Question 1

Which of the following expenditures will qualify as a research expenditure for purposes of the research credit?

Accepted Answer

A) An ice cream producer develops a new type of packaging that will keep ice cream frozen while driving home from the grocery store. 
B) An ice cream producer develops a new design on the package that will be more pleasing to the culture of a new market it is entering. 
C) An ice cream producer develops a new marketing campaign to introduce its brand to a new region of the country it is entering. 
D) All of the above qualify as research expenditures for the research credit.

Question 2

A taxpayer at risk for AMT should consider which of the following decisions?

Accepted Answer

A) investing in corporate bonds 
B) timing of state income tax estimated payments 
C) choosing a depreciation method for a new business building 
D) all of the above

Question 3

Bud and Stella are married,file a joint return,and have one child,age 3.Their combined AGI is $35,000.Bud and Stella incur $3,500 of child-care expenses during the current year.The child and dependent care credit is

Accepted Answer

A) $600. 
B) $700. 
C) $750. 
D) $875.

Question 4

Business energy tax credits are available to businesses that invest in energy-conserving solar energy properties.

Accepted Answer

A) True 
 B)False

Question 5

A taxpayer will be ineligible for the earned income credit if he or she has disqualified investment income of more than $3,400 in 2016.Disqualified income includes all the following except

Accepted Answer

A) net capital gains. 
B) tax-exempt interest. 
C) net rental income. 
D) self-employment income.

Question 6

Burton and Kay are married,file a joint return with an AGI of $115,000,and have one dependent child,Tyler,who is a full-time student in a Master of Accountancy program.The following expenses relate to his costs of attendance in 2016:
  The tuition noted above is the gross amount charged before reduction for his $5,000 tuition scholarship.What is the maximum education credit allowed to Burton and Kay?

Accepted Answer

The answer of Burton and Kay are married,file a joint...

Question 7

Jake and Christina are married and file a joint return for 2016 with taxable income of $100,000 and tax preferences and adjustments of $20,000 for AMT purposes.Their regular tax liability is $16,533.What is the amount of their total tax liability?

Accepted Answer

A) $7,121 
B) $9,412 
C) $16,533 
D) $25,945

Question 8

Nick and Nicole are both 68 years old and file a joint return.They have AGI of $15,000 and receive nontaxable Social Security payments of $4,200 during the current year.What is the amount of the tax credit for the elderly?

Accepted Answer

The answer of Nick and Nicole are both 68 years...

Question 9

Carlotta,Inc.has $50,000 foreign-source income and $150,000 worldwide income.Its U.S.tax on its worldwide income is $42,000 and it paid foreign taxes of $16,000.What is the corporation's foreign tax credit?

Accepted Answer

A) $2,000 
B) $14,000 
C) $16,000 
D) $42,000

Question 10

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?

Accepted Answer

The answer of Sam and Megan are married with two...

Question 11

During the year,Jim incurs $500,000 of rehabilitation expenditures in connection with a certified historic structure used in his business.The adjusted basis of the structure was $400,000 at the time the rehabilitation began.
a.What is the amount,if any,of his rehabilitation credit for the year?
b.What is the depreciable basis of the rehabilitation expenditures?

Accepted Answer

The answer of During the year,Jim incurs $500,000 of rehabilitation...

Question 12

For purposes of the AMT,only the foreign tax credit and refundable personal credits are allowed to reduce the tentative minimum tax.

Accepted Answer

A) True 
 B)False

Question 13

Tyler and Molly,who are married filing jointly with $210,000 of AGI in 2016,incurred the following expenses in their efforts to adopt a child:
  The adoption was finalized in 2016 What is the amount of the allowable adoption credit in 2016?

Accepted Answer

The answer of Tyler and Molly,who are married filing jointly...

Question 14

A taxpayer who paid AMT in prior years,but is not subject to the AMT in the current year,may be entitled to an AMT credit against his regular tax liability in the current year.

Accepted Answer

A) True 
 B)False

Question 15

Beth and Jay project the following taxes for the current year:
  How much in estimated tax payments (including withholding from wages and quarterly estimated payments)should the taxpayers pay this year in order to avoid underpayment penalties under the following assumptions regarding the preceding tax year?
a.Preceding tax year-AGI of $140,000 and total taxes of $36,000.
b.Preceding tax year-AGI of $155,000 and total taxes of $48,000.

Accepted Answer

The answer of Beth and Jay project the following taxes...

Question 16

ChocoHealth Inc.is developing new chocolate products providing abundant health benefits at low calorie counts.For the past three years,it spent an average of $500,000 per year on research.ChocoHealth has spent $900,000 on research.The company has elected the simplified credit.For the current year,it will earn a research credit of

Accepted Answer

A) $54,000. 
B) $126,000. 
C) $80,000. 
D) $91,000.

Question 17

Ava has net earnings from self-employment of $125,000.She also earned salary of $170,000 from a job held earlier in the year.How much Additional Medicare Tax will be owed on the self-employment income?

Accepted Answer

A) $0 
B) $769 
C) $855 
D) $3,625

Question 18

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.

Accepted Answer

The answer of Bonjour Corp.is a U.S.-based corporation with operations...

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

A larger work opportunity credit is available for employers who hire any veteran of the U.S.military.

Accepted Answer

A) True 
 B)False

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

Which of the following expenditures will qualify as a research expenditure for purposes of the research credit?

A taxpayer at risk for AMT should consider which of the following decisions?

Bud and Stella are married,file a joint return,and have one child,age 3.Their combined AGI is $35,000.Bud and Stella incur $3,500 of child-care expenses during the current year.The child and dependent care credit is

Business energy tax credits are available to businesses that invest in energy-conserving solar energy properties.

A taxpayer will be ineligible for the earned income credit if he or she has disqualified investment income of more than $3,400 in 2016.Disqualified income includes all the following except

Jake and Christina are married and file a joint return for 2016 with taxable income of $100,000 and tax preferences and adjustments of $20,000 for AMT purposes.Their regular tax liability is $16,533.What is the amount of their total tax liability?

Nick and Nicole are both 68 years old and file a joint return.They have AGI of $15,000 and receive nontaxable Social Security payments of $4,200 during the current year.What is the amount of the tax credit for the elderly?

Carlotta,Inc.has $50,000 foreign-source income and $150,000 worldwide income.Its U.S.tax on its worldwide income is $42,000 and it paid foreign taxes of $16,000.What is the corporation's foreign tax credit?

For purposes of the AMT,only the foreign tax credit and refundable personal credits are allowed to reduce the tentative minimum tax.

Tyler and Molly,who are married filing jointly with $210,000 of AGI in 2016,incurred the following expenses in their efforts to adopt a child: The adoption was finalized in 2016 What is the amount of the allowable adoption credit in 2016?

A taxpayer who paid AMT in prior years,but is not subject to the AMT in the current year,may be entitled to an AMT credit against his regular tax liability in the current year.

Ava has net earnings from self-employment of $125,000.She also earned salary of $170,000 from a job held earlier in the year.How much Additional Medicare Tax will be owed on the self-employment income?

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

A larger work opportunity credit is available for employers who hire any veteran of the U.S.military.