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Exam 12: Tax Credits and Payments

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Question 31

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The child tax credit is based on the number of the taxpayer's qualifying children under age 17.

A) True
B) False

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Question 32

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During the year, Green Corporation (a U.S.corporation) has U.S.-source income of $750,000 and foreign income of $500,000.The foreign-source income generates foreign income taxes of $240,000.The U.S.income tax before the foreign tax credit is $425,000.Green Corporation's foreign tax credit is:

A) $170,000.
B) $240,000.
C) $425,000.
D) $500,000.
E) None of the above.

F) C) and E)
G) A) and E)

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Question 33

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If the cost of a building constructed and placed into service by an eligible small business in the current year includes the cost of a wheelchair ramp, the cost of the ramp qualifies for the disabled access credit.

All taxpayers are eligible to take the basic research credit.

Rick spends $750,000 to build a qualified low-income housing project, which is placed in service on January 1, 2012.He financed the project using his personal funds.What is the amount of the low-income housing credit that Rick may claim in 2012 (assuming a rate of 7.42%)? What is the total amount of the credit that Rick may claim as a result of the $750,000 expenditure?

Which of the following correctly describes the tax credit for rehabilitation expenditures?

The work opportunity tax credit is available only for wages paid to qualifying individuals during their first year of employment.

In May 2012, Blue Corporation hired Camilla, Jolene, and Tyrone, all of whom are certified as long-term family assistance recipients.Each employee is paid $12,000 during 2012.Camilla and Tyrone continued to work for Blue Corporation in 2013, earning $14,000 each.Blue hired no additional employees during 2013.

Summer Corporation's business is international in scope and is subject to income taxes in several countries.Summer's earnings and income taxes paid in the relevant foreign countries are: If Summer Corporation's worldwide income subject to taxation in the United States is $2,400,000 and the U.S.income tax due prior to the foreign tax credit is $816,000, compute the allowable foreign tax credit.If, instead, the total foreign income taxes paid were $550,000, compute the allowable foreign tax credit.

The maximum credit for child and dependent care expenses is $2,100 if only one spouse is employed and the other spouse is a full-time student.

George and Martha are married and file a joint tax return claiming their two children, ages 10 and 8 as dependents.Assuming their AGI is $119,650, George and Martha's child tax credit is:

The tax benefit received from a tax credit is affected by the tax rate of the taxpayer.

Child care payments to a relative are not eligible for the credit for child and dependent care expenses if the relative is a child (under age 19) of the taxpayer.

Cardinal Company incurs $800,000 during the year to construct a facility that will be used exclusively for the care of its employees' pre-school age children during normal working hours.Assuming Cardinal claims the credit for employer-provided child care this year, its basis in the newly constructed facility is $640,000.

The incremental research activities credit is 20% of the qualified research expenses that exceed the base amount.

The credit for child and dependent care expenses is an example of a refundable credit.

An employer's tax deduction for wages is not affected by the work opportunity tax credit.

Jermaine and Kesha are married, file a joint tax return, have AGI of $82,500, and have two children.Devona is beginning her freshman year at State University during Fall 2012, and Arethia is beginning her senior year at Northeast University during Fall 2012 after having completed her junior year during the spring of that year.Both Devona and Arethia are claimed as dependents on their parents' tax return.Devona's qualifying tuition expenses and fees total $4,000 for the fall semester, while Arethia's qualifying tuition expenses and fees total $6,200 for each semester during 2012.Full payment is made for the tuition and related expenses for both children during each semester.The American Opportunity credit available to Jermaine and Kesha for 2012 is:

If an employee holds two jobs during the year, an overwithholding of FICA tax will result.

Qualified research and experimentation expenditures are not only eligible for the 20% tax credit, but also can be expensed in the year incurred.