments attributable to limitations on itemized deductions of $18,700. In determining regular taxable income, they had claimed $12,150 of personal and dependency exemptions for themselves and their 20-year old dependent daughter. What is George and Meredith's alternative minimum tax for 2016?

Accepted Answer

*$83,800 -

Question 14

For purposes of the limitation on qualifying expenses for the child and dependent care credit, a spouse who is either a full-time student or is incapacitated is deemed to have earned income of $250 per month, or $500 per month if there are two or more qualifying individuals in the household.

Accepted Answer

A) True 
 B)False

Question 15

In computing AMTI, all of the following must be added back except

Accepted Answer

A)  home mortgage interest (on mortgage in effect since home was purchased). 
B)  state income taxes. 
C)  unreimbursed employee business expenses. 
D)  property taxes on an individual's home. 
A)  home mortgage interest (on mortgage in effect since home was purchased). 
B)  state income taxes. 
C)  unreimbursed employee business expenses. 
D)  property taxes on an individual's home.

Question 16

Ivan has generated the following taxes and credits this year:
 $\begin{array}{lc}
\text { Regular tax } & \$ 38,000 \
\text { Tentative minimum tax } & 28,000 \
\text { Dependent care credit } & 1,200 \
\text { Lifetime Learning credit } & 800 \
\text { General business credits } & 35,000
\end{array}$ How much general business credit will he apply to the current year tax liability?

Accepted Answer

@#IMG-DLM& The general business credit is applied

Question 17

A couple has filed a joint tax return since they were first married. Because of self-employment income and significant investment income, they have made joint quarterly estimated tax payments. Before year-end the couple has divorced, and they will each file their own individual returns. The estimated payments made jointly while still married earlier in the year will be divided evenly between the two individual returns.

Accepted Answer

A) True 
 B)False

Question 18

Assume a taxpayer projects that his total income tax for the year will $25,000. A taxpayer with savings should prefer to structure his tax prepayments so that he will receive a tax refund of $2,500 rather than a tax due of $2,500.

Accepted Answer

A) True 
 B)False

Question 19

An example of an AMT tax preference item is the excess of MACRS depreciation on equipment over depreciation computed by using the the 150% declining balance method.

Accepted Answer

A) True 
 B)False

Question 20

A corporation has $100,000 of U.S. source taxable income and $300,000 of foreign source taxable income from countries X and Y for a total worldwide taxable income of $400,000. Countries X and Y levy a total of $60,000 in foreign taxes upon the foreign source taxable income. U.S. taxes before credits are $140,000. The foreign tax credit limitation is

Accepted Answer

A)  $35,000. 
B)  $60,000. 
C)  $80,000. 
D)  $105,000. 
A)  $35,000. 
B)  $60,000. 
C)  $80,000. 
D)  $105,000.

Exam 29: Special Tax Computation Methods, Tax Credits, and Payment of Tax

The general business credit includes all of the following with the exception of

Harley's tentative minimum tax is computed by multiplying the AMT tax rates by her

In computing AMTI, adjustments are

The adoption credit based on qualified adoption expenses is generally allowed in the year the adoption is finalized.

In lieu of a foreign tax credit, a taxpayer may elect to take a deduction for foreign taxes paid or accrued.

For purposes of the child and dependent care credit, qualifying employment-related expenses cannot include payments to a relative.

In the fall of 2016, James went back to school to earn a master of accountancy degree. He incurred $7,000 of qualified educational expenses and his modified AGI for the year was $40,000. His Lifetime Learning Credit is

For purposes of the limitation on qualifying expenses for the child and dependent care credit, a spouse who is either a full-time student or is incapacitated is deemed to have earned income of $250 per month, or $500 per month if there are two or more qualifying individuals in the household.

In computing AMTI, all of the following must be added back except

Ivan has generated the following taxes and credits this year: Regular tax \ 38,000 Tentative minimum tax 28,000 Dependent care credit 1,200 Lifetime Learning credit 800 General business credits 35,000 How much general business credit will he apply to the current year tax liability?

Assume a taxpayer projects that his total income tax for the year will $25,000. A taxpayer with savings should prefer to structure his tax prepayments so that he will receive a tax refund of $2,500 rather than a tax due of $2,500.

An example of an AMT tax preference item is the excess of MACRS depreciation on equipment over depreciation computed by using the the 150% declining balance method.

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

an Introduction to Taxation

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Depreciation, Cost Recovery, Amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Section 1231 and Recapture

Filters