Question 1

During 2018, Addison has the following gains and losses:
   
a. How much is Addison's tax liability if she is in the 12% tax bracket?
b. If her tax bracket is 32% (not 12%)?

Accepted Answer

a. $0. After the initial netting process

Question 2

Stuart has a short-term capital loss, a collectible long-term capital gain, and a long-term capital gain from land held as investment. The short-term loss is first applied to the collectible capital gain.

Accepted Answer

A) True 
 B)False

Question 3

The filing status of a taxpayer (e.g., single, head of household) must be identified before the applicable standard deduction is determined.

Accepted Answer

A) True 
 B)False

Question 4

Kyle, whose wife died in December 2015, filed a joint tax return for 2015. He did not remarry, but has continued to maintain his home in which his two dependent children live. What is Kyle's filing status in 2018?

Accepted Answer

A)  Head of household 
B)  Surviving spouse 
C)  Single 
D)  Married filing separately 
E)  None of these 
A)  Head of household 
B)  Surviving spouse 
C)  Single 
D)  Married filing separately 
E)  None of these

Question 5

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 family friend who is supported by and lives with the taxpayer.

Accepted Answer

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

Question 6

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.
-An ex-husband (divorce occurred last year) who lives with taxpayer.

Accepted Answer

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

Question 7

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.
-Resident of Canada or Mexico

Accepted Answer

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

Question 8

A taxpayer who itemizes must use Form 1040, and cannot use Form 1040EZ or Form 1040A.

Accepted Answer

A) True 
 B)False

Question 9

Katrina, age 16, is claimed as a dependent by her parents. During 2018, she earned $5,600 as a checker at a grocery store. Her standard deduction is $5,950 ($5,600 earned income + $350).

Accepted Answer

A) True 
 B)False

Question 10

During the year, Kim sold the following assets: business auto for a $1,000 loss, stock investment for a $1,000 loss, and pleasure yacht for a $1,000 loss. Presuming adequate income, how much of these losses may Kim claim?

Accepted Answer

A)  $0. 
B)  $1,000. 
C)  $2,000. 
D)  $3,000. 
E)  None of these. 
A)  $0. 
B)  $1,000. 
C)  $2,000. 
D)  $3,000. 
E)  None of these.

Question 11

A child who is married cannot be subject to the kiddie tax.

Accepted Answer

A) True 
 B)False

Question 12

Buddy and Hazel are ages 72 and 71 and file a joint return. If they have itemized deductions of $25,100 for 2018, they should not claim the standard deduction.

Accepted Answer

A) True 
 B)False

Question 13

Currently, the top income tax rate in effect is not the highest it has ever been.

Accepted Answer

A) True 
 B)False

Question 14

When filing their Federal income tax returns, the Youngs always claimed the standard deduction. After they purchased a home, however, they started to itemize their deductions from AGI.
a. Explain the reason for the change.
b. Suppose they purchased the home in November 2017, but did not start itemizing until tax year 2018. Why the delay as to itemizing?

Accepted Answer

a. The interest on the home mortgage and

Question 15

Which, if any, of the following is a correct statement relating to the kiddie tax in 2018?

Accepted Answer

A)  If the parents are divorced, the income of the noncustodial parent is used to determine the allocable parental tax. 
B)  The components for the application of the kiddie tax are not subject to adjustment for inflation. 
C)  If the kiddie tax applies, the parents must include the income of the child on their own income tax return. 
D)  The kiddie tax does not apply if both parents of the child are deceased. 
E)  None of these. 
A)  If the parents are divorced, the income of the noncustodial parent is used to determine the allocable parental tax. 
B)  The components for the application of the kiddie tax are not subject to adjustment for inflation. 
C)  If the kiddie tax applies, the parents must include the income of the child on their own income tax return. 
D)  The kiddie tax does not apply if both parents of the child are deceased. 
E)  None of these.

Question 16

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.
-Long-term capital gains

Accepted Answer

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

Question 17

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.
-Average income tax rate

Accepted Answer

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

Question 18

In January 2018, Jake's wife dies and he does not remarry. For tax year 2018, Jake may not be able to use the filing status available to married persons filing joint returns.

Accepted Answer

A) True 
 B)False

Question 19

For tax purposes, married persons filing separate returns are treated the same as single taxpayers.

Accepted Answer

A) True 
 B)False

Question 20

In which, if any, of the following situations may the individual not be claimed as a dependent of the taxpayer?

Accepted Answer

A)  A former spouse who lives with the taxpayer (divorce took place last year). 
B)  A stepmother who does not live with the taxpayer. 
C)  A married daughter who lives with the taxpayer. 
D)  A half-brother who does not live with the taxpayer and is a citizen and resident of Honduras. 
E)  A cousin who lives with the taxpayer. 
A)  A former spouse who lives with the taxpayer (divorce took place last year). 
B)  A stepmother who does not live with the taxpayer. 
C)  A married daughter who lives with the taxpayer. 
D)  A half-brother who does not live with the taxpayer and is a citizen and resident of Honduras. 
E)  A cousin who lives with the taxpayer.

Exam 3: Computing the Tax

During 2018, Addison has the following gains and losses: a. How much is Addison's tax liability if she is in the 12% tax bracket? b. If her tax bracket is 32% (not 12%)?

Stuart has a short-term capital loss, a collectible long-term capital gain, and a long-term capital gain from land held as investment. The short-term loss is first applied to the collectible capital gain.

The filing status of a taxpayer (e.g., single, head of household) must be identified before the applicable standard deduction is determined.

Kyle, whose wife died in December 2015, filed a joint tax return for 2015. He did not remarry, but has continued to maintain his home in which his two dependent children live. What is Kyle's filing status in 2018?

A taxpayer who itemizes must use Form 1040, and cannot use Form 1040EZ or Form 1040A.

Katrina, age 16, is claimed as a dependent by her parents. During 2018, she earned $5,600 as a checker at a grocery store. Her standard deduction is $5,950 ($5,600 earned income + $350).

During the year, Kim sold the following assets: business auto for a $1,000 loss, stock investment for a $1,000 loss, and pleasure yacht for a $1,000 loss. Presuming adequate income, how much of these losses may Kim claim?

A child who is married cannot be subject to the kiddie tax.

Buddy and Hazel are ages 72 and 71 and file a joint return. If they have itemized deductions of $25,100 for 2018, they should not claim the standard deduction.

Currently, the top income tax rate in effect is not the highest it has ever been.

Which, if any, of the following is a correct statement relating to the kiddie tax in 2018?

In January 2018, Jake's wife dies and he does not remarry. For tax year 2018, Jake may not be able to use the filing status available to married persons filing joint returns.

For tax purposes, married persons filing separate returns are treated the same as single taxpayers.

In which, if any, of the following situations may the individual not be claimed as a dependent of the taxpayer?

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