Question 1

During 2012, Marvin had the following transactions:   Marvin's AGI is:

Accepted Answer

A) $32,000. 
B) $38,000. 
C) $44,000. 
D) $56,000. 
E) $64,000. 
A) $32,000. 
B) $38,000. 
C) $44,000. 
D) $56,000. 
E) $64,000. C

Question 2

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.

Accepted Answer

Mr.Lee is taxed only on the income he receives from Hong Kong, while Mr.Anderson is taxed on his global income.Under the U.S.approach, a citizen or resident is taxed on a worldwide basis.Since the U.S.system could lead to the same income being taxed twice, various relief provisions are necessitated (e.g., foreign tax credit).

Question 3

Ellen, age 39 and single, furnishes more than 50% of the support of her parents, who do not live with her.Ellen practices as a self-employed interior decorator and has gross income in 2012 of $120,000.Her deductions are as follows: $30,000 business and $8,100 itemized.

Accepted Answer

The answer of Ellen, age 39 and single, furnishes more...

Question 4

During 2012, Jackson had the following capital gains and losses:

Accepted Answer

The answer of During 2012, Jackson had the following capital...

Question 5

Tom is single and for 2012 has AGI of $50,000. He is age 70 and has no dependents. For 2012, he has itemized deductions from AGI of $7,000.Determine Tom's taxable income for 2012.

Accepted Answer

$38,800. Tom's standard deduction is $5,

Question 6

In which, if any, of the following situations may the individual not be claimed as a dependent of the taxpayer?

Accepted Answer

A) A former spouse who lives with the taxpayer (divorce took place last year). 
B) A stepmother who does not live with the taxpayer. 
C) A married daughter who lives with the taxpayer. 
D) A half brother who does not live with the taxpayer and is a citizen and resident of Costa Rica. 
E) A cousin who lives with the taxpayer. 
A) A former spouse who lives with the taxpayer (divorce took place last year). 
B) A stepmother who does not live with the taxpayer. 
C) A married daughter who lives with the taxpayer. 
D) A half brother who does not live with the taxpayer and is a citizen and resident of Costa Rica. 
E) A cousin who lives with the taxpayer.

Question 7

Kyle, whose wife died in December 2009, filed a joint tax return for 2009.He did not remarry, but has continued to maintain his home in which his two dependent children live.What is Kyle's filing status as to 2012?

Accepted Answer

A) Head of household. 
B) Surviving spouse. 
C) Single. 
D) Married filing separately. 
E) None of the above. 
A) Head of household. 
B) Surviving spouse. 
C) Single. 
D) Married filing separately. 
E) None of the above.

Question 8

The major advantage of being classified as an abandoned spouse is that the taxpayer is treated for tax purposes as being single and not married.This means that an abandoned spouse can use the more favorable tax rates available to single persons than those available to married persons filing separately.Comment on the accuracy of this conclusion.

Accepted Answer

The conclusion is incorrect.The classifi

Question 9

When the kiddie tax applies and the parents are divorced, the applicable parent (for determining the parental tax) is the one who has custody.

Accepted Answer

A) True 
 B)False

Question 10

Taylor had the following transactions for 2012:
   What is Taylor's AGI for 2012?

Accepted Answer

$76,000.$85,000 (salary) + $3,000 (raffl

Question 11

Howard, age 82, dies on January 2, 2012.On Howard's final income tax return, the full amount of the basic and additional standard deductions will be allowed even though Howard lived for only 2 days during the year.

Accepted Answer

A) True 
 B)False

Question 12

When can a taxpayer not use Form 1040EZ? Form 1040A?

Accepted Answer

Form 1040EZ cannot be used when the taxp

Question 13

In which, if any, of the following situations will the kiddie tax not apply?

Accepted Answer

A) The child is married but does not file a joint return. 
B) The child has unearned income of $1,900 or less. 
C) The child has unearned income that exceeds more than half of his (or her) support. 
D) The child is under age 24 and a full-time student. 
E) None of the above. 
A) The child is married but does not file a joint return. 
B) The child has unearned income of $1,900 or less. 
C) The child has unearned income that exceeds more than half of his (or her) support. 
D) The child is under age 24 and a full-time student. 
E) None of the above.

Question 14

For the qualifying relative category (for dependency exemption purposes):

Accepted Answer

A) The dependent must be under age 19 or a full-time student under age 24. 
B) The dependent need not reside with the taxpayer claiming the exemption. 
C) The dependent must be related to the taxpayer claiming the exemption. 
D) The dependent must be a citizen or resident of the U.S. 
E) None of the above. 
A) The dependent must be under age 19 or a full-time student under age 24. 
B) The dependent need not reside with the taxpayer claiming the exemption. 
C) The dependent must be related to the taxpayer claiming the exemption. 
D) The dependent must be a citizen or resident of the U.S. 
E) None of the above.

Question 15

Jason and Peg are married and file a joint return.Both are over 65 years of age and Jason is blind.Their standard deduction for 2012 is $15,350 ($11,900 + $1,150 + $1,150 + $1,150).

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) In arriving at taxable income, a taxpayer must choose between the standard deduction and deductions from AGI. 
B) In arriving at AGI, personal and dependency exemptions must be subtracted from gross income. 
C) In arriving at taxable income, a taxpayer must choose between the standard deduction and claiming personal and dependency exemptions. 
D) The formula does not apply if a taxpayer elects to claim the standard deduction. 
E) None of the above. 
A) In arriving at taxable income, a taxpayer must choose between the standard deduction and deductions from AGI. 
B) In arriving at AGI, personal and dependency exemptions must be subtracted from gross income. 
C) In arriving at taxable income, a taxpayer must choose between the standard deduction and claiming personal and dependency exemptions. 
D) The formula does not apply if a taxpayer elects to claim the standard deduction. 
E) None of the above.

Question 17

During the year, Kim sold the following assets: business auto for a $1,000 loss, stock investment for a $1,000 loss, and pleasure yacht for a $1,000 loss.Presuming adequate income, how much of these losses may Kim claim?

Accepted Answer

A) $0. 
B) $1,000. 
C) $2,000. 
D) $3,000. 
E) None of the above. 
A) $0. 
B) $1,000. 
C) $2,000. 
D) $3,000. 
E) None of the above.

Question 18

Keith, age 17 and single, earns $3,000 during 2012.Keith's parents cannot claim him as a dependent even if he does not live with them.

Accepted Answer

A) True 
 B)False

Question 19

Ethan had the following transactions during 2012:
   What is Ethan's AGI for 2012?

Accepted Answer

$90,000.$90,000 (salary) + $5,000 (inter

Question 20

Contrast the tax consequences resulting from the following filing status situations:

Accepted Answer

The answer of Contrast the tax consequences resulting from the...

Exam 3: Computing the Tax

During 2012, Marvin had the following transactions: Marvin's AGI is:

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.

Ellen, age 39 and single, furnishes more than 50% of the support of her parents, who do not live with her.Ellen practices as a self-employed interior decorator and has gross income in 2012 of $120,000.Her deductions are as follows: $30,000 business and $8,100 itemized.

During 2012, Jackson had the following capital gains and losses:

Tom is single and for 2012 has AGI of $50,000. He is age 70 and has no dependents. For 2012, he has itemized deductions from AGI of $7,000.Determine Tom's taxable income for 2012.

In which, if any, of the following situations may the individual not be claimed as a dependent of the taxpayer?

Kyle, whose wife died in December 2009, filed a joint tax return for 2009.He did not remarry, but has continued to maintain his home in which his two dependent children live.What is Kyle's filing status as to 2012?

When the kiddie tax applies and the parents are divorced, the applicable parent (for determining the parental tax) is the one who has custody.

Taylor had the following transactions for 2012: What is Taylor's AGI for 2012?

Howard, age 82, dies on January 2, 2012.On Howard's final income tax return, the full amount of the basic and additional standard deductions will be allowed even though Howard lived for only 2 days during the year.

When can a taxpayer not use Form 1040EZ? Form 1040A?

In which, if any, of the following situations will the kiddie tax not apply?

For the qualifying relative category (for dependency exemption purposes):

Jason and Peg are married and file a joint return.Both are over 65 years of age and Jason is blind.Their standard deduction for 2012 is $15,350 ($11,900 + $1,150 + $1,150 + $1,150).

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

During the year, Kim sold the following assets: business auto for a $1,000 loss, stock investment for a $1,000 loss, and pleasure yacht for a $1,000 loss.Presuming adequate income, how much of these losses may Kim claim?

Keith, age 17 and single, earns $3,000 during 2012.Keith's parents cannot claim him as a dependent even if he does not live with them.

Ethan had the following transactions during 2012: What is Ethan's AGI for 2012?

Contrast the tax consequences resulting from the following filing status situations:

An Introduction to Taxation and Understanding the Federal Tax 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

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S: Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

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