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

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Question 81

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In 2016,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 2016.

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$38,100.Tom's standard deduction is $6,3...

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Question 82

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

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Question 83

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Warren,age 17,is claimed as a dependent by his father.In 2016,Warren has dividend income of $1,500 and earns $400 from a part-time job. a.What is Warren's taxable income for 2016? b.Suppose Warren earned $1,200 (not $400)from the part-time job.What is Warren's taxable income for 2016?

Regarding dependency exemptions, classify each statement in one of the four categories: 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. -A daughter who does not live with taxpayer.

Claude's deductions from AGI exceed the standard deduction allowed for the current year.Under these circumstances,Claude cannot claim the standard deduction.

Which,if any,of the statements regarding the standard deduction is correct?

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

Gain on the sale of collectibles held for more than 12 months always is subject to a tax rate of 28%.

In terms of timing as to any one year,the Tax Tables are available before the Tax Rate Schedules.

Match the statements that relate to each other. Note: Choice l. may be used more than once. 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. -$1,050

All exclusions from gross income are reported on Form 1040.

Tony,age 15,is claimed as a dependent by his grandmother.During 2016,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:

During the year,Irv had the following transactions: Long-term loss on the sale of business use equipment $7,000 Long-term loss on the sale of personal use camper 6,000 Long-term gain on the sale of personal use boat 3,000 Short-term loss on the sale of stock investment 4,000 Long-term loss on the sale of land investment 5,000 How are these transactions handled for income tax purposes?

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 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. -Relationship test (for dependency exemption purposes)

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

In January 2016,Jake's wife dies and he does not remarry.For tax year 2016,Jake may not be able to use the filing status available to married persons filing joint returns.

If an individual does not spend funds that have been received from another source (e.g. ,interest on municipal bonds),the unexpended amounts are not considered for purposes of the support test.

Which of the following taxpayers may file as a head of household in 2016? ​ Ron provides all the support for his mother,Betty,who lives by herself in an apartment in Fort Lauderdale.Ron pays the rent and other expenses for the apartment and properly claims his mother as a dependent. ​ Tammy provides over one-half the support for her 18-year old brother,Dan.Dan earned $4,200 in 2016 working at a fast food restaurant and is saving his money to attend college in 2017.Dan lives in Tammy's home. ​ Joe's wife left him late in December of 2015.No legal action was taken and Joe has not heard from her in 2016.Joe supported his 6-year-old son,who lived with him throughout 2016.

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

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