Exam 3: Tax Formula and Tax Determination an Overview of Property Transactions

Maude's parents live in another state and she cannot claim them as her dependents.If Maude pays their medical expenses,can she derive any tax benefit from doing so? Explain.

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Question 1

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If Maude could otherwise claim her parents as dependents except for not satisfying either the gross income or the joint return tests,she can claim any medical expenses paid on their behalf.

DeWayne is a U.S.citizen and resident.He spends much of each year in the United Kingdom on business.He is married to Petula,a U.K.citizen and resident of London.DeWayne has heard that it is possible that he can file a joint income tax return for U.S.purposes.If this is so,what are the constraints he should consider in making any such decision?

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Question 2

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The election to file a joint return has the effect of treating Petula as a U.S.resident.Unfortunately,this places Petula on the U.S.global approach to taxation.If Petula has considerable income of her own,the election makes this income subject to U.S.taxation which may be disadvantageous.

The Martins have a teenage son who has become an accomplished bagpiper.With proper promotion and scheduling,the son has good income potential by charging for his services at special events (particularly funerals).However,the Martins are fearful that the income could generate a kiddie tax and cause them the loss of a dependency exemption deduction.Are the Martins' concerns justified? Explain.

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Question 3

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The income received by the son would be earned income.Therefore,the kiddie tax is not a problem since it applies only to unearned income.As long as the son is under age 19 (or a full-time student under age 24),he is a dependent as a qualifying child.Under these rules,the amount of the son's income does not matter (unless he becomes self-supporting).If the son is age 19 (or older)and not a student,any dependency exemption must satisfy the qualifying relative rules.Here,not meeting the gross income test would cause the dependency exemption to be lost.

Which,if any,of the following is a correct statement relating to the kiddie tax?

(Multiple Choice)

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Question 4

During the current year,Doris received a large gift from her parents and a sizeable inheritance from an uncle.She also paid premiums on an insurance policy on her life.Doris is confused because she cannot find any place on Form 1040 to report these items.Explain.

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Question 5

Monique is a resident of the U.S.and a citizen of France.If she files a U.S.income tax return,Monique cannot claim the standard deduction.

(True/False)

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Question 6

Mr.Lee is a citizen and resident of Hong Kong,while Mr.Anderson is a citizen and resident of the U.S.In the taxation of income,Hong Kong uses a territorial approach,while the U.S.follows the global system.In terms of effect,explain what this means to Mr.Lee and Mr.Anderson.

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Question 7

Pedro is married to Consuela,who lives with him.Both are U.S.citizens and residents of Nebraska.Pedro furnishes all of the support of his parents,who are citizens and residents of Mexico.He also furnishes all of the support of Consuela's parents,who are citizens and residents of El Salvador.Consuela has no gross income for the year.If Pedro files as a married person filing separately,how many personal and dependency exemptions can he claim on his return?

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Question 8

During 2016,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%)?

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Question 9

During 2016,Jackson had the following capital gains and losses: Gain from the sale of coin collection (held three years) $12,000 Gain from the sale of land held as an investment for six years 9,000 Gain from the sale of stock held as an investment (held for 10 months) 3,000 a.How much is Jackson's tax liability if he is in the 15% tax bracket? b.If his tax bracket is 33% (not 15%)?

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Question 10

For the past few years,Corey's filing status has been as follows: 2012 (married/joint);2013 (married/separate);2014 (surviving spouse);2015(surviving spouse);and 2016 (head of household).Explain what probably has happened.

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Question 11

A taxpayer who itemizes must use Form 1040,and cannot use Form 1040EZ or Form 1040A.

(True/False)

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Question 12

For the year a spouse dies,the surviving spouse is considered married for the entire year for income tax purposes.

(True/False)

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Question 13

In terms of the tax formula applicable to individual taxpayers,which,if any,of the following statements is correct?

(Multiple Choice)

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Question 14

An "above the line" deduction refers to a deduction for AGI.

(True/False)

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Question 15

Clara,age 68,claims head of household filing status.If she has itemized deductions of $10,500 for 2016,she should not claim the standard deduction.

(True/False)

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Question 16

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 tuition

(Short Answer)

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Question 17

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. -Additional standard deduction

(Short Answer)

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Question 18

An increase in a taxpayer's AGI could decrease the amount of charitable contribution that can be claimed.

(True/False)

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Question 19

Contrast the tax consequences resulting from the following filing status situations: a.Married filing jointly versus married filing separately. b.Married filing separately versus single filing separately. c.Married filing separately versus abandoned spouse status.

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Question 20

Showing 1 - 20 of 187

Maude's parents live in another state and she cannot claim them as her dependents.If Maude pays their medical expenses,can she derive any tax benefit from doing so? Explain.

Which,if any,of the following is a correct statement relating to the kiddie tax?

During the current year,Doris received a large gift from her parents and a sizeable inheritance from an uncle.She also paid premiums on an insurance policy on her life.Doris is confused because she cannot find any place on Form 1040 to report these items.Explain.

Monique is a resident of the U.S.and a citizen of France.If she files a U.S.income tax return,Monique cannot claim the standard deduction.

Mr.Lee is a citizen and resident of Hong Kong,while Mr.Anderson is a citizen and resident of the U.S.In the taxation of income,Hong Kong uses a territorial approach,while the U.S.follows the global system.In terms of effect,explain what this means to Mr.Lee and Mr.Anderson.

During 2016,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%)?

For the past few years,Corey's filing status has been as follows: 2012 (married/joint);2013 (married/separate);2014 (surviving spouse);2015(surviving spouse);and 2016 (head of household).Explain what probably has happened.

A taxpayer who itemizes must use Form 1040,and cannot use Form 1040EZ or Form 1040A.

For the year a spouse dies,the surviving spouse is considered married for the entire year for income tax purposes.

In terms of the tax formula applicable to individual taxpayers,which,if any,of the following statements is correct?

An "above the line" deduction refers to a deduction for AGI.

Clara,age 68,claims head of household filing status.If she has itemized deductions of $10,500 for 2016,she should not claim the standard deduction.

An increase in a taxpayer's AGI could decrease the amount of charitable contribution that can be claimed.

Contrast the tax consequences resulting from the following filing status situations: a.Married filing jointly versus married filing separately. b.Married filing separately versus single filing separately. c.Married filing separately versus abandoned spouse status.

An Introduction to Taxation and Understanding the Federal Law

Working With the Tax Law

Gross Income Concepts and Inclusions

Gross Income Exclusions

Deductions and Losses in General

Deductions and Losses Certain Business Expenses and Losses

Depreciation Cost Recovery Amortization and Depletion

Deductions Employee and Self Employed Related Expenses

Deduction and Losses Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions Determination of Gain and Loss and Basic Considerations

Property Transactions Nontaxable Exchanges

Property Transactions Capital Gains and Losses

Property Transactions Section 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

Exam 3: Tax Formula and Tax Determination an Overview of Property Transactions

Maude's parents live in another state and she cannot claim them as her dependents.If Maude pays their medical expenses,can she derive any tax benefit from doing so? Explain.

Which,if any,of the following is a correct statement relating to the kiddie tax?

During the current year,Doris received a large gift from her parents and a sizeable inheritance from an uncle.She also paid premiums on an insurance policy on her life.Doris is confused because she cannot find any place on Form 1040 to report these items.Explain.

Monique is a resident of the U.S.and a citizen of France.If she files a U.S.income tax return,Monique cannot claim the standard deduction.

Mr.Lee is a citizen and resident of Hong Kong,while Mr.Anderson is a citizen and resident of the U.S.In the taxation of income,Hong Kong uses a territorial approach,while the U.S.follows the global system.In terms of effect,explain what this means to Mr.Lee and Mr.Anderson.

During 2016,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%)?

For the past few years,Corey's filing status has been as follows: 2012 (married/joint);2013 (married/separate);2014 (surviving spouse);2015(surviving spouse);and 2016 (head of household).Explain what probably has happened.

A taxpayer who itemizes must use Form 1040,and cannot use Form 1040EZ or Form 1040A.

For the year a spouse dies,the surviving spouse is considered married for the entire year for income tax purposes.

In terms of the tax formula applicable to individual taxpayers,which,if any,of the following statements is correct?

An "above the line" deduction refers to a deduction for AGI.

Clara,age 68,claims head of household filing status.If she has itemized deductions of $10,500 for 2016,she should not claim the standard deduction.

An increase in a taxpayer's AGI could decrease the amount of charitable contribution that can be claimed.

Contrast the tax consequences resulting from the following filing status situations: a.Married filing jointly versus married filing separately. b.Married filing separately versus single filing separately. c.Married filing separately versus abandoned spouse status.

An Introduction to Taxation and Understanding the Federal Law

Working With the Tax Law

Gross Income Concepts and Inclusions

Gross Income Exclusions

Deductions and Losses in General

Deductions and Losses Certain Business Expenses and Losses

Depreciation Cost Recovery Amortization and Depletion

Deductions Employee and Self Employed Related Expenses

Deduction and Losses Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions Determination of Gain and Loss and Basic Considerations

Property Transactions Nontaxable Exchanges

Property Transactions Capital Gains and Losses

Property Transactions Section 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

During 2016,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%)?