Exam 18: Determination of Tax

A married couple in the top tax bracket has a new baby.Due to the birth of the baby their taxable income will be reduced in 2017 by $4,050.

Lester,a widower qualifying as a surviving spouse,has $209,000 of salary,five personal and dependency exemptions and itemizes deductions.Lester must use which form to report his taxable income?

Anna is supported entirely by her three sons John,James,and Joseph who provide for her support in the following percentages: John: 10%,James: 40%,Joseph: 50% Assuming a multiple support declaration exists,which of the brothers may claim his mother as a dependent?

The term "gross income" means the total of all income from any source,but after reduction for exclusions.

Paul and Hannah,who are married and file a joint return,are in the process of adopting a child who is born in December 2017.The child,a son,comes to live with them a week after his birth on December 12.The adoption is not finalized until February of 2018.What tax issues are present in this situation?

Mia is a single taxpayer with projected AGI of $275,000 in 2017.She is considering selling a long-term investment before year-end.She expects to realize a gain of $25,000.If Mia sells the investment by December 31,her 2017 taxable income will increase by $25,000.

Sarah,who is single,maintains a home in which she,her 15-year-old brother,and her 21-year-old niece live.Sarah provides the majority of the support for her brother,her niece,and her cousin,age 18,who is enrolled full-time at the university and lives in an apartment.While the niece and cousin have no income,her brother has a part-time job and earns $4,000 per year.How many personal and dependency exemptions may Sarah claim?

Generally,when a married couple files a joint return,each spouse is liable for one-half of the entire tax and any penalties incurred.

All of the following items are deductions for adjusted gross income except

Amber supports four individuals: Erin,her stepdaughter,who lives with her; Amy,her cousin,who lives in another state; Britney,her friend,who lives legally in Amber's home all year long; and Charlie,her father,who lives in another state.Assume that the dependency requirements other than residence are all met.How many personal and dependency exemptions may Amber claim?

Tony supports the following individuals during the current year: Miranda,his former mother-in-law who lives in her own home and has no gross income; his cousin,Jeff,age 23,who is a full-time student,earns $7,000 during the year,and lives with Tony all year long; and Matt,age 22,who is Tony's brother,is a full-time student living on campus and earns $8,000 during the year.How many dependency exemptions may Tony claim?

If an individual with a marginal tax rate of 39.6% has a long-term capital gain,it is taxed at

An unmarried taxpayer may file as head of household if he maintains a home for his qualifying child.

The standard deduction is the maximum amount of itemized deductions which may be claimed by a taxpayer,and is based on an individual's filing status,age,and vision.

Mr.and Mrs.Kusra are in the top tax bracket.They have just had a baby.The Kusras plan to gift a corporate bond they currently own to the baby.The bond pays $2,100 of interest income per year.The Kusra family overall will save taxes if the bond is transferred to the child.

On June 1,2017,Ellen turned 65.Ellen has been a widow for five years and has no dependents.Her standard deduction is

Charishma is a taxpayer with taxable income exceeding $500,000.She sells a stock for a $50,000 gain.She acquired the stock 13 months earlier.The gain will be taxed at a total tax rate of 20%.

A widow or widower may file a joint tax return and claim an exemption for the deceased spouse in the year of the spouse's death as long as the surviving spouse does not remarry before the end of the year.

Oscar and Diane separated in June of this year although they continue to live in the same town.They have twin sons,Blake and Cliff,who remain in the family home with Diane.Oscar's income this year was $45,000 while Diane worked only part-time and made $15,000.Oscar also gambles heavily but told Diane that he had no winnings this year.What tax issues should they consider?

Nate and Nikki have three dependent children ages 12,15,and 17.Their modified AGI is $120,000.What is the amount of the child credit to which they are entitled?