Question 1

The general business credits are refundable credits.

Accepted Answer

A) True 
 B)False

Question 2

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 3

Lavonne has a regular tax liability of $13,356 on taxable income of $70,000. She also has tax preferences of $25,000 and positive adjustments attributable to limitations on itemized deductions of $15,000. Lavonne is single and takes a $3,950 personal exemption for herself only. Lavonne's alternative minimum tax for 2014 is

Accepted Answer

A) $0. 
B) $2,543. 
C) $16,271. 
D) none of the above.

Question 4

Tom and Anita are married, file a joint return with an AGI of $165,000, and have one dependent child, Tim, who is a first-time freshman in college. The following expenses are incurred and paid in 2014:
  What is the maximum education credit allowed to Tom and Anita?

Accepted Answer

The answer of Tom and Anita are married, file a...

Question 5

Evan and Barbara incurred qualified adoption expenses in 2013 of $6,000, and then incurred $7,500 more in 2014 when the adoption of their child became final. Their 2013 AGI was $110,000 and their 2014 AGI was $100,000. The allowable adoption credit is

Accepted Answer

A) $13,190 in 2014. 
B) $13,500 in 2014. 
C) $6,000 in 2013 and $7,190 in 2014. 
D) $6,000 in 2013 and $7,500 in 2014.

Question 6

Sonya started a self-employed consulting business in the last part of the year and earned $40,000. She had been employed as manager in a consulting firm prior to starting her own business and had earned $125,000.
(a)What is Sonya's self employment tax for 2014?
(b)What is Sonya's deduction for AGI for the SE tax?

Accepted Answer

The answer of Sonya started a self-employed consulting business in...

Question 7

Harley's tentative minimum tax is computed by multiplying the AMT tax rates by her

Accepted Answer

A) taxable income. 
B) alternative minimum tax base. 
C) alternative minimum taxable income. 
D) tentative alternative taxable income.

Question 8

Ivan has generated the following taxes and credits this year:
  How much general business credit will he apply to the current year tax liability?

Accepted Answer

The answer of Ivan has generated the following taxes and...

Question 9

Tyler and Molly, who are married filing jointly with $210,000 of AGI in 2014, incurred the following expenses in their efforts to adopt a child:
  The adoption was finalized in 2014. What is the amount of the allowable adoption credit in 2014?

Accepted Answer

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

Question 10

With respect to estimated tax payments for a taxpayer with AGI of $150,000 or lower in the prior year, all of the following are generally true with the exception of

Accepted Answer

A) no penalty is imposed if the estimated tax is less than $1,000. 
B) no penalty is imposed if the individual has no tax liability for the prior year. 
C) no underpayment penalty is imposed if the estimated payments total at least 90% of the tax due for the current year. 
D) no underpayment penalty is imposed if the estimated payments total at least 90% of the actual tax liability for the prior year.

Question 11

Reva and Josh Lewis had alternative minimum taxable income of $350,000 in 2014 and file a joint return. For purposes of computing the alternative minimum tax, their exemption is

Accepted Answer

A) $33,725. 
B) $52,800. 
C) $48,375. 
D) $82,100.

Question 12

Individuals without children are eligible for the earned income credit if they meet all the following conditions except

Accepted Answer

A) file married filing separately. 
B) at tax year end are at least age 25 but not more than age 64. 
C) for the tax year are not a dependent of another taxpayer. 
D) the United States is their principal place of residence for more than one-half of the tax year.

Question 13

Nonrefundable credits may offset tax liability but may not result in additional payments to the taxpayer.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) $ 0. 
B) $1,000. 
C) $1,500. 
D) $2,500.

Question 15

Casualty and theft losses in excess of 10% of AGI are deductible for AMT purposes.

Accepted Answer

A) True 
 B)False

Question 16

If an individual is classified as an employee, the employer is required to withhold the employee's share of the FICA tax and to provide a matching amount.

Accepted Answer

A) True 
 B)False

Question 17

Lara started a self-employed consulting business in the last part of the year and earned $60,000 of self- employment income. She had been employed as manager in a consulting firm prior to starting her own business and had earned $175,000.
(a)What is Lara's Additional Medicare Tax for 2014, if any?
(b)What is Lara's deduction for AGI for the Additional Medicare Tax?

Accepted Answer

The answer of Lara started a self-employed consulting business in...

Question 18

All of the following are allowable deductions under the alternative minimum tax except

Accepted Answer

A) charitable contributions. 
B) gambling losses. 
C) qualified housing interest. 
D) personal property taxes.

Question 19

An example of an AMT tax preference is the excess of MACRS depreciation on equipment over depreciation computed by using the the 150% declining balance method.

Accepted Answer

A) True 
 B)False

Question 20

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.

Accepted Answer

A) True 
 B)False

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

The general business credits are refundable credits.

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.

Tom and Anita are married, file a joint return with an AGI of $165,000, and have one dependent child, Tim, who is a first-time freshman in college. The following expenses are incurred and paid in 2014: What is the maximum education credit allowed to Tom and Anita?

Evan and Barbara incurred qualified adoption expenses in 2013 of $6,000, and then incurred $7,500 more in 2014 when the adoption of their child became final. Their 2013 AGI was $110,000 and their 2014 AGI was $100,000. The allowable adoption credit is

Harley's tentative minimum tax is computed by multiplying the AMT tax rates by her

Ivan has generated the following taxes and credits this year: How much general business credit will he apply to the current year tax liability?

Tyler and Molly, who are married filing jointly with $210,000 of AGI in 2014, incurred the following expenses in their efforts to adopt a child: The adoption was finalized in 2014. What is the amount of the allowable adoption credit in 2014?

With respect to estimated tax payments for a taxpayer with AGI of $150,000 or lower in the prior year, all of the following are generally true with the exception of

Reva and Josh Lewis had alternative minimum taxable income of $350,000 in 2014 and file a joint return. For purposes of computing the alternative minimum tax, their exemption is

Individuals without children are eligible for the earned income credit if they meet all the following conditions except

Nonrefundable credits may offset tax liability but may not result in additional payments to the taxpayer.

Casualty and theft losses in excess of 10% of AGI are deductible for AMT purposes.

If an individual is classified as an employee, the employer is required to withhold the employee's share of the FICA tax and to provide a matching amount.

All of the following are allowable deductions under the alternative minimum tax except

An example of an AMT tax preference is the excess of MACRS depreciation on equipment over depreciation computed by using the the 150% declining balance method.

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.