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Exam 13: Tax Credits and Payment Procedures

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Question 51

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During the current year,Eleanor earns $120,000 in wages as an employee of an accounting firm.She also earns $13,000 in gross income from an outside consulting service she operates.Deductible expenses paid in connection with the consulting service amount to $3,000.Eleanor also incurs a recognized long-term capital gain of $1,000 from the sale of a stock investment.She must pay a self-employment tax on:

A) $0.
B) $10,000.
C) $13,000.
D) $14,000.

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

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Question 52

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The low-income housing credit is available to low-income tenants who reside in qualifying low-income housing.

A) True
B) False

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Question 53

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A LIFO method is applied to general business credit carryovers,carrybacks,and utilization of credits earned during a particular year.

The tax credit for rehabilitation expenditures for certified historic structures differs from that for qualifying structures that are not certified historic structures.

The disabled access credit is computed at the rate of 50% of all access expenditures incurred by the taxpayer during the year.

George and Martha are married and file a joint tax return claiming their two children,ages 10 and 8 as dependents.Assuming their AGI is $119,650,George and Martha's child tax credit is:

Refundable tax credits include the:

The credit for child and dependent care expenses is an example of a refundable credit.

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.

Amber is in the process this year of renovating the office building (placed in service in 1976) used by her business.Because of current Federal Regulations that require the structure to be accessible to handicapped individuals,she incurs an additional $11,000 for various features,such as ramps and widened doorways,to make her office building more accessible.The $11,000 incurred will produce a disabled access credit of what amount?

A small employer incurs $1,500 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.

Which of the following correctly reflects current rules regarding estimated tax payments for individuals?

A taxpayer who meets the age requirement and receives no Social Security benefits will be entitled to the full tax credit for the elderly.

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

Several years ago,Sarah purchased a structure for $150,000 that was placed in service in 1929.In the current year,she incurred qualifying rehabilitation expenditures of $200,000.The amount of the tax credit for rehabilitation expenditures,and the amount by which the building's basis for cost recovery would increase as a result of the rehabilitation expenditures are the following amounts.

How does the FICA tax compare to the self-employment tax? How are these two taxes similar and how do they differ?

Jack and Jill are married,have three children,and have earnings during 2016 of $28,500.Do they qualify for the earned income credit? If so,calculate the amount of credit that is available to them.

Unused foreign tax credits can be carried back three years and forward fifteen years.

Some (or all)of the tax credit for rehabilitation expenditures will have to be recaptured if the rehabilitated property is disposed of prematurely or if it ceases to be qualifying property.

If a taxpayer chooses to claim a foreign tax credit,those foreign income taxes paid can also be claimed as a deduction.