Exam 3: Computing the Tax

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.

In meeting the criteria of a qualifying child for dependency exemption purposes,when if ever,might the child's income become relevant?

Once they reach age 65,many taxpayers will switch from itemizing their deductions from AGI and start claiming the standard deduction.

Regarding the tax formula and its relationship to Form 1040,which,if any,of the following statements is correct?

Many taxpayers who previously itemized will start claiming the standard deduction when they purchase a home.

Millie,age 80,is supported during the current year as follows: Percent of Support Weston (a son) 20% Faith (a daughter) 35% Jake (a cousin) 25% Brayden (unrelated close family friend) 20% During the year,Millie lives in an assisted living facility.Under a multiple support agreement,indicate which parties can qualify to claim Millie as a dependent.

Meg,age 23,is a full-time law student and is claimed by her parents as a dependent.During 2015,she received $1,400 interest income from a bank savings account and $6,100 from a part-time job.What is Meg's taxable income for 2015?

In applying the gross income test in the case of dependents that are married,could the application of community property laws have any effect? Explain.

During 2015,Trevor has the following capital transactions: LTCG $ 6,000 Long-term collectible gain 2,000 STCG 4,000 STCL 10,000 After the netting process,the following results:

During 2015,Addison has the following gains and losses: LTCG $10,000 LTCL 3,000 STCG 2,000 STCL 7,000 ​ a.How much is Addison's tax liability if she is in the 15% tax bracket? b.If her tax bracket is 33% (not 15%)?

Butch and Minerva are divorced in December of 2015.Since they were married for more than one-half of the year,they are considered as married for 2015.

Married taxpayers who file separately cannot later (i.e. ,after the due date for filing) change to a joint return.

In 2015,Tom is single and has AGI of $50,000.He is age 70,has no dependents,and has itemized deductions (i.e. ,from AGI) of $7,000.Determine Tom's taxable income for 2015.

Sylvia,age 17,is claimed by her parents as a dependent.During 2015,she had interest income from a bank savings account of $2,000 and income from a part-time job of $4,200.Sylvia's taxable income is:

Match the statements that relate to each other.Note: Choice l.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 exemption 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. -Scholarship funds for room and board

Which of the following items,if any,is deductible?

Stealth taxes are directed at lower income taxpayers.

In January 2015,Jake's wife dies and he does not remarry.For tax year 2015,Jake may not be able to use the filing status available to married persons filing joint returns.

In 2015,Hal furnishes more than half of the support of his ex-wife and her father,both of whom live with him.The divorce occurred in 2014.Hal may claim the father-in-law and the ex-wife as dependents.

Which of the following taxpayers may file as a head of household in 2015? ​ Ron provides all the support for his mother,Betty,who lives by herself in an apartment in Fort Lauderdale.Ron pays the rent and other expenses for the apartment and properly claims his mother as a dependent. ​ Tammy provides over one-half the support for her 18-year old brother,Dan.Dan earned $4,200 in 2015 working at a fast food restaurant and is saving his money to attend college in 2016.Dan lives in Tammy's home. ​ Joe's wife left him late in December of 2014.No legal action was taken and Joe has not heard from her in 2015.Joe supported his 6-year-old son,who lived with him throughout 2015.