Exam 3: Taxable Entities, Tax Formula, Introduction to Property Transactions

M, age 65 and single, has no dependents and an A.G.I, of $50,000 and these expenses: medical expenses of $2,200, personal casualty losses of $5,000, real estate taxes of $2,000, and residence mortgage interest of $1,000.In 2012 the taxpayer should deduct which of the following total amounts from A.G.I.?

John, a widower of four years who is supporting his two young (under age 19) daughters, will have a larger standard deduction in 2012 than will Kate, who is single and sharing an apartment with two friends.

Brent, a 19-year-old student at Private University, is financially supported by his parents and does not have a regular job.Brent most likely cannot claim any personal exemption on his return for the current year.

B and D are beneficiaries of a trust that distributed $6,000 out of its taxable earnings to each of them in 20X0.The trust had $11,000 of taxable net income in 20X0.The trust is not required to pay income tax for 20X0.

J and Z, husband and wife, created a trust for J's aging mother, Betty.This year the trust received dividend income of $15,000 and distributed $10,000 to Betty.The taxable income of the trust and Betty is?

Which of the following is not a tax-paying entity under the Federal income tax?

The sole proprietorship business of an individual taxpayer is treated as a separate entity for tax purposes.

The exemption amount is the same for both personal and dependency exemptions.

A corporation is generally entitled to an income tax deduction for cash dividends paid to shareholders because the shareholders are required to include the dividend in gross income.

Ralph and Lauren incorporated their bagel business this year.For tax purposes, the corporation operates as a regular C corporation.For the year, the corporation was profitable, making $300,000 before the owners took any money out of the business.Assuming the corporation paid Ralph a salary of $40,000 and Lauren a salary of $60,000 and also paid each a dividend of $20,000 to each ($40,000 in total), what is the corporation's taxable income? (Ignore payroll taxes)

Which one of the following is not true of the tax treatment of fiduciaries?

An S corporation generally pays no tax on the taxable income it generates.

Long-term capital gains may be taxed at 15 percent for a taxpayer whose gains would otherwise be taxed at 31 percent.

The income of a child under age 19 is taxed to the parent.

Sandy and Dave formed a law partnership, agreeing to split the income 50:50.The partnership had net income of $100,000.Dave withdrew $35,000 throughout the year, and Sandy withdrew $30,000.Dave and Sandy had no other income.The partnership must pay taxes on income of

V is single for tax purposes, has itemized deductions totaling $5,600 and is entitled to one $3,800 exemption deduction for 2012.V should itemize her deductions in 2012.

Capital losses of individuals in excess of the $3,000 annual limit may be carried forward indefinitely to future tax years, but may not be carried back to prior years.

Which of the following is a capital asset?

The standard deduction is an amount that one deducts in addition to one's itemized deductions.

Why are deductions of individual taxpayers broken down into these two groups: (1) deductions for A.G.I.and (2) deductions from A.G.I.?