Question 1

The Hutters filed a joint return for 2018. They provide more than 50% of the support of Carla, Ellie, and Aaron. Carla (age 18) is a cousin and earns $2,800 from a part-time job. Ellie (age 25) is their daughter and is a full-time law student. She received a $7,500 scholarship for tuition from her law school. Aaron is a brother who is a citizen of Israel but resides in France. Carla and Ellie live with the Hutters. How many dependents can the Hutters claim?

Accepted Answer

A)  None 
B)  One 
C)  Two 
D)  Three

Question 2

Michaella, age 23, is a full-time law student and is claimed by her parents as a dependent. During 2018, she received $1,400 interest income from a bank savings account and $11,800 from a part-time job. What is Michaella's taxable income for 2018?

Accepted Answer

The answer of Michaella, age 23, is a full-time law...

Question 3

Match the statements that relate to each other. Note: Choice l. may be used more than once.
a. Available to a 70-year-old father claimed as a dependent by his son.
b. Equal to tax liability divided by taxable income.
c. The highest income tax rate applicable to a taxpayer.
d. Not eligible for the standard deduction.
e. No one qualified taxpayer meets the support test. 
f. Taxpayer's ex-husband does not qualify.
g. A dependent child (age 18) who has only unearned income.
h. Highest applicable rate is 37%.
i. Applicable rate could be as low as 0%. 
j. Maximum rate is 28%.
k. No correct match provided.
-Tax Rate Schedule

Accepted Answer

The answer of Match the statements that relate to each...

Question 4

In satisfying the support test and the gross income test for claiming someone as a dependent, a scholarship received by the person being claimed is handled the same way for each test. Do you agree or disagree with this statement? Why?

Accepted Answer

The answer of In satisfying the support test and the...

Question 5

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 6

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 7

Evan and Eileen Carter are husband and wife and file a joint return for 2018. Both are under 65 years of age. They provide more than half of the support of their daughter, Pamela (age 25), who is a full-time medical student. Pamela receives a $5,000 scholarship covering her tuition at college. They furnish all of the support of Belinda (Evan's grandmother), who is age 80 and lives in a nursing home. They also support Peggy (age 66), who is a friend of the family and lives with them. How many dependents may the Carters claim?

Accepted Answer

A)  None 
B)  One 
C)  Two 
D)  Three

Question 8

In 2018, Hal furnishes more than half of the support of his ex-wife and her father, both of whom live with him. The divorce occurred in 2017. Hal may claim the father-in-law and the ex-wife as dependents.

Accepted Answer

A) True 
 B)False

Question 9

Contrast the tax consequences resulting from the following filing status situations:
a. Married filing jointly versus married filing separately.
b. Married filing separately versus single.
c. Married filing separately versus abandoned spouse status.

Accepted Answer

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

Question 10

All exclusions from gross income are reported on Form 1040.

Accepted Answer

A) True 
 B)False

Question 11

Ashley had the following transactions during 2017:

Accepted Answer

The answer of Ashley had the following transactions during 2017:
...

Question 12

For 2018, Tom has taxable income of $48,005. When he uses the Tax Tables, Tom finds that his tax liability is higher than under the Tax Rate Schedules.
a. Why is there a difference?
b. Can Tom use the Tax Rate Schedules?

Accepted Answer

The answer of For 2018, Tom has taxable income of...

Question 13

Howard, age 82, dies on January 2, 2018. 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 14

In determining whether the gross income test is met for determining dependency status, only the taxable portion of a scholarship is considered.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Mel is not quite sure whether an expenditure he made is a deduction for AGI or a deduction from AGI. Since he plans to choose the standard deduction option for the year, does the distinction matter? Explain.

Accepted Answer

The answer of Mel is not quite sure whether an...

Question 17

Match the statements that relate to each other. Note: Choice l. may be used more than once.
a. Available to a 70-year-old father claimed as a dependent by his son.
b. Equal to tax liability divided by taxable income.
c. The highest income tax rate applicable to a taxpayer.
d. Not eligible for the standard deduction.
e. No one qualified taxpayer meets the support test. 
f. Taxpayer's ex-husband does not qualify.
g. A dependent child (age 18) who has only unearned income.
h. Highest applicable rate is 37%.
i. Applicable rate could be as low as 0%. 
j. Maximum rate is 28%.
k. No correct match provided.
-Kiddie tax may be imposed

Accepted Answer

The answer of Match the statements that relate to each...

Question 18

In 2018, Tom is single and has AGI of $50,000. He is age 70, has no dependents, and has itemized deductions (i.e.,from AGI) of $7,000. Determine Tom's taxable income for 2018.

Accepted Answer

The answer of In 2018, Tom is single and has...

Question 19

Many taxpayers who previously itemized will start claiming the standard deduction when they purchase a home.

Accepted Answer

A) True 
 B)False

Question 20

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.

Exam 3: Computing the Tax

Michaella, age 23, is a full-time law student and is claimed by her parents as a dependent. During 2018, she received $1,400 interest income from a bank savings account and $11,800 from a part-time job. What is Michaella's taxable income for 2018?

In satisfying the support test and the gross income test for claiming someone as a dependent, a scholarship received by the person being claimed is handled the same way for each test. Do you agree or disagree with this statement? Why?

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

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.

In 2018, Hal furnishes more than half of the support of his ex-wife and her father, both of whom live with him. The divorce occurred in 2017. Hal may claim the father-in-law and the ex-wife as dependents.

Contrast the tax consequences resulting from the following filing status situations: a. Married filing jointly versus married filing separately. b. Married filing separately versus single. c. Married filing separately versus abandoned spouse status.

All exclusions from gross income are reported on Form 1040.

Ashley had the following transactions during 2017:

For 2018, Tom has taxable income of $48,005. When he uses the Tax Tables, Tom finds that his tax liability is higher than under the Tax Rate Schedules. a. Why is there a difference? b. Can Tom use the Tax Rate Schedules?

Howard, age 82, dies on January 2, 2018. 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.

In determining whether the gross income test is met for determining dependency status, only the taxable portion of a scholarship is considered.

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:

Mel is not quite sure whether an expenditure he made is a deduction for AGI or a deduction from AGI. Since he plans to choose the standard deduction option for the year, does the distinction matter? Explain.

In 2018, Tom is single and has AGI of $50,000. He is age 70, has no dependents, and has itemized deductions (i.e.,from AGI) of $7,000. Determine Tom's taxable income for 2018.

Many taxpayers who previously itemized will start claiming the standard deduction when they purchase a home.

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