Question 1

Adjusted gross income (AGI) sets the ceiling or the floor for certain deductions. Explain and illustrate what this statement means.

Accepted Answer

By a ceiling what is meant is that the d...

Question 2

The Dargers have itemized deductions that exceed the standard deduction. However, when they file their joint return, they choose the standard deduction option.
a. Is this proper procedure?
b. Aside from a possible misunderstanding as to the tax law, what might be the reason for the Darger's choice?

Accepted Answer

a. Yes. The choice between itemizing and...

Question 3

Match the statements that relate to each other. Note: Choice L may be used more than once.
-Territorial system of taxation

Accepted Answer

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 ex­husband does not qualify.G) A dependent child (age 18)  who has only unearned income.H) Highest applicable rate is 39.6%.I) Applicable rate could be as low as 0%.J) Maximum rate is 28%.K) Income from foreign sources is not subject to tax.L) No correct match provided.M) D) and I)
N) F) and J)

Question 4

Match the statements that relate to each other. Note: Choice L may be used more than once.
-Multiple support agreement

Accepted Answer

A)  Not available to 65-year old taxpayer who itemizes.
B)  Exception for U.S. citizenship or residency test (for dependency exemption purposes) .
C)  Largest basic standard deduction available to a dependent who has no earned income.
D)  Considered for dependency exemption purposes.
E)  Qualifies for head of household filing status.F) A child (age 15)  who is a dependent and has only earned income.G) Considered in applying gross income test (for dependency exemption purposes) .H) Not considered in applying the gross income test (for dependency exemption purposes) .I) Unmarried taxpayer who can use the same tax rates as married persons filing jointly.J) Exception to the support test (for dependency exemption purposes) .K) A child (age 16)  who is a dependent and has only unearned income of $4,500.L) No correct match provided.M) C) and K)
N) E) and I)

Question 5

Sylvia, age 17, is claimed by her parents as a dependent. During 2014, she had interest income from a bank savings account of $2,000 and income from a part­time job of $4,200. Sylvia'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 the above.F) B) and C)
G) A) and B)

Question 6

In 2014, Frank sold his personal use automobile for a loss of $9,000. He also sold a personal coin collection for a gain of $10,000. As a result of these sales, $10,000 is subject to income tax.

Accepted Answer

A) True 
 B)False

Question 7

Regarding the rules applicable to filing of income tax returns, which, if any, of the following is an incorrect statement:

Accepted Answer

A)   Married persons who file joint returns cannot later (after the due date of the return)  substitute separate returns.
B)   Married persons who file separate returns can later (after the due date of the return)  substitute a joint return.
C)   The usual test as to when a taxpayer must file a return is based on the total of the following: personal exemption + basic standard deduction + both additional standard deductions.
D)   Special filing requirement rules exist for taxpayers who are claimed as dependents of another.
E)   None of the above.F) C) and D)
G) C) and E)

Question 8

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 9

Match the statements that relate to each other. Note: Choice L may be used more than once.
-Gain on collectibles (held more than one year)

Accepted Answer

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 ex­husband does not qualify.G) A dependent child (age 18)  who has only unearned income.H) Highest applicable rate is 39.6%.I) Applicable rate could be as low as 0%.J) Maximum rate is 28%.K) Income from foreign sources is not subject to tax.L) No correct match provided.M) F) and J)
N) B) and F)

Question 10

Currently, the top income tax rate in effect is not the highest it has ever been.

Accepted Answer

A) True 
 B)False

Question 11

Lee, a citizen of Korea, is a resident of the U.S. Any rent income Lee receives from land he owns in Korea is not subject to the U.S. income tax.

Accepted Answer

A) True 
 B)False

Question 12

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

It makes a great deal of difference if t...

Question 13

In 2014, 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 2014.

Accepted Answer

$38,300. Tom's standard deduction is $6,...

Question 14

Monique is a resident of the U.S. and a citizen of France. If she files a U.S. income tax return, Monique cannot claim the standard deduction.

Accepted Answer

A) True 
 B)False

Question 15

Debby, age 18, is claimed as a dependent by her mother. During 2014, she earned $1,100 in interest income on a savings account. Debby's standard deduction is $1,450 ($1,100 + $350).

Accepted Answer

A) True 
 B)False

Question 16

The filing status of a taxpayer (e.g., single, head of household) must be identified before the applicable standard deduction is determined.

Accepted Answer

A) True 
 B)False

Question 17

In early 2014, Ben sold a yacht, held for 9 months and for pleasure, for a $5,000 gain. Concerned about offsetting the gain before year­end, Ben is considering selling one of the following-each of which would yield a $5,000 loss:
-Houseboat used for recreation.
-Truck used in business.
-Stock investment held for 13 months.
Evaluate each choice.

Accepted Answer

The sale of the houseboat produces no be...

Question 18

Match the statements that relate to each other. Note: Choice L may be used more than once.
-Scholarship funds for room and board

Accepted Answer

A)  Not available to 65-year old taxpayer who itemizes.
B)  Exception for U.S. citizenship or residency test (for dependency exemption purposes) .
C)  Largest basic standard deduction available to a dependent who has no earned income.
D)  Considered for dependency exemption purposes.
E)  Qualifies for head of household filing status.F) A child (age 15)  who is a dependent and has only earned income.G) Considered in applying gross income test (for dependency exemption purposes) .H) Not considered in applying the gross income test (for dependency exemption purposes) .I) Unmarried taxpayer who can use the same tax rates as married persons filing jointly.J) Exception to the support test (for dependency exemption purposes) .K) A child (age 16)  who is a dependent and has only unearned income of $4,500.L) No correct match provided.M) A) and L)
N) B) and D)

Question 19

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 taxable income, a taxpayer must choose between the standard deduction and deductions from AGI.
B)   In arriving at AGI, personal and dependency exemptions must be subtracted from gross income.
C)   In arriving at taxable income, a taxpayer must choose between the standard deduction and claiming personal and dependency exemptions.
D)   The formula does not apply if a taxpayer elects to claim the standard deduction.
E)   None of the above.F) B) and C)
G) All of the above

Question 20

Regarding dependency exemptions, classify each statement in one of the four categories:
-An ex-husband (divorce occurred last year)  who lives with taxpayer.

Accepted Answer

A)  Could be a qualifying child.
B)  Could be a qualifying relative.
C)  Could be either a qualifying child or a qualifying relative.
D)  Could be neither a qualifying child nor a qualifying relative.E) A) and D)
F) A) and C)

Exam 3: Computing the Tax

Debby, age 18, is claimed as a dependent by her mother. During 2014, she earned $1,100 in interest income on a savings account. Debby's standard deduction is $1,450 ($1,100 + $350).

Correct Answer
verified

The filing status of a taxpayer (e.g., single, head of household) must be identified before the applicable standard deduction is determined.

Correct Answer
verified

Match the statements that relate to each other. Note: Choice L may be used more than once. -Gain on collectibles (held more than one year)

Correct Answer
verified

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

Correct Answer
verified

Lee, a citizen of Korea, is a resident of the U.S. Any rent income Lee receives from land he owns in Korea is not subject to the U.S. income tax.

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

Correct Answer
verified

In 2014, Frank sold his personal use automobile for a loss of $9,000. He also sold a personal coin collection for a gain of $10,000. As a result of these sales, $10,000 is subject to income tax.

Correct Answer
verified

Match the statements that relate to each other. Note: Choice L may be used more than once. -Multiple support agreement

Correct Answer
verified

Match the statements that relate to each other. Note: Choice L may be used more than once. -Territorial system of taxation

Correct Answer
verified

The Dargers have itemized deductions that exceed the standard deduction. However, when they file their joint return, they choose the standard deduction option. a. Is this proper procedure? b. Aside from a possible misunderstanding as to the tax law, what might be the reason for the Darger's choice?

Correct Answer
verified
a. Yes. The choice between itemizing and...
View Answer

Correct Answer
verified
The sale of the houseboat produces no be...
View Answer

In 2014, 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 2014.

Correct Answer
verified
$38,300. Tom's standard deduction is $6,...
View Answer

Adjusted gross income (AGI) sets the ceiling or the floor for certain deductions. Explain and illustrate what this statement means.

Correct Answer
verified
By a ceiling what is meant is that the d...
View Answer

Sylvia, age 17, is claimed by her parents as a dependent. During 2014, she had interest income from a bank savings account of $2,000 and income from a parttime job of $4,200. Sylvia's taxable income is:

Correct Answer
verified

Monique is a resident of the U.S. and a citizen of France. If she files a U.S. income tax return, Monique cannot claim the standard deduction.

Correct Answer
verified

Regarding the rules applicable to filing of income tax returns, which, if any, of the following is an incorrect statement:

Correct Answer
verified

Regarding dependency exemptions, classify each statement in one of the four categories: -An ex-husband (divorce occurred last year) who lives with taxpayer.

Correct Answer
verified

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.

Correct Answer
verified
It makes a great deal of difference if t...
View Answer

Currently, the top income tax rate in effect is not the highest it has ever been.

Correct Answer
verified

Match the statements that relate to each other. Note: Choice L may be used more than once. -Scholarship funds for room and board

Correct Answer
verified

Exam 3: Computing the Tax

Debby, age 18, is claimed as a dependent by her mother. During 2014, she earned $1,100 in interest income on a savings account. Debby's standard deduction is $1,450 ($1,100 + $350).

Correct AnswerverifiedShow Answer

The filing status of a taxpayer (e.g., single, head of household) must be identified before the applicable standard deduction is determined.

Correct AnswerverifiedShow Answer

Match the statements that relate to each other. Note: Choice L may be used more than once. -Gain on collectibles (held more than one year)

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Lee, a citizen of Korea, is a resident of the U.S. Any rent income Lee receives from land he owns in Korea is not subject to the U.S. income tax.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In 2014, Frank sold his personal use automobile for a loss of $9,000. He also sold a personal coin collection for a gain of $10,000. As a result of these sales, $10,000 is subject to income tax.

Correct AnswerverifiedShow Answer

Match the statements that relate to each other. Note: Choice L may be used more than once. -Multiple support agreement

Correct AnswerverifiedShow Answer

Match the statements that relate to each other. Note: Choice L may be used more than once. -Territorial system of taxation

Correct AnswerverifiedShow Answer

The Dargers have itemized deductions that exceed the standard deduction. However, when they file their joint return, they choose the standard deduction option. a. Is this proper procedure? b. Aside from a possible misunderstanding as to the tax law, what might be the reason for the Darger's choice?

Correct Answerverifieda. Yes. The choice between itemizing and...View AnswerShow Answer

Correct AnswerverifiedThe sale of the houseboat produces no be...View AnswerShow Answer

In 2014, 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 2014.

Correct Answerverified$38,300. Tom's standard deduction is $6,...View AnswerShow Answer

Adjusted gross income (AGI) sets the ceiling or the floor for certain deductions. Explain and illustrate what this statement means.

Correct AnswerverifiedBy a ceiling what is meant is that the d...View AnswerShow Answer

Sylvia, age 17, is claimed by her parents as a dependent. During 2014, she had interest income from a bank savings account of $2,000 and income from a part­time job of $4,200. Sylvia's taxable income is:

Correct AnswerverifiedShow Answer

Monique is a resident of the U.S. and a citizen of France. If she files a U.S. income tax return, Monique cannot claim the standard deduction.

Correct AnswerverifiedShow Answer

Regarding the rules applicable to filing of income tax returns, which, if any, of the following is an incorrect statement:

Correct AnswerverifiedShow Answer

Regarding dependency exemptions, classify each statement in one of the four categories: -An ex-husband (divorce occurred last year) who lives with taxpayer.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedIt makes a great deal of difference if t...View AnswerShow Answer

Currently, the top income tax rate in effect is not the highest it has ever been.

Correct AnswerverifiedShow Answer

Match the statements that relate to each other. Note: Choice L may be used more than once. -Scholarship funds for room and board

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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a. Yes. The choice between itemizing and...
View Answer

Correct Answer
verified
The sale of the houseboat produces no be...
View Answer

Correct Answer
verified
$38,300. Tom's standard deduction is $6,...
View Answer

Correct Answer
verified
By a ceiling what is meant is that the d...
View Answer

Sylvia, age 17, is claimed by her parents as a dependent. During 2014, she had interest income from a bank savings account of $2,000 and income from a parttime job of $4,200. Sylvia's taxable income is:

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
It makes a great deal of difference if t...
View Answer

Correct Answer
verified

Correct Answer
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