Question 1

A child who has unearned income of $2,000 or less cannot be subject to the kiddie tax.

Accepted Answer

A) True 
 B)False

Question 2

Ellen, age 39 and single, furnishes more than 50% of the support of her parents, who do not live with her. Ellen practices as a self-employed interior decorator and has gross income in 2014 of $120,000. Her deductions are as follows: $30,000 business and $8,100 itemized.
a. What is Ellen's taxable income for 2014?
b. Can Ellen qualify for head of household filing status? Explain.

Accepted Answer

c. $69,050. $120,000 (gross income) - $3...

Question 3

Howard, age 82, dies on January 2, 2014. 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 4

Albert buys his mother a TV. For purposes of meeting the support test, Albert cannot include the cost of the TV.

Accepted Answer

A) True 
 B)False

Question 5

Match the statements that relate to each other. Note: Choice L may be used more than once.
-Kiddie tax applies

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 E)
N) C) and K)

Question 6

Sarah furnishes more than 50% of the support of her son and daughter-in-law who live with her. If the son and daughter-in-law file a joint return, Sarah cannot claim them as dependents.

Accepted Answer

A) True 
 B)False

Question 7

Buddy and Hazel are ages 72 and 71 and file a joint return. If they have itemized deductions of $14,600 for 2014, they should not claim the standard deduction.

Accepted Answer

A) True 
 B)False

Question 8

Wilma, age 70 and single, is claimed as a dependent on her daughter's tax return. During 2014, she had interest income of $2,500 and $800 of earned income from baby sitting. Wilma's taxable income is:

Accepted Answer

A)   $750.
B)   $900.
C)   $1,750.
D)   $2,200.
E)   None of the above.F) None of the above
G) B) and D)

Question 9

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

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) A) and J)
N) B) and E)

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Regarding dependency exemptions, classify each statement in one of the four categories:
-A cousin who does not live 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) B) and C)
F) None of the above

Question 12

Maude's parents live in another state and she cannot claim them as her dependents. If Maude pays their medical expenses, can she derive any tax benefit from doing so? Explain.

Accepted Answer

If Maude could otherwise claim...

Question 13

Arnold is married to Sybil, who abandoned him in 2013. He has not seen or communicated with her since April of that year. He maintains a household in which their son, Evans, lives. Evans is age 25 and earns over $6,000 each year. For tax year 2014, Arnold's filing status is:

Accepted Answer

A)   Married, filing jointly.
B)   Head of household.
C)   Married, filing separately.
D)   Surviving spouse.
E)   Single.F) A) and B)
G) C) and D)

Question 14

Emily had the following transactions during 2014:
  
What is Emily's AGI for 2014?

Accepted Answer

$100,000. $90,000 (salary) + $5,000 (int...

Question 15

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

Accepted Answer

A)   Some taxpayers may qualify for two types of standard deductions.
B)   Not available to taxpayers who choose to deduct their personal and dependency exemptions.
C)   May be taken as a for AGI deduction.
D)   The basic standard deduction is indexed for inflation but the additional standard deduction is not.
E)   None of the above.F) A) and E)
G) A) and D)

Question 16

Lucas, age 17 and single, earns $6,000 during 2014. Lucas's parents cannot claim him as a dependent if he does not live with them.

Accepted Answer

A) True 
 B)False

Question 17

Match the statements that relate to each other. Note: Choice L may be used more than once.
-Additional standard deduction

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) A) and E)
N) F) and J)

Question 18

The basic and additional standard deductions both are subject to an annual adjustment for inflation.

Accepted Answer

A) True 
 B)False

Question 19

All exclusions from gross income are reported on Form 1040.

Accepted Answer

A) True 
 B)False

Question 20

Match the statements that relate to each other. Note: Choice L may be used more than once.
-Average income tax rate

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) C) and E)
N) A) and D)

Exam 3: Computing the Tax

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

Correct Answer
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Howard, age 82, dies on January 2, 2014. 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.

Correct Answer
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Match the statements that relate to each other. Note: Choice L may be used more than once. -Additional standard deduction

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

Correct Answer
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A child who has unearned income of $2,000 or less cannot be subject to the kiddie tax.

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

Correct Answer
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Match the statements that relate to each other. Note: Choice L may be used more than once. -Nonresident alien

Correct Answer
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All exclusions from gross income are reported on Form 1040.

Correct Answer
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Match the statements that relate to each other. Note: Choice L may be used more than once. -Average income tax rate

Correct Answer
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Maude's parents live in another state and she cannot claim them as her dependents. If Maude pays their medical expenses, can she derive any tax benefit from doing so? Explain.

Correct Answer
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If Maude could otherwise claim...
View Answer

Wilma, age 70 and single, is claimed as a dependent on her daughter's tax return. During 2014, she had interest income of $2,500 and $800 of earned income from baby sitting. Wilma's taxable income is:

Correct Answer
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Arnold is married to Sybil, who abandoned him in 2013. He has not seen or communicated with her since April of that year. He maintains a household in which their son, Evans, lives. Evans is age 25 and earns over $6,000 each year. For tax year 2014, Arnold's filing status is:

Correct Answer
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Emily had the following transactions during 2014: What is Emily's AGI for 2014?

Correct Answer
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$100,000. $90,000 (salary) + $5,000 (int...
View Answer

Correct Answer
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c. $69,050. $120,000 (gross income) - $3...
View Answer

Lucas, age 17 and single, earns $6,000 during 2014. Lucas's parents cannot claim him as a dependent if he does not live with them.

Correct Answer
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Buddy and Hazel are ages 72 and 71 and file a joint return. If they have itemized deductions of $14,600 for 2014, they should not claim the standard deduction.

Correct Answer
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Match the statements that relate to each other. Note: Choice L may be used more than once. -Kiddie tax applies

Correct Answer
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Albert buys his mother a TV. For purposes of meeting the support test, Albert cannot include the cost of the TV.

Correct Answer
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Sarah furnishes more than 50% of the support of her son and daughter-in-law who live with her. If the son and daughter-in-law file a joint return, Sarah cannot claim them as dependents.

Correct Answer
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The basic and additional standard deductions both are subject to an annual adjustment for inflation.

Correct Answer
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Exam 3: Computing the Tax

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

Correct AnswerverifiedShow Answer

Howard, age 82, dies on January 2, 2014. 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.

Correct AnswerverifiedShow Answer

Match the statements that relate to each other. Note: Choice L may be used more than once. -Additional standard deduction

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A child who has unearned income of $2,000 or less cannot be subject to the kiddie tax.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

All exclusions from gross income are reported on Form 1040.

Correct AnswerverifiedShow Answer

Match the statements that relate to each other. Note: Choice L may be used more than once. -Average income tax rate

Correct AnswerverifiedShow Answer

Maude's parents live in another state and she cannot claim them as her dependents. If Maude pays their medical expenses, can she derive any tax benefit from doing so? Explain.

Correct AnswerverifiedIf Maude could otherwise claim...View AnswerShow Answer

Wilma, age 70 and single, is claimed as a dependent on her daughter's tax return. During 2014, she had interest income of $2,500 and $800 of earned income from baby sitting. Wilma's taxable income is:

Correct AnswerverifiedShow Answer

Arnold is married to Sybil, who abandoned him in 2013. He has not seen or communicated with her since April of that year. He maintains a household in which their son, Evans, lives. Evans is age 25 and earns over $6,000 each year. For tax year 2014, Arnold's filing status is:

Correct AnswerverifiedShow Answer

Emily had the following transactions during 2014: What is Emily's AGI for 2014?

Correct Answerverified$100,000. $90,000 (salary) + $5,000 (int...View AnswerShow Answer

Correct Answerverifiedc. $69,050. $120,000 (gross income) - $3...View AnswerShow Answer

Lucas, age 17 and single, earns $6,000 during 2014. Lucas's parents cannot claim him as a dependent if he does not live with them.

Correct AnswerverifiedShow Answer

Buddy and Hazel are ages 72 and 71 and file a joint return. If they have itemized deductions of $14,600 for 2014, they should not claim the standard deduction.

Correct AnswerverifiedShow Answer

Match the statements that relate to each other. Note: Choice L may be used more than once. -Kiddie tax applies

Correct AnswerverifiedShow Answer

Albert buys his mother a TV. For purposes of meeting the support test, Albert cannot include the cost of the TV.

Correct AnswerverifiedShow Answer

Sarah furnishes more than 50% of the support of her son and daughter-in-law who live with her. If the son and daughter-in-law file a joint return, Sarah cannot claim them as dependents.

Correct AnswerverifiedShow Answer

The basic and additional standard deductions both are subject to an annual adjustment for inflation.

Correct AnswerverifiedShow Answer

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If Maude could otherwise claim...
View Answer

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$100,000. $90,000 (salary) + $5,000 (int...
View Answer

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c. $69,050. $120,000 (gross income) - $3...
View Answer

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