Question 1

For purposes of the AMT,the standard deduction,but not the personal and dependency exemptions,is allowed.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following expenditures will qualify as a research expenditure for purposes of the research credit?

Accepted Answer

A) An ice cream producer develops a new type of packaging that will keep ice cream frozen while driving home from the grocery store. 
B) An ice cream producer develops a new design on the package that will be more pleasing to the culture of a new market it is entering. 
C) An ice cream producer develops a new marketing campaign to introduce its brand to a new region of the country it is entering. 
D) All of the above qualify as research expenditures for the research credit. 
A) An ice cream producer develops a new type of packaging that will keep ice cream frozen while driving home from the grocery store. 
B) An ice cream producer develops a new design on the package that will be more pleasing to the culture of a new market it is entering. 
C) An ice cream producer develops a new marketing campaign to introduce its brand to a new region of the country it is entering. 
D) All of the above qualify as research expenditures for the research credit. A

Question 3

With respect to estimated tax payments for a taxpayer with AGI of $150,000 or lower in the prior year,all of the following are generally true with the exception of

Accepted Answer

A) no penalty is imposed if the estimated tax is less than $1,000. 
B) no penalty is imposed if the individual has no tax liability for the prior year. 
C) no underpayment penalty is imposed if the estimated payments total at least 90% of the tax due for the current year. 
D) no underpayment penalty is imposed if the estimated payments total at least 90% of the actual tax liability for the prior year. 
A) no penalty is imposed if the estimated tax is less than $1,000. 
B) no penalty is imposed if the individual has no tax liability for the prior year. 
C) no underpayment penalty is imposed if the estimated payments total at least 90% of the tax due for the current year. 
D) no underpayment penalty is imposed if the estimated payments total at least 90% of the actual tax liability for the prior year. D

Question 4

Hawaii,Inc. ,began a child care facility for its employees during the year.The corporation incurred the following expenses:
   What is the amount of Hawaii's credit for employer-provided child care?

Accepted Answer

The credit is ($138,000 × .25)

Question 5

Carlotta,Inc. ,has $50,000 foreign-source income and $150,000 worldwide income.Its U.S.tax on its worldwide income is $42,000,and it paid foreign taxes of $12,000.What is the corporation's foreign tax credit?

Accepted Answer

A) $4,000 
B) $12,000 
C) $14,000 
D) $42,000 
A) $4,000 
B) $12,000 
C) $14,000 
D) $42,000

Question 6

All of the following statements are true regarding the Lifetime Learning Credit except which one?

Accepted Answer

A) In order to qualify for the Lifetime Learning Credit,a student must be enrolled at least 1/2 time. 
B) Qualifying expenses include those for tuition and related fees but not for room and board. 
C) The Lifetime Learning credit may be claimed for any degree or nondegree course at a college or university that helps an individual acquire or improve their job skills. 
D) The Lifetime Learning credit and the American Opportunity Tax credit may not be taken in the same tax year with respect to the same student's tuition and related fees. 
A) In order to qualify for the Lifetime Learning Credit,a student must be enrolled at least 1/2 time. 
B) Qualifying expenses include those for tuition and related fees but not for room and board. 
C) The Lifetime Learning credit may be claimed for any degree or nondegree course at a college or university that helps an individual acquire or improve their job skills. 
D) The Lifetime Learning credit and the American Opportunity Tax credit may not be taken in the same tax year with respect to the same student's tuition and related fees.

Question 7

For purposes of the AMT,only the foreign tax credit and refundable personal credits are allowed to reduce the tentative minimum tax.

Accepted Answer

A) True 
 B)False

Question 8

Tom and Anita are married,file a joint return with an AGI of $165,000,and have one dependent child,Tim,who is a first-time freshman in college.The following expenses are incurred and paid in 2017:
   What is the maximum education credit allowed to Tom and Anita?

Accepted Answer

Tim is eligible for the American Opportu

Question 9

Joe,who is single with modified AGI of $84,000,is sending his son to his first year of college.The total tuition and related payments during the year amounted to $18,000.Joe has not taken advantage of any other type of tax benefit related to educational expenses.His American Opportunity Tax Credit is

Accepted Answer

A) $ 0. 
B) $1,000. 
C) $1,500. 
D) $2,500. 
A) $ 0. 
B) $1,000. 
C) $1,500. 
D) $2,500.

Question 10

Self-employed individuals are subject to the self-employment tax if their net earnings are more than the personal exemption amount.

Accepted Answer

A) True 
 B)False

Question 11

Yulia has some funds that she wishes to invest,but is concerned that she is at risk for AMT.Yulia should avoid investing in all municipal bonds.

Accepted Answer

A) True 
 B)False

Question 12

Describe the differences between the American Opportunity Tax credit and the Lifetime Learning credit.

Accepted Answer

The American Opportunity Tax Credit (AOT

Question 13

Tanya has earnings from self-employment of $240,000,resulting in self-employment tax of $22,200 and Additional Medicare Tax of $360.Due to these taxes,Tanya will be allowed a deduction for AGI of

Accepted Answer

A) $11,280. 
B) $22,560. 
C) $11,100. 
D) $22,200. 
A) $11,280. 
B) $22,560. 
C) $11,100. 
D) $22,200.

Question 14

In the fall of 2017,Gina went back to school to earn a master of taxation degree.She incurred $7,000 of qualified educational expenses and her modified AGI for the year was $58,000.Her Lifetime Learning Credit is

Accepted Answer

A) $2,500. 
B) $1,400. 
C) $280. 
D) $1,120. 
A) $2,500. 
B) $1,400. 
C) $280. 
D) $1,120.

Question 15

A taxpayer who paid AMT in prior years,but is not subject to the AMT in the current year,may be entitled to an AMT credit against his regular tax liability in the current year.

Accepted Answer

A) True 
 B)False

Question 16

Indie Corporation purchases a building for use in its business at a cost of $100,000.The building was built in 1900 and is a certified historic structure.Indie spends $150,000 on qualifying renovations certified as consistent with the buildings character.Indie will earn a rehabilitation (historic)tax credit of

Accepted Answer

A) $15,000. 
B) $30,000. 
C) $25,000. 
D) $50,000. 
A) $15,000. 
B) $30,000. 
C) $25,000. 
D) $50,000.

Question 17

A taxpayer acquired an office building to be used in her business this year.For AMT purposes,depreciation must be recalculated using the straight-line method over 40 years.

Accepted Answer

A) True 
 B)False

Question 18

Marvin and Pamela are married,file a joint return,and have two children,ages 9 and 11.Their combined AGI is $65,000.Marvin's earned income is $40,000; Pamela's is $25,000.They incur $6,500 of child care expenses to enable them to be employed during the current year.Their child and dependent care credit is

Accepted Answer

A) $1,200. 
B) $1,300. 
C) $1,800. 
D) $6,000. 
A) $1,200. 
B) $1,300. 
C) $1,800. 
D) $6,000.

Question 19

Shafiq,age 16,works part-time at the local supermarket after school and on vacations.He plans to open a Roth IRA to save for his future.Shafiq makes less than $10,000 per year.He can take advantage of the qualified retirement savings contributions credit ("saver's credit").

Accepted Answer

A) True 
 B)False

Question 20

Lee and Whitney incurred qualified adoption expenses in 2016 of $2,000,and then incurred $7,000 more in 2017 when the adoption of their child became final.Their 2016 AGI was $120,000 and their 2017 AGI was $140,000.The allowable adoption credit is

Accepted Answer

A) $ 7,000 in 2017. 
B) $ 9,000 in 2017. 
C) $13,570 in 2017. 
D) $2,000 in 2016 and $7,000 in 2017. 
A) $ 7,000 in 2017. 
B) $ 9,000 in 2017. 
C) $13,570 in 2017. 
D) $2,000 in 2016 and $7,000 in 2017.

Exam 30: Special Tax Computation Methods, tax Credits, and Payment of Tax

For purposes of the AMT,the standard deduction,but not the personal and dependency exemptions,is allowed.

Which of the following expenditures will qualify as a research expenditure for purposes of the research credit?

With respect to estimated tax payments for a taxpayer with AGI of $150,000 or lower in the prior year,all of the following are generally true with the exception of

Hawaii,Inc. ,began a child care facility for its employees during the year.The corporation incurred the following expenses: What is the amount of Hawaii's credit for employer-provided child care?

Carlotta,Inc. ,has $50,000 foreign-source income and $150,000 worldwide income.Its U.S.tax on its worldwide income is $42,000,and it paid foreign taxes of $12,000.What is the corporation's foreign tax credit?

All of the following statements are true regarding the Lifetime Learning Credit except which one?

For purposes of the AMT,only the foreign tax credit and refundable personal credits are allowed to reduce the tentative minimum tax.

Tom and Anita are married,file a joint return with an AGI of $165,000,and have one dependent child,Tim,who is a first-time freshman in college.The following expenses are incurred and paid in 2017: What is the maximum education credit allowed to Tom and Anita?

Self-employed individuals are subject to the self-employment tax if their net earnings are more than the personal exemption amount.

Yulia has some funds that she wishes to invest,but is concerned that she is at risk for AMT.Yulia should avoid investing in all municipal bonds.

Describe the differences between the American Opportunity Tax credit and the Lifetime Learning credit.

Tanya has earnings from self-employment of $240,000,resulting in self-employment tax of $22,200 and Additional Medicare Tax of $360.Due to these taxes,Tanya will be allowed a deduction for AGI of

In the fall of 2017,Gina went back to school to earn a master of taxation degree.She incurred $7,000 of qualified educational expenses and her modified AGI for the year was $58,000.Her Lifetime Learning Credit is

A taxpayer who paid AMT in prior years,but is not subject to the AMT in the current year,may be entitled to an AMT credit against his regular tax liability in the current year.

A taxpayer acquired an office building to be used in her business this year.For AMT purposes,depreciation must be recalculated using the straight-line method over 40 years.

Shafiq,age 16,works part-time at the local supermarket after school and on vacations.He plans to open a Roth IRA to save for his future.Shafiq makes less than $10,000 per year.He can take advantage of the qualified retirement savings contributions credit ("saver's credit").

Lee and Whitney incurred qualified adoption expenses in 2016 of $2,000,and then incurred $7,000 more in 2017 when the adoption of their child became final.Their 2016 AGI was $120,000 and their 2017 AGI was $140,000.The allowable adoption credit is

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