Question 1

Harley's tentative minimum tax is computed by multiplying the AMT tax rates by her

Accepted Answer

A) taxable income. 
B) alternative minimum tax base. 
C) alternative minimum taxable income. 
D) tentative alternative taxable income. 
A) taxable income. 
B) alternative minimum tax base. 
C) alternative minimum taxable income. 
D) tentative alternative taxable income.

Question 2

Refundable tax credits

Accepted Answer

A) only offset a taxpayer's tax liability. 
B) may only be used if the taxpayer is receiving a refund. 
C) have all expired but may be reinstated with new tax legislation. 
D) allow the excess over the taxpayer's tax liability to be paid to the taxpayer. 
A) only offset a taxpayer's tax liability. 
B) may only be used if the taxpayer is receiving a refund. 
C) have all expired but may be reinstated with new tax legislation. 
D) allow the excess over the taxpayer's tax liability to be paid to the taxpayer.

Question 3

John has $55,000 of self-employment earnings from a sole proprietorship.John is also employed part-time by a major corporation and is paid $25,000.John's self-employment tax for 2017 is

Accepted Answer

A) $3,886. 
B) $4,208. 
C) $7,771. 
D) $8,415. 
A) $3,886. 
B) $4,208. 
C) $7,771. 
D) $8,415.

Question 4

A couple has filed a joint tax return since they were first married.Because of self-employment income and significant investment income,they have made joint quarterly estimated tax payments.Before year-end the couple has divorced,and they will each file their own individual returns.The estimated payments made jointly while still married earlier in the year will be divided evenly between the two individual returns.

Accepted Answer

A) True 
 B)False

Question 5

Jay and Cara's daughter is starting her freshman year of college.Jay and Cara will be able to claim the American Opportunity Tax Credit for a percentage of the cost of tuition,required fees and course materials,but the room and board charges will not qualify for the credit.

Accepted Answer

A) True 
 B)False

Question 6

Octo Corp.purchases a building for use in its business at a cost of $100,000.The building was built in 1930 and needs substantial work so it can be used.Octo spends $150,000 on qualifying renovations.Octo will earn a rehabilitation credit of

Accepted Answer

A) $15,000. 
B) $25,000. 
C) $5,000. 
D) $30,000. 
A) $15,000. 
B) $25,000. 
C) $5,000. 
D) $30,000.

Question 7

Research expenses eligible for the research credit include costs that are incident to the development or improvement of a product or component.

Accepted Answer

A) True 
 B)False

Question 8

To help retain its talented workforce,Zapper Corporation opens a child care facility in the building next to its offices.It spends $200,000 on rent,salaries and supplies.With respect to the $200,000 expenditure,Zapper will be entitled to a tax credit and a tax deduction of

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 9

In computing AMTI,all of the following must be added back except

Accepted Answer

A) home mortgage interest (on mortgage in effect since home was purchased). 
B) state income taxes. 
C) unreimbursed employee business expenses. 
D) property taxes on an individual's home. 
A) home mortgage interest (on mortgage in effect since home was purchased). 
B) state income taxes. 
C) unreimbursed employee business expenses. 
D) property taxes on an individual's home.

Question 10

Discuss tax-planning options available for expenses incurred for child and dependent care.

Accepted Answer

Certain employers may offer up to $5,000

Question 11

A credit is available to encourage employers to provide child care for employees.The employer can either operate its own child care facility for its employees or pay a separate qualified child care facility under contract.

Accepted Answer

A) True 
 B)False

Question 12

In 2017,Rita is divorced with one child.She has AGI of $20,000 resulting in a federal income tax liability of $255 and an earned income credit of $3,135.She has had $550 of federal income taxes withheld from her pay.Rita will receive a federal income refund of

Accepted Answer

A) $550. 
B) $2,880. 
C) $3,135. 
D) $3,430. 
A) $550. 
B) $2,880. 
C) $3,135. 
D) $3,430.

Question 13

A self-employed individual has earnings from his business of $300,000 in 2017.For the earnings in excess of $127,200,he will only have to pay the 2.9% Medicare Tax.

Accepted Answer

A) True 
 B)False

Question 14

If an employee has more than one employer during the year,all employers must withhold federal income taxes but only one employer must withhold FICA tax.

Accepted Answer

A) True 
 B)False

Question 15

Which one of the following is a refundable credit?

Accepted Answer

A) earned income credit 
B) child and dependent care credit 
C) lifetime learning credit 
D) credit for the elderly and disabled 
A) earned income credit 
B) child and dependent care credit 
C) lifetime learning credit 
D) credit for the elderly and disabled

Question 16

Nick and Nicole are both 68 years old and file a joint return.They have AGI of $15,000 and receive nontaxable Social Security payments of $4,200 during the current year.What is the amount of the tax credit for the elderly?

Accepted Answer

@#IMG-DLM& 
The credit is nonr

Question 17

All of the following are allowable deductions under the alternative minimum tax except

Accepted Answer

A) charitable contributions. 
B) gambling losses. 
C) qualified housing interest. 
D) state income taxes. 
A) charitable contributions. 
B) gambling losses. 
C) qualified housing interest. 
D) state income taxes.

Question 18

Kerry is single and has AGI of $25,000 in 2017.During the year he contributes $5,000 to his Roth IRA.What is the amount of qualified retirement savings contributions credit to which he is entitled?

Accepted Answer

A) $200 
B) $400 
C) $800 
D) $1,000 
A) $200 
B) $400 
C) $800 
D) $1,000

Question 19

Runway Corporation has $2 million of gross receipts in the preceding year.For purposes of the disabled access credit,what is the maximum number of full-time employees the corporation can have in the preceding year?

Accepted Answer

A) 10 
B) 15 
C) 20 
D) 30 
A) 10 
B) 15 
C) 20 
D) 30

Question 20

An individual with AGI equal to or less than $150,000 in the prior year may generally avoid penalties for underpayment of estimated tax in each of the following cases with the exception of

Accepted Answer

A) estimated tax is less than $1,500. 
B) 90% of the tax due for the current year is paid. 
C) 90% of the tax due for the current year is paid when computed on an annualized basis. 
D) 100% of the actual tax liability for the prior year is paid. 
A) estimated tax is less than $1,500. 
B) 90% of the tax due for the current year is paid. 
C) 90% of the tax due for the current year is paid when computed on an annualized basis. 
D) 100% of the actual tax liability for the prior year is paid.

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

Harley's tentative minimum tax is computed by multiplying the AMT tax rates by her

Refundable tax credits

John has $55,000 of self-employment earnings from a sole proprietorship.John is also employed part-time by a major corporation and is paid $25,000.John's self-employment tax for 2017 is

Jay and Cara's daughter is starting her freshman year of college.Jay and Cara will be able to claim the American Opportunity Tax Credit for a percentage of the cost of tuition,required fees and course materials,but the room and board charges will not qualify for the credit.

Octo Corp.purchases a building for use in its business at a cost of $100,000.The building was built in 1930 and needs substantial work so it can be used.Octo spends $150,000 on qualifying renovations.Octo will earn a rehabilitation credit of

Research expenses eligible for the research credit include costs that are incident to the development or improvement of a product or component.

To help retain its talented workforce,Zapper Corporation opens a child care facility in the building next to its offices.It spends $200,000 on rent,salaries and supplies.With respect to the $200,000 expenditure,Zapper will be entitled to a tax credit and a tax deduction of

In computing AMTI,all of the following must be added back except

Discuss tax-planning options available for expenses incurred for child and dependent care.

A credit is available to encourage employers to provide child care for employees.The employer can either operate its own child care facility for its employees or pay a separate qualified child care facility under contract.

In 2017,Rita is divorced with one child.She has AGI of $20,000 resulting in a federal income tax liability of $255 and an earned income credit of $3,135.She has had $550 of federal income taxes withheld from her pay.Rita will receive a federal income refund of

A self-employed individual has earnings from his business of $300,000 in 2017.For the earnings in excess of $127,200,he will only have to pay the 2.9% Medicare Tax.

If an employee has more than one employer during the year,all employers must withhold federal income taxes but only one employer must withhold FICA tax.

Which one of the following is a refundable credit?

Nick and Nicole are both 68 years old and file a joint return.They have AGI of $15,000 and receive nontaxable Social Security payments of $4,200 during the current year.What is the amount of the tax credit for the elderly?

All of the following are allowable deductions under the alternative minimum tax except

Kerry is single and has AGI of $25,000 in 2017.During the year he contributes $5,000 to his Roth IRA.What is the amount of qualified retirement savings contributions credit to which he is entitled?

Runway Corporation has $2 million of gross receipts in the preceding year.For purposes of the disabled access credit,what is the maximum number of full-time employees the corporation can have in the preceding year?

An individual with AGI equal to or less than $150,000 in the prior year may generally avoid penalties for underpayment of estimated tax in each of the following cases with the exception of

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