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Exam 3: Computing the Tax

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Question 101

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

A) For any one year,the Tax Tables are issued by the IRS after the Tax Rate Schedules.
B) The Tax Tables will always yield the same amount of tax as the Tax Rate Schedules.
C) Taxpayers can elect as to whether the use the Tax Tables or the Tax Rate Schedules.
D) The Tax Tables can be used by an estate but not by a trust.
E) No correct answer given.

F) A) and E)
G) B) and E)

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Question 102

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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

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Question 103

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When the kiddie tax applies and the parents are divorced,the applicable parent (for determining the parental tax) is the one with the greater taxable income.

Roy and Linda were divorced in 2014.The divorce decree awards custody of their children to Linda but is silent as to who is entitled to claim them as dependents.If Roy furnished more than half of their support,he can claim them as dependents in 2015.

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. -Kiddie tax does not apply

Under the Federal income tax formula for individuals,the determination of adjusted gross income (AGI) precedes that of taxable income (TI).

Mel is not quite sure whether an expenditure he made is a deduction for AGI or a deduction from AGI.Since he plans to choose the standard deduction option for the year,does the distinction matter? Explain.

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 stepdaughter who does not live with taxpayer.