Question 1

Marguerite and Josephus have two children,ages 13 and 10.Their modified AGI is $120,500.What is their child tax credit?

Accepted Answer

A) $900 
B) $1,000 
C) $2,000 
D) None of the above. 
A) $900 
B) $1,000 
C) $2,000 
D) None of the above.

Question 2

Qualified tuition and related expenses eligible for the American Opportunity Tax Credit are limited to those incurred the first two years of postsecondary education.

Accepted Answer

A) True 
 B)False

Question 3

Jeffery and Cassie,who are married with modified AGI of $90,000,are sending their son to his first year of college.Their total tuition and related payments during 2017 amounted to $5,500.They have not taken advantage of any other type of tax benefit related to educational expenses.Their American Opportunity Tax Credit for 2017 is

Accepted Answer

A) $1,500. 
B) $2,000. 
C) $2,500. 
D) $5,000. 
A) $1,500. 
B) $2,000. 
C) $2,500. 
D) $5,000.

Question 4

All of the following statements regarding self-employment income/tax are true except

Accepted Answer

A) the self-employment tax is imposed on net earnings from self-employment when self-employment income is over $400. 
B) self-employment tax is computed separately for married individuals filing joint returns. 
C) independent contractors are subject to self-employment tax on the amount of net earnings from the self-employment activity. 
D) employees who have a business in addition to their regular employment are not subject to the self-employment tax since FICA is withheld on their wages. 
A) the self-employment tax is imposed on net earnings from self-employment when self-employment income is over $400. 
B) self-employment tax is computed separately for married individuals filing joint returns. 
C) independent contractors are subject to self-employment tax on the amount of net earnings from the self-employment activity. 
D) employees who have a business in addition to their regular employment are not subject to the self-employment tax since FICA is withheld on their wages.

Question 5

Form 6251,Alternative Minimum Tax,must be filed in any of the following situations except

Accepted Answer

A) the taxpayer has general business tax credits that are limited by the tentative minimum tax. 
B) the AMT base exceeds the exemption amounts and an individual has AMT adjustments or tax preference items. 
C) the tentative minimum tax exceeds the regular tax. 
D) the earned income tax credit exceeds the tentative minimum tax. 
A) the taxpayer has general business tax credits that are limited by the tentative minimum tax. 
B) the AMT base exceeds the exemption amounts and an individual has AMT adjustments or tax preference items. 
C) the tentative minimum tax exceeds the regular tax. 
D) the earned income tax credit exceeds the tentative minimum tax.

Question 6

Rex has the following AMT adjustment factors: -Depreciation of real property acquired in 1996 using MACRS is $22,000 while depreciation for AMT purposes is $15,000.
-R&E expenditures amounting to $60,000 are expensed.
The net adjustment is

Accepted Answer

A) $7,000. 
B) $54,000. 
C) $61,000. 
D) $67,000. 
A) $7,000. 
B) $54,000. 
C) $61,000. 
D) $67,000.

Question 7

Layla earned $20,000 of general business credits from her sole proprietorship.Her regular tax liability is $45,000,and her tentative minimum tax is $49,000.During the current year Layla will apply general business credits of

Accepted Answer

A) $0. 
B) $4,000. 
C) $20,000. 
D) $45,000. 
A) $0. 
B) $4,000. 
C) $20,000. 
D) $45,000.

Question 8

In computing AMTI,adjustments are

Accepted Answer

A) limited. 
B) added only. 
C) subtracted only. 
D) either added or subtracted. 
A) limited. 
B) added only. 
C) subtracted only. 
D) either added or subtracted.

Question 9

The nonrefundable disabled access credit is available to eligible small businesses for expenditures incurred to make existing business facilities accessible to disabled individuals.

Accepted Answer

A) True 
 B)False

Question 10

Current year foreign taxes paid exceed the ceiling based on U.S.tax attributable to foreign source income.These excess foreign tax credits

Accepted Answer

A) are lost. 
B) can be carried forward ten years only. 
C) can be carried back one year and then carried forward ten years. 
D) can be carried back one year and then carried forward twenty years. 
A) are lost. 
B) can be carried forward ten years only. 
C) can be carried back one year and then carried forward ten years. 
D) can be carried back one year and then carried forward twenty years.

Question 11

Hong earns $127,300 in her job as a physician's assistant.She also has her own business selling cosmetics.This business generated $10,000 of earnings.What is Hong's self-employment tax for 2017?

Accepted Answer

A) $268 
B) $290 
C) $1,412 
D) $1,530 
A) $268 
B) $290 
C) $1,412 
D) $1,530

Question 12

Doggie Rx Inc.is a new company developing a tasty chewable pill for dogs that will protect them from all types of fleas,ticks and intestinal parasites.This is its first year of business,and it has spent $500,000 on qualifying research expenditures.Doggie Rx will earned a simplified research credit of

Accepted Answer

A) $30,000. 
B) $70,000. 
C) $15,000. 
D) $250,000. 
A) $30,000. 
B) $70,000. 
C) $15,000. 
D) $250,000.

Question 13

Ivan has generated the following taxes and credits this year:
   How much general business credit will he apply to the current year tax liability?

Accepted Answer

@#IMG-DLM& 
The general business credit is applied

Question 14

The general business credits are refundable credits.

Accepted Answer

A) True 
 B)False

Question 15

The foreign tax credit is equal to the smaller of foreign taxes paid or accrued in the tax year or the portion of the U.S.income tax liability attributable to the income earned in all foreign countries.

Accepted Answer

A) True 
 B)False

Question 16

In computing AMTI,tax preference items are

Accepted Answer

A) excluded. 
B) added only. 
C) subtracted only. 
D) either added or subtracted. 
A) excluded. 
B) added only. 
C) subtracted only. 
D) either added or subtracted.

Question 17

George and Meredith who are married,have a regular tax liability of $22,728 based on regular taxable income of $125,000.This year they generated tax preferences of $25,000,and positive adjustments attributable to limitations on itemized deductions of $18,700.In determining regular taxable income,they had claimed $12,150 of personal and dependency exemptions for themselves and their 20-year-old dependent daughter.What is George and Meredith's alternative minimum tax for 2017?

Accepted Answer

The answer of George and Meredith who are married,have a...

Question 18

Nonrefundable personal tax credits can only offset an individual's regular tax,not AMT.

Accepted Answer

A) True 
 B)False

Question 19

Bonjour Corp.is a U.S.-based corporation with operations in France.The operations in France generated $200,000 of taxable income whereas worldwide operations generated total taxable income of $2,000,000.Its U.S.tax liability before credits is $680,000.Determine the allowable foreign tax credit assuming taxes paid to France as follows:
a.$40,000.
b.$80,000.

Accepted Answer

Ceiling on application of foreign tax cr

Question 20

In 2017,Charlton and Cindy have alternative minimum taxable income of $130,000 and file a joint return.For purposes of computing the alternative minimum tax,their exemption is

Accepted Answer

A) $0. 
B) $8,100. 
C) $54,300. 
D) $84,500. 
A) $0. 
B) $8,100. 
C) $54,300. 
D) $84,500.

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

Marguerite and Josephus have two children,ages 13 and 10.Their modified AGI is $120,500.What is their child tax credit?

Qualified tuition and related expenses eligible for the American Opportunity Tax Credit are limited to those incurred the first two years of postsecondary education.

All of the following statements regarding self-employment income/tax are true except

Form 6251,Alternative Minimum Tax,must be filed in any of the following situations except

Rex has the following AMT adjustment factors: -Depreciation of real property acquired in 1996 using MACRS is $22,000 while depreciation for AMT purposes is $15,000. -R&E expenditures amounting to $60,000 are expensed. The net adjustment is

Layla earned $20,000 of general business credits from her sole proprietorship.Her regular tax liability is $45,000,and her tentative minimum tax is $49,000.During the current year Layla will apply general business credits of

In computing AMTI,adjustments are

The nonrefundable disabled access credit is available to eligible small businesses for expenditures incurred to make existing business facilities accessible to disabled individuals.

Current year foreign taxes paid exceed the ceiling based on U.S.tax attributable to foreign source income.These excess foreign tax credits

Hong earns $127,300 in her job as a physician's assistant.She also has her own business selling cosmetics.This business generated $10,000 of earnings.What is Hong's self-employment tax for 2017?

Ivan has generated the following taxes and credits this year: How much general business credit will he apply to the current year tax liability?

The general business credits are refundable credits.

The foreign tax credit is equal to the smaller of foreign taxes paid or accrued in the tax year or the portion of the U.S.income tax liability attributable to the income earned in all foreign countries.

In computing AMTI,tax preference items are

Nonrefundable personal tax credits can only offset an individual's regular tax,not AMT.

In 2017,Charlton and Cindy have alternative minimum taxable income of $130,000 and file a joint return.For purposes of computing the alternative minimum tax,their exemption is

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