Exam 14: Special Tax Computation Methods, tax Credits, and Payment of Tax

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

Which statement is correct?

Evan and Barbara incurred qualified adoption expenses in 2012 of $6,000,and then incurred $7,500 more in 2013 when the adoption of their child became final.Their 2012 AGI was $110,000 and their 2013 AGI was $100,000.The allowable adoption credit is

A credit for rehabilitation expenditures is available to a business for the purchase price of a building originally placed in service before 1936.

Which of the following statements regarding the Work Opportunity Tax Credit (WOTC)for hiring veterans is not correct?

The qualified retirement savings contributions credit is based on a maximum contribution of $2,000.

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.

For purposes of the limitation on qualifying expenses for the child and dependent care credit,a spouse who is either a full-time student or is incapacitated is deemed to have earned income of $250 per month,or $500 per month if there are two or more qualifying individuals in the household.

The general business credit may not exceed the net income tax minus the greater of the tentative minimum tax or

In computing AMTI,adjustments are

All of the following are self-employment income except

One-half of the self-employment tax imposed is allowed as a for AGI deduction.

All tax-exempt bond interest income is classified as a tax preference.

Sam and Megan are married with two dependent children.Both Sam and Megan work,earning $50,000 and $55,000,respectively.Their AGI totals $110,000.They incur $6,500 of qualifying child care expenses of which $2,500 is reimbursed by Megan's dependent care program at work. What is the amount of their child and dependent care credit?

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

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

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.

George and Meredith who are married,have a regular tax liability of $23,108,taxable income of $125,000,tax preferences of $25,000,and positive adjustments attributable to limitations on itemized deductions of $18,700 this year.They claim $11,700 of personal and dependency exemptions for themselves and their 20-year old dependent daughter.What is George and Meredith's alternative minimum tax for 2013?

Lee and Whitney incurred qualified adoption expenses in 2012 of $2,000,and then incurred $7,000 more in 2013 when the adoption of their special needs child became final.Their 2012 AGI was $120,000 and their 2013 AGI was $140,000.The allowable adoption credit is

Tyler and Molly,who are married filing jointly with $200,000 of AGI in 2013,incurred the following expenses in their efforts to adopt a child: The adoption was finalized in 2013.What is the amount of the allowable adoption credit in 2013?