Question 1

Regarding the rules applicable to filing of income tax returns, which, if any, of the following is an incorrect statement:

Accepted Answer

A)  Married persons who file joint returns cannot later (after the due date of the return) substitute separate returns. 
B)  Married persons who file separate returns can later (after the due date of the return) substitute a joint return. 
C)  The usual test as to when a taxpayer must file a return is based on the total of the following: personal exemption + basic standard deduction + both additional standard deductions. 
D)  Special filing requirement rules exist for taxpayers who are claimed as dependents of another. 
E)  None of these. 
A)  Married persons who file joint returns cannot later (after the due date of the return) substitute separate returns. 
B)  Married persons who file separate returns can later (after the due date of the return) substitute a joint return. 
C)  The usual test as to when a taxpayer must file a return is based on the total of the following: personal exemption + basic standard deduction + both additional standard deductions. 
D)  Special filing requirement rules exist for taxpayers who are claimed as dependents of another. 
E)  None of these.

Question 2

Match the statements that relate to each other. Note: Some choices may be used more than once.
a. Not available to 65-year old taxpayer who itemizes.
b. Exception for U.S. citizenship or residency test (for dependency exemption purposes).
c. Largest basic standard deduction available to a dependent who has no earned income.
d. Considered for dependency purposes.
e. Qualifies for head of household filing status.
f. A child (age 15) who is a dependent and has only earned income.
g. Considered in applying gross income test (for dependency exemption purposes).
h. Not considered in applying the gross income test (for dependency exemption purposes). 
i. Unmarried taxpayer who can use the same tax rates as married persons filing jointly.
j. Exception to the support test (for dependency exemption purposes).
k. A child (age 16) who is a dependent and has only unearned income of $4,500. 
l. No correct match provided.
-Multiple support agreement

Accepted Answer

The answer of Match the statements that relate to each...

Question 3

Hunter (age 68) and his wife Jenelle (age 70) file a joint return. They furnish all of the support of Luther (Hunter's90-year old father), who lives with them. In 2018, they received $6,000 of interest income on city of Chicago bonds and interest and dividend income on corporate stocks and bonds of $50,000. Compute Hunter and Jenelle's taxable income for 2018.

Accepted Answer

$23,400. Their gross income is $50,000 s

Question 4

Adjusted gross income (AGI) appears at the bottom of page 1 and at the top of page 2 of Form 1040.

Accepted Answer

A) True 
 B)False

Question 5

Warren, age 17, is claimed as a dependent by his father. In 2018, Warren has dividend income of $1,500 and earns $400 from a part-time job.
a. What is Warren's taxable income for 2018?
b. Suppose Warren earned $1,200 (not $400) from the part-time job. What is Warren's taxable income for 2018?

Accepted Answer

a. $850. Warren's standard deduction is

Question 6

Albert buys his mother a TV. For purposes of meeting the support test, Albert cannot include the cost of the TV.

Accepted Answer

A) True 
 B)False

Question 7

Married taxpayers who file separately cannot later (i.e., after the due date for filing) change to a joint return.

Accepted Answer

A) True 
 B)False

Question 8

Match the statements that relate to each other. Note: Choice l. may be used more than once.
a. Available to a 70-year-old father claimed as a dependent by his son.
b. Equal to tax liability divided by taxable income.
c. The highest income tax rate applicable to a taxpayer.
d. Not eligible for the standard deduction.
e. No one qualified taxpayer meets the support test. 
f. Taxpayer's ex-husband does not qualify.
g. A dependent child (age 18) who has only unearned income.
h. Highest applicable rate is 37%.
i. Applicable rate could be as low as 0%. 
j. Maximum rate is 28%.
k. No correct match provided.
-Additional standard deduction

Accepted Answer

The answer of Match the statements that relate to each...

Question 9

During 2018, Lisa (age 66) furnished more than 50% of the support of the following persons:
? Lisa's current husband who has no income and is not claimed by someone else as a dependent.
? Lisa's stepson (age 19) who lives with her and earns $6,000 as a dance instructor. He dropped out of school a year ago.
? Lisa's ex-husband who does not live with her. The divorce occurred two years ago.
? Lisa's former brother-in-law who does not live with her.
Presuming all other dependency tests are met, on a separate return how many dependents may Lisa claim?

Accepted Answer

A)  Two 
B)  Three 
C)  Four 
D)  Five 
E)  None of these 
A)  Two 
B)  Three 
C)  Four 
D)  Five 
E)  None of these

Question 10

Regarding classification as a dependent, classify each statement in one of the four categories:
a. Could be a qualifying child.
b. Could be a qualifying relative.
c. Could be either a qualifying child or a qualifying relative.
d. Could be neither a qualifying child nor a qualifying relative.
-A nephew who lives with taxpayer.

Accepted Answer

The answer of Regarding classification as a dependent, classify each...

Question 11

When can a taxpayer not use Form 1040EZ? Form 1040A?

Accepted Answer

Form 1040EZ cannot be used when the taxp

Question 12

Harpreet, whose husband died in December 2017, maintains a household in which her dependent mother lives. Which (if any) of the following is her filing status for the tax year 2018? (Note: Harpreet is the executor of her husband's estate.)

Accepted Answer

A)  Single 
B)  Married, filing separately 
C)  Surviving spouse 
D)  Head of household 
E)  Married, filing jointly 
A)  Single 
B)  Married, filing separately 
C)  Surviving spouse 
D)  Head of household 
E)  Married, filing jointly

Question 13

Regarding classification as a dependent, classify each statement in one of the four categories:
a. Could be a qualifying child.
b. Could be a qualifying relative.
c. Could be either a qualifying child or a qualifying relative.
d. Could be neither a qualifying child nor a qualifying relative.
-A daughter-in-law who lives with taxpayer.

Accepted Answer

The answer of Regarding classification as a dependent, classify each...

Question 14

A qualifying child cannot include:

Accepted Answer

A)  A nonresident alien. 
B)  A married son who files a joint return. 
C)  A daughter who is away at college. 
D)  A brother who is 28 years of age and disabled. 
E)  A grandmother. 
A)  A nonresident alien. 
B)  A married son who files a joint return. 
C)  A daughter who is away at college. 
D)  A brother who is 28 years of age and disabled. 
E)  A grandmother.

Question 15

Deductions for AGI are often referred to as "above-the-line" or "page 1" deductions. Explain.

Accepted Answer

"Above the line" means before

Question 16

In early 2018, Ben sold a yacht, held for 9 months and for pleasure, for a $5,000 gain. Concerned about offsetting the gain before year-end, Ben is considering selling one of the following-each of which would yield a $5,000 loss:
? Houseboat used for recreation.
? Truck used in business.
? Stock investment held for 13 months.
Evaluate each choice.

Accepted Answer

The sale of the houseboat produces no be

Question 17

Ellen, age 39 and single, furnishes more than 50% of the support of her parents, who do not live with her? their only source of income are Social Security benefits. Ellen practices as a self-employed interior decorator and has gross income in 2018 of $120,000. Helen has $30,000 of business deductions and $8,100 of itemized deductions.
a. Can Ellen qualify for head of household filing status? Explain.
b. What is Ellen's taxable income for 2018?
c. What is Ellen's dependent tax credit (if any)?

Accepted Answer

a. Ellen can qualify for head of househo

Question 18

Regarding classification as a dependent, classify each statement in one of the four categories:
a. Could be a qualifying child.
b. Could be a qualifying relative.
c. Could be either a qualifying child or a qualifying relative.
d. Could be neither a qualifying child nor a qualifying relative.
-A half-brother who lives with taxpayer.

Accepted Answer

The answer of Regarding classification as a dependent, classify each...

Question 19

In determining the filing requirement based on gross income received, both additional standard deductions (i.e., age and blindness) are taken into account.

Accepted Answer

A) True 
 B)False

Question 20

Match the statements that relate to each other. Note: Some choices may be used more than once.
a. Not available to 65-year old taxpayer who itemizes.
b. Exception for U.S. citizenship or residency test (for dependency exemption purposes).
c. Largest basic standard deduction available to a dependent who has no earned income.
d. Considered for dependency purposes.
e. Qualifies for head of household filing status.
f. A child (age 15) who is a dependent and has only earned income.
g. Considered in applying gross income test (for dependency exemption purposes).
h. Not considered in applying the gross income test (for dependency exemption purposes). 
i. Unmarried taxpayer who can use the same tax rates as married persons filing jointly.
j. Exception to the support test (for dependency exemption purposes).
k. A child (age 16) who is a dependent and has only unearned income of $4,500. 
l. No correct match provided.
-Scholarship funds for room and board

Accepted Answer

The answer of Match the statements that relate to each...

Regarding the rules applicable to filing of income tax returns, which, if any, of the following is an incorrect statement:

Adjusted gross income (AGI) appears at the bottom of page 1 and at the top of page 2 of Form 1040.

Warren, age 17, is claimed as a dependent by his father. In 2018, Warren has dividend income of $1,500 and earns $400 from a part-time job. a. What is Warren's taxable income for 2018? b. Suppose Warren earned $1,200 (not $400) from the part-time job. What is Warren's taxable income for 2018?

Albert buys his mother a TV. For purposes of meeting the support test, Albert cannot include the cost of the TV.

Married taxpayers who file separately cannot later (i.e., after the due date for filing) change to a joint return.

When can a taxpayer not use Form 1040EZ? Form 1040A?

Harpreet, whose husband died in December 2017, maintains a household in which her dependent mother lives. Which (if any) of the following is her filing status for the tax year 2018? (Note: Harpreet is the executor of her husband's estate.)

A qualifying child cannot include:

Deductions for AGI are often referred to as "above-the-line" or "page 1" deductions. Explain.

In determining the filing requirement based on gross income received, both additional standard deductions (i.e., age and blindness) are taken into account.

An Introduction to Taxation and Understanding the Federal Tax Law

Working with the Tax Law

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: In General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses, Section 1231, and Recapture Provisions

Taxing Business Income

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters

Exam 3: Computing the Tax

Regarding the rules applicable to filing of income tax returns, which, if any, of the following is an incorrect statement:

Adjusted gross income (AGI) appears at the bottom of page 1 and at the top of page 2 of Form 1040.

Warren, age 17, is claimed as a dependent by his father. In 2018, Warren has dividend income of $1,500 and earns $400 from a part-time job. a. What is Warren's taxable income for 2018? b. Suppose Warren earned $1,200 (not $400) from the part-time job. What is Warren's taxable income for 2018?

Albert buys his mother a TV. For purposes of meeting the support test, Albert cannot include the cost of the TV.

Married taxpayers who file separately cannot later (i.e., after the due date for filing) change to a joint return.

When can a taxpayer not use Form 1040EZ? Form 1040A?

Harpreet, whose husband died in December 2017, maintains a household in which her dependent mother lives. Which (if any) of the following is her filing status for the tax year 2018? (Note: Harpreet is the executor of her husband's estate.)

A qualifying child cannot include:

Deductions for AGI are often referred to as "above-the-line" or "page 1" deductions. Explain.

In determining the filing requirement based on gross income received, both additional standard deductions (i.e., age and blindness) are taken into account.

An Introduction to Taxation and Understanding the Federal Tax Law

Working with the Tax Law

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: In General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses, Section 1231, and Recapture Provisions

Taxing Business Income

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters