Question 1

All tax-exempt bond interest income is classified as an AMT preference.

Accepted Answer

A) True 
 B)False

Question 2

If an individual is an employee and also has self-employment income,the maximum tax base for computing self-employment tax is reduced by the wages that are subject to the FICA tax.

Accepted Answer

A) True 
 B)False

Question 3

For purposes of the AMT,only the foreign tax credit and refundable personal credits are allowed to reduce the tentative minimum tax.

Accepted Answer

A) True 
 B)False

Question 4

All of the following are self-employment income except

Accepted Answer

A) net income of a sole proprietorship. 
B) dividends received by a corporate shareholder. 
C) fees received for serving as a director of a corporation. 
D) distributive share of partnership income from a partnership operating a business. 
A) net income of a sole proprietorship. 
B) dividends received by a corporate shareholder. 
C) fees received for serving as a director of a corporation. 
D) distributive share of partnership income from a partnership operating a business.

Question 5

A taxpayer acquired an office building to be used in her business this year.For AMT purposes,depreciation must be recalculated using the straight-line method over 40 years.

Accepted Answer

A) True 
 B)False

Question 6

All of the following statements regarding self-employment income/tax are true except

Accepted Answer

A) the self-employment tax is imposed on net earnings from self-employment when self-employment income is over $400. 
B) self-employment tax is computed separately for married individuals filing joint returns. 
C) independent contractors are subject to self-employment tax on the amount of net earnings from the self-employment activity. 
D) employees who have a business in addition to their regular employment are not subject to the self-employment tax since FICA is withheld on their wages. 
A) the self-employment tax is imposed on net earnings from self-employment when self-employment income is over $400. 
B) self-employment tax is computed separately for married individuals filing joint returns. 
C) independent contractors are subject to self-employment tax on the amount of net earnings from the self-employment activity. 
D) employees who have a business in addition to their regular employment are not subject to the self-employment tax since FICA is withheld on their wages.

Question 7

Lara started a self-employed consulting business in the last part of the year and earned $60,000 of self- employment earnings.She had been employed as manager in a consulting firm prior to starting her own business and had earned $175,000.
a.What is Lara's Additional Medicare Tax,if any?
b.What is Lara's deduction for AGI for the Additional Medicare Tax?

Accepted Answer

@#IMG-DLM& b.There is no deduc

Question 8

Runway Corporation has $2 million of gross receipts in the preceding year.For purposes of the disabled access credit,what is the maximum number of full-time employees the corporation can have in the preceding year?

Accepted Answer

A) 10 
B) 15 
C) 20 
D) 30 
A) 10 
B) 15 
C) 20 
D) 30

Question 9

The general business credits are refundable credits.

Accepted Answer

A) True 
 B)False

Question 10

In the fall of 2019,Gina went back to school to earn a master of taxation degree.She incurred $7,000 of qualified educational expenses and her modified AGI for the year was $60,000.Her Lifetime Learning Credit is

Accepted Answer

A) $2,500. 
B) $1,400. 
C) $280. 
D) $1,120. 
A) $2,500. 
B) $1,400. 
C) $280. 
D) $1,120.

Question 11

Patty,a single taxpayer,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 $89,000 in foreign taxes upon the foreign source taxable income.U.S.taxes before credits are $115,194.The foreign tax credit limitation is

Accepted Answer

A) $28,799. 
B) $86,396. 
C) $66,750. 
D) $89,000. 
A) $28,799. 
B) $86,396. 
C) $66,750. 
D) $89,000.

Question 12

In 2019,Rita is divorced with one child.She has AGI of $20,000 resulting in a federal income tax liability of $200 and an earned income credit of $3,374.She has had $550 of federal income taxes withheld from her pay.Rita will receive a federal income refund of

Accepted Answer

A) $550. 
B) $2,624. 
C) $3,174. 
D) $3,724. 
A) $550. 
B) $2,624. 
C) $3,174. 
D) $3,724.

Question 13

Carlotta has $50,000 foreign-source income and $150,000 total worldwide income.Her U.S.tax on her worldwide income is $30,175,and she paid foreign taxes of $16,000.What is the Carlotta's foreign tax credit?

Accepted Answer

A) $5,942 
B) $10,058 
C) $16,000 
D) $5,333 
A) $5,942 
B) $10,058 
C) $16,000 
D) $5,333

Question 14

Business energy tax credits are available to businesses that invest in energy-conserving solar energy properties.

Accepted Answer

A) True 
 B)False

Question 15

To claim the Lifetime Learning Credit,a student must take at least one-half of a full-time course load during the year.

Accepted Answer

A) True 
 B)False

Question 16

A taxpayer's tentative minimum tax exceeds his net income tax so he will be paying the alternative minimum tax this year.The taxpayer has a sole proprietorship through which he has earned general business credits.The taxpayer can reduce his AMT to the extent of his general business credits.

Accepted Answer

A) True 
 B)False

Question 17

A taxpayer will be ineligible for the earned income credit if he or she has disqualified investment income of more than $3,600 in 2019.Disqualified income includes all the following except

Accepted Answer

A) net capital gains. 
B) tax-exempt interest. 
C) net rental income. 
D) self-employment income. 
A) net capital gains. 
B) tax-exempt interest. 
C) net rental income. 
D) self-employment income.

Question 18

Doggie Rx Inc.is a new company developing a tasty chewable pill for dogs that will protect them from all types of fleas,ticks and intestinal parasites.This is its first year of business,and it has spent $500,000 on qualifying research expenditures.Doggie Rx will earned a simplified research credit of

Accepted Answer

A) $30,000. 
B) $70,000. 
C) $15,000. 
D) $250,000. 
A) $30,000. 
B) $70,000. 
C) $15,000. 
D) $250,000.

Question 19

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.This year 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 20

Indie Corporation purchases a building for use in its business at a cost of $100,000.The building was built in 1900 and is a certified historic structure.Indie spends $150,000 on qualifying renovations certified as consistent with the buildings character.Indie will earn a total rehabilitation (historic)tax credit of

Accepted Answer

A) $15,000. 
B) $30,000. 
C) $25,000. 
D) $50,000. 
A) $15,000. 
B) $30,000. 
C) $25,000. 
D) $50,000.

Exam 30: Special Tax Computation Methods,tax Credits,and Payment of Tax

All tax-exempt bond interest income is classified as an AMT preference.

If an individual is an employee and also has self-employment income,the maximum tax base for computing self-employment tax is reduced by the wages that are subject to the FICA tax.

For purposes of the AMT,only the foreign tax credit and refundable personal credits are allowed to reduce the tentative minimum tax.

All of the following are self-employment income except

A taxpayer acquired an office building to be used in her business this year.For AMT purposes,depreciation must be recalculated using the straight-line method over 40 years.

All of the following statements regarding self-employment income/tax are true except

Runway Corporation has $2 million of gross receipts in the preceding year.For purposes of the disabled access credit,what is the maximum number of full-time employees the corporation can have in the preceding year?

The general business credits are refundable credits.

In the fall of 2019,Gina went back to school to earn a master of taxation degree.She incurred $7,000 of qualified educational expenses and her modified AGI for the year was $60,000.Her Lifetime Learning Credit is

In 2019,Rita is divorced with one child.She has AGI of $20,000 resulting in a federal income tax liability of $200 and an earned income credit of $3,374.She has had $550 of federal income taxes withheld from her pay.Rita will receive a federal income refund of

Carlotta has $50,000 foreign-source income and $150,000 total worldwide income.Her U.S.tax on her worldwide income is $30,175,and she paid foreign taxes of $16,000.What is the Carlotta's foreign tax credit?

Business energy tax credits are available to businesses that invest in energy-conserving solar energy properties.

To claim the Lifetime Learning Credit,a student must take at least one-half of a full-time course load during the year.

A taxpayer's tentative minimum tax exceeds his net income tax so he will be paying the alternative minimum tax this year.The taxpayer has a sole proprietorship through which he has earned general business credits.The taxpayer can reduce his AMT to the extent of his general business credits.

A taxpayer will be ineligible for the earned income credit if he or she has disqualified investment income of more than $3,600 in 2019.Disqualified income includes all the following except

Tax Research

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