Question 1

The oldest age at which the "Kiddie Tax" could apply to a dependent child is

Accepted Answer

A) 17. 
B) 18. 
C) 20. 
D) 23. 
A) 17. 
B) 18. 
C) 20. 
D) 23.

Question 2

If a single taxpayer with a marginal tax rate of 24% has a long-term capital gain,it is taxed at

Accepted Answer

A) 0%. 
B) 20%. 
C) 25%. 
D) 15%. 
A) 0%. 
B) 20%. 
C) 25%. 
D) 15%.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

The regular standard deduction is available to which one of the following taxpayers?

Accepted Answer

A) a married taxpayer filing a separate return where the other spouse itemizes 
B) a person who has only unearned income and is a dependent of another 
C) a nonresident alien 
D) None of the above. 
A) a married taxpayer filing a separate return where the other spouse itemizes 
B) a person who has only unearned income and is a dependent of another 
C) a nonresident alien 
D) None of the above.

Question 5

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.Which of the following statements is correct regarding the number of dependents Anita can claim?

Accepted Answer

A) Anita can claim her daughter,but not her son,as a dependent. 
B) Anita can claim her son,but not her daughter,as a dependent. 
C) Both the son and daughter qualify as Anita's dependents. 
D) Neither the daughter nor the son qualify as Anita's dependent. 
A) Anita can claim her daughter,but not her son,as a dependent. 
B) Anita can claim her son,but not her daughter,as a dependent. 
C) Both the son and daughter qualify as Anita's dependents. 
D) Neither the daughter nor the son qualify as Anita's dependent.

Question 6

Although exclusions are usually not reported on an individual's income tax return,interest income on state and local government bonds must be reported on the tax return.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Tobe is a 22-year-old college student with $5,000 of interest income and $6,000 of earned income.Kiddie tax will apply to him if

Accepted Answer

A) he is a part-time student and the cost of his support exceeds $12,000. 
B) he is a part-time student and the cost of his support is $12,000 or less. 
C) he is a full-time student and the cost of his support exceeds $12,000. 
D) he is a full-time student and the cost of his support is $12,000 or less. 
A) he is a part-time student and the cost of his support exceeds $12,000. 
B) he is a part-time student and the cost of his support is $12,000 or less. 
C) he is a full-time student and the cost of his support exceeds $12,000. 
D) he is a full-time student and the cost of his support is $12,000 or less.

Question 9

Sarah,who is single,maintains a home in which she,her 15-year-old brother,and her 21-year-old niece live.Sarah provides the majority of the support for her brother,her niece,and her cousin,age 18,who is enrolled full-time at the university and lives in an apartment.While the niece and cousin have no income,her brother has a part-time job and earns $4,500 per year.How many dependents may Sarah claim?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) None 
A) 1 
B) 2 
C) 3 
D) None

Question 10

Ryan and Edith file a joint return showing $420,000 of AGI.They have three dependent children ages 7,9,and 13.What is the amount of their child credit?

Accepted Answer

A) $0 
B) $2,000 
C) $5,000 
D) $6,000 
A) $0 
B) $2,000 
C) $5,000 
D) $6,000

Question 11

A child credit is a partially refundable credit.

Accepted Answer

A) True 
 B)False

Question 12

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).

Accepted Answer

A) True 
 B)False

Question 13

Rose and Steve are a married couple with two qualifying children.Lily is a 15-year-old high school student,and Sam is a 21-year-old college student.The couple reports AGI of $165,000.The couple is entitled to child and dependent credits of

Accepted Answer

A) $2,000. 
B) $4,000. 
C) $1,000. 
D) $2,500. 
A) $2,000. 
B) $4,000. 
C) $1,000. 
D) $2,500.

Question 14

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 claim the child as a dependent.

Accepted Answer

A) True 
 B)False

Question 15

A daughter or son may not satisfy the criteria to be considered a qualifying child but may still qualify as a dependent.

Accepted Answer

A) True 
 B)False

Question 16

Divya is age 22 and a full-time student with $8,000 of income from part-time and summer jobs and $2,600 of interest and dividend income.The total cost of her support for the year is $15,000.Divya is not subject to the kiddie tax.

Accepted Answer

A) True 
 B)False

Question 17

Ava reports income from a sole proprietorship,earning interest on bank accounts and gains on sales of stock.In addition to the Form 1040,she will need to file

Accepted Answer

A) Form 1099. 
B) Schedule 1. 
C) Schedule 2. 
D) none of the above. 
A) Form 1099. 
B) Schedule 1. 
C) Schedule 2. 
D) none of the above.

Question 18

A single taxpayer provided the following information for 2019: $$\begin{array} { | l | r | } 
\hline \text { Salary } & \$ 80,000 \
\hline \text { Interest on local government bonds } & 4,000 \
\text { (qualifies as a tax exclusion) } & \
\hline \text { Allowable itemized deductions } & 13,000 \
\hline
\end{array}$$ What is taxable income?

Accepted Answer

A) $71,000 
B) $67,800 
C) $80,000 
D) $67,000 
A) $71,000 
B) $67,800 
C) $80,000 
D) $67,000

Question 19

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 $6,000 of income from other sources and other itemized deductions of $13,000.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 2019 income tax assuming she operates the business as a proprietorship,an S corporation,and a C corporation.Ignore payroll and other taxes.

Accepted Answer

@#IMG-DLM& *Sole proprietorship: 20% × $100,000; S

Question 20

Silver Inc.is an S corporation.This year it earned $60,000 of taxable income and paid a $10,000 distribution to Daisy,its sole shareholder.Daisy has a marginal tax rate of 24%.Due to the corporation's results and the distribution paid,the IRS will receive total taxes of

Accepted Answer

A) $12,600. 
B) $14,400. 
C) $14,100. 
D) $11,520. 
A) $12,600. 
B) $14,400. 
C) $14,100. 
D) $11,520.

Exam 18: Determination of Tax

The oldest age at which the "Kiddie Tax" could apply to a dependent child is

If a single taxpayer with a marginal tax rate of 24% has a long-term capital gain,it is taxed at

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

The regular standard deduction is available to which one of the following taxpayers?

Although exclusions are usually not reported on an individual's income tax return,interest income on state and local government bonds must be reported on the tax return.

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

Tobe is a 22-year-old college student with $5,000 of interest income and $6,000 of earned income.Kiddie tax will apply to him if

Ryan and Edith file a joint return showing $420,000 of AGI.They have three dependent children ages 7,9,and 13.What is the amount of their child credit?

A child credit is a partially refundable credit.

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).

Rose and Steve are a married couple with two qualifying children.Lily is a 15-year-old high school student,and Sam is a 21-year-old college student.The couple reports AGI of $165,000.The couple is entitled to child and dependent credits of

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 claim the child as a dependent.

A daughter or son may not satisfy the criteria to be considered a qualifying child but may still qualify as a dependent.

Divya is age 22 and a full-time student with $8,000 of income from part-time and summer jobs and $2,600 of interest and dividend income.The total cost of her support for the year is $15,000.Divya is not subject to the kiddie tax.

Ava reports income from a sole proprietorship,earning interest on bank accounts and gains on sales of stock.In addition to the Form 1040,she will need to file

A single taxpayer provided the following information for 2019: Salary \ 80,000 Interest on local government bonds 4,000 (qualifies as a tax exclusion) Allowable itemized deductions 13,000 What is taxable income?

Silver Inc.is an S corporation.This year it earned $60,000 of taxable income and paid a $10,000 distribution to Daisy,its sole shareholder.Daisy has a marginal tax rate of 24%.Due to the corporation's results and the distribution paid,the IRS will receive total taxes of

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