Question 1

A taxpayer can receive innocent spouse relief if

Accepted Answer

A) the understated tax is attributable to erroneous items of the other spouse. 
B) the innocent spouse did not know and had no reason to know that there was an understatement of tax. 
C) under the circumstances,it would be inequitable to hold the innocent spouse liable for the understated tax. 
D) All of the above conditions apply.

Question 2

Paige is starting Paige's Poodle Parlor and is considering alternative organizational forms.She anticipates the business will earn $100,000 from operating before compensating her for her services and before charitable contributions.Page,who is single,has $6,000 of income from other sources and other itemized deductions of $12,000.Her compensation for services will be $50,000.Charitable contributions to be made by the business are expected to be $5,000.Other distributions (dividends)to her from the business are expected to be $14,000.
Required: Compare her current income tax assuming she operates the business as a proprietorship,an S corporation,and a C corporation.Ignore payroll and other taxes.

Accepted Answer

The answer of Paige is starting Paige's Poodle Parlor and...

Question 3

Husband and wife,who live in a common law state,are eligible to file a joint return for 2017,but elect to file separately.They do not have dependents.Wife has adjusted gross income of $25,000 and has $2,200 of expenditures which qualify as itemized deductions.She is entitled to one exemption.Husband deducts itemized deductions of $11,200.What is the taxable income for the wife?

Accepted Answer

A) $14,600 
B) $18,750 
C) $20,950 
D) None of the above.

Question 4

Deborah,who is single,is claimed as a dependent on her parents' tax return.She had a part-time job during 2017 and earned $850 during the year,which was her only income.What is her standard deduction?

Accepted Answer

A) $850 
B) $1,050 
C) $1,200 
D) $6,350

Question 5

Adam attended college for much of 2017,during which time he was supported by his parents.Erin married Adam in December 2017.They live in a common law state.Adam graduated and will commence work in January 2018.Erin worked during 2017 and earned $20,000.Adam's only income was interest of $1,100.Adam's parents are in the 28% tax bracket.Thus,claiming Adam as a dependent would save them $1,134 ($4,050 × .28).
a.What is Erin and Adam's tax liability if they file a joint return?
b.What is Erin and Adam's total tax liability if they file separate returns and Adam's parents claim him as a dependent?

Accepted Answer

The answer of Adam attended college for much of 2017,during...

Question 6

Ryan and Edith file a joint return showing $130,000 of AGI.They have three dependent children ages 7,9,and 13.What is the amount of their child credit?

Accepted Answer

A) $0 
B) $1,000 
C) $2,000 
D) $3,000

Question 7

Vincent,age 12,is a dependent of his parents.During 2017,Vincent's earned income from wages is $2,600 and Vincent received $3,000 of interest income.The parent's marginal rate is 28% and Vincent's marginal rate is 10%.Vincent's tax is

Accepted Answer

A) $265. 
B) $742. 
C) $412. 
D) None of the above.

Question 8

For purposes of the dependency exemption,a qualifying child must be under age 19,a full-time student under age 24,or a permanently and totally disabled child.

Accepted Answer

A) True 
 B)False

Question 9

Bill and Tessa have two children whom they support and who live in their home.Timmy is 17 and has earned income of $5,000 for the year.Their other child,Tommy,is 15.Tessa's mother also lives with them and may be claimed as their dependent.She is 89 years old.Their adjusted gross income is $130,000.
Required: Compute Bill and Tessa's taxable income for 2017 if they file a joint return and they do not itemize deductions.

Accepted Answer

The answer of Bill and Tessa have two children whom...

Question 10

Which of the following dependent relatives does not have to live in the same household as the taxpayer who is claiming head of household filing status?

Accepted Answer

A) uncle 
B) brother 
C) father 
D) nephew

Question 11

Tax returns from individual taxpayers and partnerships are due on the 15th day of the fourth month following the close of the tax year.

Accepted Answer

A) True 
 B)False

Question 12

Discuss reasons why a married couple may choose not to file a joint return.

Accepted Answer

The answer of Discuss reasons why a married couple may...

Question 13

Avi and Rianna are considering marriage before year-end.They each earn a salary of about $150,000,have some investment income and some itemized deductions.What additional taxes will Avi and Rianna face as a married couple?

Accepted Answer

The answer of Avi and Rianna are considering marriage before...

Question 14

Assuming a calendar tax year and the conventional 15th of the month due date,all of the following business entities must file their 2017 tax returns by the March 15,2018 except

Accepted Answer

A) the C corporation. 
B) the S corporation. 
C) the partnership. 
D) All of the above entities must file their 2017 tax returns by March 15,2018.

Question 15

The filing status in which the rates increase most rapidly is

Accepted Answer

A) single. 
B) head of household. 
C) married filing separately. 
D) married filing jointly.

Question 16

The amount of Social Security tax paid by the taxpayer will be a consideration in determining the refundable component of the child credit for larger families.

Accepted Answer

A) True 
 B)False

Question 17

Although exclusions are usually not reported on an individual's income tax return,interest income on state and local government bonds must be reported on the tax return.

Accepted Answer

A) True 
 B)False

Question 18

A building used in a business is sold after five years of use for a gain.The gain will be treated as a long-term capital gain.

Accepted Answer

A) True 
 B)False

Question 19

Shane and Alyssa (a married couple)have AGI of $345,000 in 2017.They bought a house this year and paid $16,000 of interest expense on the mortgage and paid $6,500 of property taxes.They will be allowed a deduction from AGI of

Accepted Answer

A) $21,489. 
B) $22,500. 
C) $19,995. 
D) $21,564.

Question 20

Suri,age 8,is a dependent of her parents and has unearned income of $6,000.She must file her own tax return.

Accepted Answer

A) True 
 B)False

Exam 18: Determination of Tax

A taxpayer can receive innocent spouse relief if

Deborah,who is single,is claimed as a dependent on her parents' tax return.She had a part-time job during 2017 and earned $850 during the year,which was her only income.What is her standard deduction?

Ryan and Edith file a joint return showing $130,000 of AGI.They have three dependent children ages 7,9,and 13.What is the amount of their child credit?

Vincent,age 12,is a dependent of his parents.During 2017,Vincent's earned income from wages is $2,600 and Vincent received $3,000 of interest income.The parent's marginal rate is 28% and Vincent's marginal rate is 10%.Vincent's tax is

For purposes of the dependency exemption,a qualifying child must be under age 19,a full-time student under age 24,or a permanently and totally disabled child.

Which of the following dependent relatives does not have to live in the same household as the taxpayer who is claiming head of household filing status?

Tax returns from individual taxpayers and partnerships are due on the 15th day of the fourth month following the close of the tax year.

Discuss reasons why a married couple may choose not to file a joint return.

Avi and Rianna are considering marriage before year-end.They each earn a salary of about $150,000,have some investment income and some itemized deductions.What additional taxes will Avi and Rianna face as a married couple?

Assuming a calendar tax year and the conventional 15th of the month due date,all of the following business entities must file their 2017 tax returns by the March 15,2018 except

The filing status in which the rates increase most rapidly is

The amount of Social Security tax paid by the taxpayer will be a consideration in determining the refundable component of the child credit for larger families.

Although exclusions are usually not reported on an individual's income tax return,interest income on state and local government bonds must be reported on the tax return.

A building used in a business is sold after five years of use for a gain.The gain will be treated as a long-term capital gain.

Shane and Alyssa (a married couple) have AGI of $345,000 in 2017.They bought a house this year and paid $16,000 of interest expense on the mortgage and paid $6,500 of property taxes.They will be allowed a deduction from AGI of

Suri,age 8,is a dependent of her parents and has unearned income of $6,000.She must file her own tax return.