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Exam 3: Computing the Tax

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Question 81

True/False

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Lee,a citizen of Korea,is a resident of the U.S.Any rent income Lee receives from land he owns in Korea is not subject to the U.S.income tax.

A) True
B) False

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Question 82

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Nelda is married to Chad,who abandoned her in early June of 2015.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 Nelda's filing status in 2015 is correct?

A) Nelda can use the rates for single taxpayers.
B) Nelda can file a joint return with Chad.
C) Nelda can file as a surviving spouse.
D) Nelda can file as a head of household.
E) None of these statements is appropriate.

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

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Question 83

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In determining the filing requirement based on gross income received,both additional standard deductions (i.e. ,age and blindness) are taken into account.

Jayden and Chloe Harper are husband and wife and use the calendar year for tax purposes. a.​ If the Harpers file a joint return for 2015,can they later switch to separate returns for 2015? b.If the Harpers file separate returns for 2015,can they later switch to a joint return for 2015?

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 granddaughter,who lives with taxpayer,is 19 years old,earns $5,000,and is not a full-time student.

Married taxpayers who file a joint return cannot later (i.e. ,after the filing due date) switch to separate returns for that year.

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

Because they appear on page 1 of Form 1040,itemized deductions are also referred to as "page 1 deductions."

All exclusions from gross income are reported on Form 1040.

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:

Kirby is in the 15% tax bracket and had the following capital asset transactions during 2015: Long-term gain from the sale of a coin collection $11,000 Long-term gain from the sale of a land investment 10,000 Short-term gain from the sale of a stock investment 2,000 Kirby's tax consequences from these gains are as follows:

Match the statements that relate to each other.Note: Choice l.may be used more than once. 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 ex-husband 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. -Territorial system of taxation

Kim,a resident of Oregon,supports his parents who are residents of Canada but citizens of Korea.Kim can claim his parents as dependents.

Jason and Peg are married and file a joint return.Both are over 65 years of age and Jason is blind.Their standard deduction for 2015 is $16,350 ($12,600 + $1,250 + $1,250 + $1,250).

A child who is married cannot be subject to the kiddie tax.

In terms of timing as to any one year,the Tax Tables are available before the Tax Rate Schedules.

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.

Which,if any,of the following is a correct statement relating to the kiddie tax?

Match the statements that relate to each other.Note: Choice l.may be used more than once. 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 ex-husband 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. -Kiddie tax may be imposed

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 niece who lives with taxpayer,is 20 years old,earns $5,000,and is a full-time student.