Question 1

Marguerite and Josephus have two children,ages 13 and 10.Their modified AGI is $410,500.What is their child tax credit?

Accepted Answer

A) $2,900 
B) $2,000 
C) $4,000 
D) $1,450. 
A) $2,900 
B) $2,000 
C) $4,000 
D) $1,450.

Question 2

Form 6251,Alternative Minimum Tax,must be filed in any of the following situations except

Accepted Answer

A) the taxpayer has general business tax credits that are limited by the tentative minimum tax. 
B) the AMT base exceeds the exemption amounts and an individual has AMT adjustments or tax preference items. 
C) the tentative minimum tax exceeds the regular tax. 
D) the earned income tax credit exceeds the tentative minimum tax. 
A) the taxpayer has general business tax credits that are limited by the tentative minimum tax. 
B) the AMT base exceeds the exemption amounts and an individual has AMT adjustments or tax preference items. 
C) the tentative minimum tax exceeds the regular tax. 
D) the earned income tax credit exceeds the tentative minimum tax.

Question 3

If an individual is classified as an employee,the employer is required to withhold the employee's share of the FICA tax and to provide a matching amount.

Accepted Answer

A) True 
 B)False

Question 4

One-half of the self-employment tax imposed is allowed as a for AGI deduction.

Accepted Answer

A) True 
 B)False

Question 5

Evan and Barbara incurred qualified adoption expenses in 2018 of $6,000,and then incurred $9,000 more in 2019 when the adoption of their child became final.Their 2018 AGI was $110,000 and their 2019 AGI was $100,000.The allowable adoption credit is

Accepted Answer

A) $14,080 in 2019. 
B) $15,000 in 2019. 
C) $6,000 in 2018 and $8,080 in 2019. 
D) $6,000 in 2018 and $9,000 in 2019. 
A) $14,080 in 2019. 
B) $15,000 in 2019. 
C) $6,000 in 2018 and $8,080 in 2019. 
D) $6,000 in 2018 and $9,000 in 2019.

Question 6

An individual taxpayer who is self-employed and an active investor has qualified for foreign tax credits,nonrefundable personal tax credits and general business credits.Because he knows there are differing limitations on the application of these credits,with resulting interrelated aspects,he wants to know the appropriate order for their application.The appropriate order of the application of these three classes of tax credits is as follows

Accepted Answer

A) (1)foreign tax credits; (2)general business credits; (3)nonrefundable personal tax credits. 
B) (1)general business credits; (2)foreign tax credits; (3)nonrefundable personal tax credits. 
C) (1)foreign tax credits; (2)nonrefundable personal tax credits; (3)general business credits. 
D) (1)nonrefundable personal tax credits; (2)foreign tax credits; (3)general business credits. 
A) (1)foreign tax credits; (2)general business credits; (3)nonrefundable personal tax credits. 
B) (1)general business credits; (2)foreign tax credits; (3)nonrefundable personal tax credits. 
C) (1)foreign tax credits; (2)nonrefundable personal tax credits; (3)general business credits. 
D) (1)nonrefundable personal tax credits; (2)foreign tax credits; (3)general business credits.

Question 7

In the fall of 2019,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 8

Max and Alexandra are married and incur $5,500 of qualifying expenses to care for their two children,ages 2 and 5.Max's earned income is $35,000 and Alexandra's earnings from a part-time job are $5,000.What is the amount of the qualifying expenses for purposes of computing the child and dependent care credit?

Accepted Answer

A) $3,000 
B) $5,000 
C) $5,500 
D) $6,000 
A) $3,000 
B) $5,000 
C) $5,500 
D) $6,000

Question 9

Marvin and Pamela are married,file a joint return,and have two children,ages 9 and 11.Their combined AGI is $65,000.Marvin's earned income is $40,000; Pamela's is $25,000.They incur $6,500 of child care expenses to enable them to be employed during the current year.Their child and dependent care credit is

Accepted Answer

A) $1,200. 
B) $1,300. 
C) $1,800. 
D) $6,000. 
A) $1,200. 
B) $1,300. 
C) $1,800. 
D) $6,000.

Question 10

A self-employed individual has earnings from his business of $300,000 in 2019.For the earnings in excess of $132,900,he will only have to pay the 2.9% Medicare Tax.

Accepted Answer

A) True 
 B)False

Question 11

For purposes of the AMT,certain itemized deductions are disallowed,but the standard deduction is allowed.

Accepted Answer

A) True 
 B)False

Question 12

Dwayne has general business credits totaling $30,000 before limitation.His regular tax liability is $83,000 and his tentative minimum tax is $79,000.What amount of general business credit can Dwayne take this year?

Accepted Answer

A) $4,000 
B) $14,500 
C) $25,000 
D) $30,000 
A) $4,000 
B) $14,500 
C) $25,000 
D) $30,000

Question 13

Joe,who is single with modified AGI of $84,000,is sending his son to his first year of college.The total tuition and related payments during the year amounted to $18,000.Joe has not taken advantage of any other type of tax benefit related to educational expenses.His American Opportunity Tax Credit is

Accepted Answer

A) $0. 
B) $1,000. 
C) $1,500. 
D) $2,500. 
A) $0. 
B) $1,000. 
C) $1,500. 
D) $2,500.

Question 14

Nonrefundable personal tax credits can only offset an individual's regular tax,not AMT.

Accepted Answer

A) True 
 B)False

Question 15

Layla earned $20,000 of general business credits from her sole proprietorship.Her regular tax liability is $45,000,and her tentative minimum tax is $49,000.During the current year Layla will apply general business credits of

Accepted Answer

A) $0. 
B) $4,000. 
C) $20,000. 
D) $45,000. 
A) $0. 
B) $4,000. 
C) $20,000. 
D) $45,000.

Question 16

Qualified tuition and related expenses eligible for the American Opportunity Tax Credit are limited to those incurred the first two years of postsecondary education.

Accepted Answer

A) True 
 B)False

Question 17

Carlotta has $50,000 foreign-source income and $150,000 worldwide income.Her U.S.tax on her worldwide income is $30,175,and she paid foreign taxes of $9,000.What is the Carlotta's foreign tax credit?

Accepted Answer

A) $3,000 
B) $9,000 
C) $10,058 
D) $30,290 
A) $3,000 
B) $9,000 
C) $10,058 
D) $30,290

Question 18

Lavonne,a single taxpayer,has a regular tax liability of $11,259 on taxable income of $70,000.She also has tax preferences of $38,000 and positive adjustments attributable to limitations on itemized deductions of $10,000.Lavonne's alternative minimum tax for 2019 is

Accepted Answer

A) $0. 
B) $779. 
C) $12,038. 
D) none of the above. 
A) $0. 
B) $779. 
C) $12,038. 
D) none of the above.

Question 19

Drake and Davina are married and file a joint return for 2019 with taxable income of $100,000 and tax preferences and adjustments of $65,000 for AMT purposes.Their regular tax liability is $13,717.What is the amount of their total tax liability?

Accepted Answer

A) $13,858 
B) $42,900 
C) $25,575 
D) $13,717 
A) $13,858 
B) $42,900 
C) $25,575 
D) $13,717

Question 20

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.Based on her fact pattern,which of the following scenarios will not allow her to avoid underpayment penalties?

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.

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

Marguerite and Josephus have two children,ages 13 and 10.Their modified AGI is $410,500.What is their child tax credit?

Form 6251,Alternative Minimum Tax,must be filed in any of the following situations except

If an individual is classified as an employee,the employer is required to withhold the employee's share of the FICA tax and to provide a matching amount.

One-half of the self-employment tax imposed is allowed as a for AGI deduction.

Evan and Barbara incurred qualified adoption expenses in 2018 of $6,000,and then incurred $9,000 more in 2019 when the adoption of their child became final.Their 2018 AGI was $110,000 and their 2019 AGI was $100,000.The allowable adoption credit is

In the fall of 2019,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

A self-employed individual has earnings from his business of $300,000 in 2019.For the earnings in excess of $132,900,he will only have to pay the 2.9% Medicare Tax.

For purposes of the AMT,certain itemized deductions are disallowed,but the standard deduction is allowed.

Dwayne has general business credits totaling $30,000 before limitation.His regular tax liability is $83,000 and his tentative minimum tax is $79,000.What amount of general business credit can Dwayne take this year?

Nonrefundable personal tax credits can only offset an individual's regular tax,not AMT.

Layla earned $20,000 of general business credits from her sole proprietorship.Her regular tax liability is $45,000,and her tentative minimum tax is $49,000.During the current year Layla will apply general business credits of

Qualified tuition and related expenses eligible for the American Opportunity Tax Credit are limited to those incurred the first two years of postsecondary education.

Carlotta has $50,000 foreign-source income and $150,000 worldwide income.Her U.S.tax on her worldwide income is $30,175,and she paid foreign taxes of $9,000.What is the Carlotta's foreign tax credit?

Lavonne,a single taxpayer,has a regular tax liability of $11,259 on taxable income of $70,000.She also has tax preferences of $38,000 and positive adjustments attributable to limitations on itemized deductions of $10,000.Lavonne's alternative minimum tax for 2019 is

Drake and Davina are married and file a joint return for 2019 with taxable income of $100,000 and tax preferences and adjustments of $65,000 for AMT purposes.Their regular tax liability is $13,717.What is the amount of their total tax liability?

Tax Research

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