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Exam 13: Tax Credits and Payment Procedures

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Question 31

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A taxpayer who qualifies for the low-income housing credit claims the credit over a 20-year period.

A) True
B) False

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Question 32

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BlueCo incurs $900,000 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.The credit for employer-provided child care available to BlueCo this year is $225,000.

A) True
B) False

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Question 33

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Julia is 30 years old, unmarried with a nine year-old daughter, and has earnings during 2019 of $19,700.Does she qualify for the earned income credit? If so, calculate the amount of credit that is available to her.

During the year, Green, Inc., incurs the following research expenditure. $\begin{array}{llcc} \text { In-house wages, supplies, computer time } &\$60,000\\ \text { Paid to Blue Foundation for research } &30,000\\\end{array}$ Green's qualifying research expenditures for the year are:

The purpose of the tax credit for rehabilitation expenditures is to encourage the relocation of businesses from older, economically distressed areas (i.e., inner city) to newer locations.

An employer's tax deduction for wages is affected by the work opportunity tax credit.

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

Only married taxpayers with children can claim the earned income credit.

The tax benefit received from a tax credit never is affected by the tax rate of the taxpayer.

The additional Medicare taxes assessed on high-income individuals carry differing tax rates depending on the tax base.

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.

A small employer incurs $31,500 for consulting fees related to establishing a qualified retirement plan for its 75 employees.As a result, the employer may claim the credit for small employer pension plan startup costs for $750.

Rex and Dena are married and have two children, Michelle (age seven) and Nancy (age five) .During 2019, Rex earned a salary of $26,500, received interest income of $300, and filed a joint income tax return with Dena.Dena had $0 gross income.Their earned income credit for the year is:

Any unused general business credit must be carried back three years and then forward for 20 years.

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

Black Company paid wages of $180,000 of which $40,000 was qualified for the work opportunity tax credit under the general rules.Black Company's deduction for wages for the year is:

Which of the following, if any, correctly describes the research activities credit?

Ahmad is considering making a $10,000 investment in a venture whose promoter promises will generate immediate tax benefits for him.Ahmad, who normally itemizes his deductions, is in the 32% marginal tax bracket.If the investment is of a type where the taxpayer may claim either a tax credit of 25% of the amount of the expenditure or an itemized deduction for the amount of the investment, what treatment is likely most beneficial to Ahmad, and by how much will Ahmad's tax liability decline because of the investment?

Expenses that are reimbursed by a taxpayer's employer under a dependent care assistance program also can qualify for the credit for child and dependent care expenses.

Discuss the treatment of unused general business credits.