Question 1

Butch and Minerva are divorced in December of 2018. Since they were married for more than one-half of the year, they are considered as married for 2018.

Accepted Answer

A) True 
 B)False

Question 2

Tony, age 15, is claimed as a dependent by his grandmother. During 2018, Tony had interest income from Boeing Corporation bonds of $1,000 and earnings from a part-time job of $800. Tony's taxable income is:

Accepted Answer

A)  $1,800. 
B)  $1,800 - $800 - $1,050 = $50). 
C)  $1,800 - $1,150 = $650. 
D)  $1,800 - $1,050 = $750. 
E)  None of these.

Question 3

Darren, age 20 and not disabled, earns $4,300 during 2018. Darren's parents cannot claim him as a dependent unless he is a full-time student.

Accepted Answer

A) True 
 B)False

Question 4

Which, if any, of the following is a deduction for AGI?

Accepted Answer

A)  State and local sales taxes. 
B)  Interest on home mortgage. 
C)  Charitable contributions. 
D)  Unreimbursed moving expenses of an employee not in the military). 
E)  None of these.

Question 5

Which, if any, of the following is a deduction for AGI?

Accepted Answer

A)  Contributions to a traditional Individual Retirement Account. 
B)  Child support payments. 
C)  Funeral expenses. 
D)  Loss on the sale of a personal residence. 
E)  Medical expenses.

Question 6

Under the Federal income tax formula for individuals, a choice must be made between claiming deductions for AGI and itemized deductions.

Accepted Answer

A) True 
 B)False

Question 7

In January 2018, Jake's wife dies and he does not remarry. For tax year 2018, Jake may not be able to use the filing status available to married persons filing joint returns.

Accepted Answer

A) True 
 B)False

Question 8

After her divorce, Hope continues to support her ex-husband's sister, Cindy, who does not live with her. Hope can
claim Cindy as a dependent.

Accepted Answer

A) True 
 B)False

Question 9

The kiddie tax does not apply to a child whose earned income is more than one-half of his or her support.

Accepted Answer

A) True 
 B)False

Question 10

An individual taxpayer uses a fiscal year of March 1 to February 28. The due date of this taxpayer's Federal income tax return is May 15 of each tax year.

Accepted Answer

A) True 
 B)False

Question 11

After Ellie moves out of the apartment she had rented as her personal residence, she recovers her damage deposit of $1,000. The $1,000 is not income to Ellie.

Accepted Answer

A) True 
 B)False

Question 12

Regarding the tax formula and its relationship to Form 1040, which, if any, of the following statements is correct?

Accepted Answer

A)  Most exclusions from gross income are reported on page 2 of Form 1040. 
B)  An "above the line deduction" refers to a deduction from AGI. 
C)  A "page 1 deduction" refers to a deduction for AGI. 
D)  The taxable income TI) amount appears both at the bottom of page 1 and at the top of page 2 of Form 1040. 
E)  None of these.

Question 13

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

Accepted Answer

The answer of When can a taxpayer not use Form...

Question 14

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 AGI, a taxpayer must elect between claiming deductions for AGI and deductions from AGI. 
B)  In arriving at taxable income, a taxpayer must elect between claiming deductions for AGI and deductions from AGI. 
C)  If a taxpayer has deductions for AGI, the standard deduction is not available. 
D)  In arriving at taxable income, a taxpayer must elect between deductions for AGI and the standard deduction. 
E)  None of these.

Question 15

The Deweys are expecting to save on their taxes for 2018. Not only have both incurred large medical expenses, but both reached age 65. During the year, they also recognized a $30,000 loss on some land they sold which was purchased as an investment several years ago. Are the Deweys under a mistaken understanding regarding their tax position? Explain.

Accepted Answer

The answer of The Deweys are expecting to save on...

Question 16

In applying the gross income test in the case of dependents that are married, could the application of community property laws have any effect? Explain.

Accepted Answer

The answer of In applying the gross income test in...

Question 17

Sarah furnishes more than 50% of the support of her son and daughter-in-law who live with her. If the son and daughter-in-law file a joint return, Sarah cannot claim them as dependents.

Accepted Answer

A) True 
 B)False

Question 18

Ayla, age 17, is claimed by her parents as a dependent. During 2018, she had interest income from a bank savings account of $2,000 and income from a part-time job of $4,200. Ayla's taxable income is:

Accepted Answer

A)  $4,200 - $4,550 = $0. 
B)  $6,200 - $5,700 = $500. 
C)  $6,200 - $4,550 = $1,650. 
D)  $6,200 - $1,000 = $5,200. 
E)  None of these.

Question 19

Katelyn is divorced and maintains a household in which she and her daughter, Crissa, live. Crissa, age 22, earns
$11,000 during 2018 as a model. Katelyn does not qualify for head of household filing status.

Accepted Answer

A) True 
 B)False

Question 20

Under the income tax formula, a taxpayer must choose between deductions for AGI and the standard deduction.

Accepted Answer

A) True 
 B)False

Exam 3: Tax Formula and Tax Determination an Overview of Property Transactions

Butch and Minerva are divorced in December of 2018. Since they were married for more than one-half of the year, they are considered as married for 2018.

Tony, age 15, is claimed as a dependent by his grandmother. During 2018, Tony had interest income from Boeing Corporation bonds of $1,000 and earnings from a part-time job of $800. Tony's taxable income is:

Darren, age 20 and not disabled, earns $4,300 during 2018. Darren's parents cannot claim him as a dependent unless he is a full-time student.

Which, if any, of the following is a deduction for AGI?

Which, if any, of the following is a deduction for AGI?

Under the Federal income tax formula for individuals, a choice must be made between claiming deductions for AGI and itemized deductions.

In January 2018, Jake's wife dies and he does not remarry. For tax year 2018, Jake may not be able to use the filing status available to married persons filing joint returns.

After her divorce, Hope continues to support her ex-husband's sister, Cindy, who does not live with her. Hope can claim Cindy as a dependent.

The kiddie tax does not apply to a child whose earned income is more than one-half of his or her support.

An individual taxpayer uses a fiscal year of March 1 to February 28. The due date of this taxpayer's Federal income tax return is May 15 of each tax year.

After Ellie moves out of the apartment she had rented as her personal residence, she recovers her damage deposit of $1,000. The $1,000 is not income to Ellie.

Regarding the tax formula and its relationship to Form 1040, which, if any, of the following statements is correct?

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

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

In applying the gross income test in the case of dependents that are married, could the application of community property laws have any effect? Explain.

Sarah furnishes more than 50% of the support of her son and daughter-in-law who live with her. If the son and daughter-in-law file a joint return, Sarah cannot claim them as dependents.

Ayla, age 17, is claimed by her parents as a dependent. During 2018, she had interest income from a bank savings account of $2,000 and income from a part-time job of $4,200. Ayla's taxable income is:

Katelyn is divorced and maintains a household in which she and her daughter, Crissa, live. Crissa, age 22, earns $11,000 during 2018 as a model. Katelyn does not qualify for head of household filing status.

Under the income tax formula, a taxpayer must choose between deductions for AGI and the standard deduction.