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

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Question 51

Multiple Choice

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During 2018, Sandeep had the following transactions: $\begin{array}{ll}\text { Salary } &\$ 80,000 \\\text {Interest income on City of Baltimore bonds } &1,000 \\\text { Damages for personal injury (car accident) } & 100,000 \\\text { Punitive damages (same car accident) } & 200,000\\\text { Cash diridends from Cheurnn Cornoration stock } &7,000\\\end{array}$ Sandeep's AC

A) $\$ 185,000$
B) 8187,000
C) 1885,000
D) 8287,000
E) $\$ 387,000 .$

F) B) and D)
G) B) and C)

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Question 52

Multiple Choice

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Harpreet, whose husband died in December 2017, maintains a household in which her dependent mother lives. Which if any) of the following is her filing status for the tax year 2018? Note: Harpreet is the executor of her husband's estate.)

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

F) A) and E)
G) None of the above

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Question 53

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In 2018, a child who has unearned income of $2,100 or less cannot be subject to the kiddie tax.

Derek, age 46, is a surviving spouse. If he has itemized deductions of $26,250 for 2018, Derek should not claim the standard deduction.

Jeremy is married to Amy, who abandoned him in 2017. He has not seen or communicated with her since April of that year. He maintains a household in which their son, Evan, lives. Evan is age 25 and earns over $6,000 each year. For tax year 2018, Jeremy's filing status is:

When separate income tax returns are filed by married taxpayers, one spouse cannot claim the other spouse as an exemption.

Debby, age 18, is claimed as a dependent by her mother. During 2018, she earned $1,100 in interest income on a savings account. Debby's standard deduction is $1,450 $1,100 + $350).

Surviving spouse filing status begins in the year in which the deceased spouse died.

The Hutters filed a joint return for 2018. They provide more than 50% of the support of Carla, Ellie, and Aaron. Carla age 18) is a cousin and earns $2,800 from a part-time job. Ellie age 25) is their daughter and is a full-time law student. She received a $7,500 scholarship for tuition from her law school. Aaron is a brother who is a citizen of Israel but resides in France. Carla and Ellie live with the Hutters. How many dependents can the Hutters claim?

When married persons file a joint return, joint and several liability results. What does this mean?

Howard, age 82, dies on January 2, 2018. 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.

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

Natalie is married to Chad, who abandoned her in early June of 2018. She has not seen or communicated with him since then. She maintains a household in which she and her two dependent children live. Which of the following statements about Natalie's filing status in 2018 is correct?

Stuart has a short-term capital loss, a collectible long-term capital gain, and a long-term capital gain from land held as investment. The short-term loss is first applied to the collectible capital gain.

In early 2018, Ben sold a yacht, held for 9 months and for pleasure, for a $5,000 gain. Concerned about offsetting the gain before year-end, 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.

During 2018, Lisa age 66) furnished more than 50% of the support of the following persons: ∙ Lisa's current husband who has no income and is not claimed by someone else as a dependent. ∙ Lisa's stepson age 19) who lives with her and earns $6,000 as a dance instructor. He dropped out of school a year ago. ∙ Lisa's ex-husband who does not live with her. The divorce occurred two years ago. ∙ Lisa's former brother-in-law who does not live with her. Presuming all other dependency tests are met, on a separate return how many dependents may Lisa claim?

Regarding the Tax Tables applicable to the Federal income tax, which of the following statements is correct?

Ellen, age 12, lives in the same household with her father, grandfather, and uncle. The cost of maintaining the household is provided by her grandfather 40%) and her uncle 60%) . Disregarding tie-breaker rules, Ellen is a qualifying child as to:

For the past few years, Corey's filing status has been as follows: 2014 married/joint); 2015 married/separate); 2016 surviving spouse); 2017 surviving spouse); and 2018 head of household). Explain what probably has happened.

Buddy and Hazel are ages 72 and 71 and file a joint return. If they have itemized deductions of $25,100 for 2018, they should not claim the standard deduction.