Exam 16: Introduction to the Taxation of Individuals

In 2013,Ed is 66 and single.If he has itemized deductions of $7,300,he should not claim the standard deduction alternative.

Monique is a resident of the U.S.and a citizen of France.If she files a U.S.income tax return,Monique cannot claim the standard deduction.

During 2013,Ralph made the following contributions to the University of Oregon (a qualified charitable organization): Ralph acquired the stock in Raptor,Inc.,as an investment fourteen months ago at a cost of $42,000.Ralph's AGI for 2013 is $189,000.What is Ralph's charitable contribution deduction for 2013?

Darren,age 20 and not disabled,earns $4,000 during 2013.Darren's parents cannot claim him as a dependent unless he is a full-time student.

Employee business expenses for travel qualify as itemized deductions subject to the 2% floor if they are not reimbursed.

Sarah furnishes more than 50% of the support of her son and daughter-in-law who live with her.If the son and daughter-in-law file a joint return,Sarah cannot claim them as dependents.

Ellen,age 12,lives in the same household with her father,grandfather,and uncle.The cost of maintaining the household is provided by her grandfather (40%)and her uncle (60%).Disregarding tie-breaker rules,Ellen is a qualifying child as to:

For purposes of computing the credit for child and dependent care expenses,the qualifying employment-related expenses are limited to an individual's actual or deemed earned income.

Child care payments to a relative are not eligible for the credit for child and dependent care expenses if the relative is a child (under age 19)of the taxpayer.

Upon the recommendation of a physician,Ed has a swimming pool installed at his residence because of a heart condition.If he is allowed to deduct all or part of the cost of the pool,Ed's increase in utility bills due to the operation of the pool qualifies as a medical expense.

Ronaldo contributed stock worth $12,000 to the Children's Protective Agency,a qualified charity.He acquired the stock twenty months ago for $6,000.He may deduct $6,000 as a charitable contribution deduction (subject to percentage limitations).

Warren,age 17,is claimed as a dependent by his father.In 2013,Warren has dividend income of $1,500 and earns $400 from a part-time job.

Mel is not quite sure whether an expenditure he made is a deduction for AGI or a deduction from AGI.Since he plans to choose the standard deduction option for the year,does the distinction matter? Explain.

Kyle and Liza are married and under 65 years of age.During 2013,they furnish more than half of the support of their 19-year old daughter,May,who lives with them.She graduated from high school in May 2012.May earns $15,000 from a part-time job,most of which she sets aside for future college expenses.Kyle and Liza also provide more than half of the support of Kyle's cousin who lives with them.Liza's father,who died on January 3,2013,at age 90,has for many years qualified as their dependent.How many personal and dependency exemptions should Kyle and Liza claim?

When separate income tax returns are filed by married taxpayers,one spouse cannot claim the other spouse as an exemption.

Herbert is the sole proprietor of a furniture store.He can deduct real property taxes on his store building but he cannot deduct state income taxes related to his net income from the furniture store as a business deduction.

Christie sued her former employer for a back injury she suffered on the job in 2013.As a result of the injury,she was partially disabled.In 2014,she received $240,000 for her loss of future income,$160,000 in punitive damages because of the employer's flagrant disregard for the employee's safety,and $15,000 for medical expenses.The medical expenses were deducted on her 2013 return,reducing her taxable income by $12,000.Christie's 2014 gross income from the above is:

The additional standard deduction for age and blindness is greater for married taxpayers than for single taxpayers.

In terms of income tax consequences,abandoned spouses are treated the same way as married persons filing separate returns.

Katelyn is divorced and maintains a household in which she and her daughter,Crissa,live.Crissa,age 22,earns $11,000 during 2013 as a model.Katelyn does not qualify for head of household filing status.