Exam 3: Computing the Tax

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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 2010 is $14,700 ($11,400 + $1,100 + $1,100 + $1,100).

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Question 1

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True

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

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Question 2

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Homer (age 68)and his wife Jean (age 70)file a joint return.They furnish all of the support of Luther (Homer's 90-year old father),who lives with them.For 2010,they received $6,000 of interest income on city of Chicago bonds and interest income on corporate bonds of $48,000.Compute Homer and Jean's taxable income for 2010.

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Question 3

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$23,450.Their gross income is $48,000 since the $6,000 interest on municipal bonds is an exclusion.They are entitled to a basic standard deduction of $11,400 and additional standard deductions of $1,100 each for being age 65 or older.They can claim a dependency exemption of $3,650 for Luther and two personal exemptions for themselves.Thus,$48,000 - $11,400 - $2,200 (2 * $1,100)- $10,950 (3 * $3,650)= $23,450.

Mickey,age 12,lives in the same household with his mother,grandmother,and uncle.

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Question 4

In 2010,Hal furnishes more than half of the support of his ex-wife and her father,neither of whom lives with him.The divorce occurred in 2009.Hal may claim the father-in-law but not the ex-wife as dependents.

(True/False)

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Question 5

In terms of income tax consequences,abandoned spouses are not treated the same way as married persons filing separate returns.

(True/False)

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Question 6

Regarding head of household filing status,comment on the following:

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Question 7

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

(Multiple Choice)

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Question 8

Most exclusions from gross income are not reported on Form 1040.

(True/False)

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Question 9

An increase in the amount of a taxpayer's AGI will not affect the amount of medical expenses allowed as a deduction.

(True/False)

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Question 10

Buddy and Hazel are ages 72 and 71 and file a joint return.If they have itemized deductions of $13,500 for 2010,they should not claim the standard deduction.

(True/False)

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Question 11

Albert buys his mother a used car.For purposes of meeting the support test,Albert cannot count the cost of the used car.

(True/False)

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Question 12

Ashley earns a salary of $35,000,has capital gains of $4,000,and interest income of $3,000 in 2010.Her husband died in 2009.Ashley has a dependent son,Tyrone,who is age 8.Her itemized deductions are $9,000.

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Question 13

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 2010 of $120,000.Her deductions are as follows: $30,000 business and $8,100 itemized.

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Question 14

When separate income tax returns are filed by married taxpayers,one spouse cannot claim the other spouse as an exemption.

(True/False)

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Question 15

In January 2010,Jake's wife dies and he does not remarry.For tax year 2010,Jake may not be able to use the filing status available to married persons filing joint returns.

(True/False)

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Question 16

Robert had the following transactions for 2010: What is Robert's AGI for 2010?

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Question 17

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

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Question 18

Ellen,age 12,lives in the same household with her father,grandfather,and uncle.The cost of maintaining the household is provided by her grandfather (40%)and her uncle (60%).Disregarding tie-breaker rules,Ellen is a qualifying child as to:

(Multiple Choice)

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Question 19

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

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Question 20

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Exam 3: Computing the Tax

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 2010 is $14,700 ($11,400 + $1,100 + $1,100 + $1,100).

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

Mickey,age 12,lives in the same household with his mother,grandmother,and uncle.

In 2010,Hal furnishes more than half of the support of his ex-wife and her father,neither of whom lives with him.The divorce occurred in 2009.Hal may claim the father-in-law but not the ex-wife as dependents.

In terms of income tax consequences,abandoned spouses are not treated the same way as married persons filing separate returns.

Regarding head of household filing status,comment on the following:

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

Most exclusions from gross income are not reported on Form 1040.

An increase in the amount of a taxpayer's AGI will not affect the amount of medical expenses allowed as a deduction.

Buddy and Hazel are ages 72 and 71 and file a joint return.If they have itemized deductions of $13,500 for 2010,they should not claim the standard deduction.

Albert buys his mother a used car.For purposes of meeting the support test,Albert cannot count the cost of the used car.

Ashley earns a salary of $35,000,has capital gains of $4,000,and interest income of $3,000 in 2010.Her husband died in 2009.Ashley has a dependent son,Tyrone,who is age 8.Her itemized deductions are $9,000.

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 2010 of $120,000.Her deductions are as follows: $30,000 business and $8,100 itemized.

When separate income tax returns are filed by married taxpayers,one spouse cannot claim the other spouse as an exemption.

In January 2010,Jake's wife dies and he does not remarry.For tax year 2010,Jake may not be able to use the filing status available to married persons filing joint returns.

Robert had the following transactions for 2010: What is Robert's AGI for 2010?

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

Ellen,age 12,lives in the same household with her father,grandfather,and uncle.The cost of maintaining the household is provided by her grandfather (40%)and her uncle (60%).Disregarding tie-breaker rules,Ellen is a qualifying child as to:

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

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

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

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

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

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

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

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

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