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Exam 12: Tax Credits and Payments

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Question 51

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The disabled access credit was enacted to encourage small businesses to make their businesses more accessible to disabled individuals.

A) True
B) False

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Question 52

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Which of the following best describes the treatment applicable to unused business credits?

A) Unused amounts are carried forward indefinitely.
B) Unused amounts are first carried back one year and then forward for 20 years.
C) Unused amounts are first carried back one year and then forward for 10 years.
D) Unused amounts are first carried back three years and then carried forward for 15 years.
E) None of the above.

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

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Question 53

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Explain the purpose of the disabled access credit and describe the general characteristics of its computation.

During 2012, Eleanor earns $120,000 in wages as an employee of an accounting firm.She also earns $26,000 in gross income from an outside consulting service she operates.Deductible expenses paid in connection with the consulting service amount to $6,000.Eleanor also has a recognized long-term capital gain of $1,000 from the sale of a stock investment.She must pay a self-employment tax on:

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

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.

Rick spends $750,000 to build a qualified low-income housing project, which is placed in service on January 1, 2012.He financed the project using his personal funds.What is the amount of the low-income housing credit that Rick may claim in 2012 (assuming a rate of 7.42%)? What is the total amount of the credit that Rick may claim as a result of the $750,000 expenditure?

Cheryl is single, has one child (age 6) , and files as head of household during 2012.Her salary for the year is $19,000.She qualifies for an earned income credit of the following amount:

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:

Qualified research and experimentation expenditures are not only eligible for the 20% tax credit, but also can be expensed in the year incurred.

Child care payments to a relative are not eligible for the credit for child and dependent care expenses if the relative is a child (under age 19) of the taxpayer.

Green Company, in the renovation of its building, incurs $9,000 of expenditures that qualify for the disabled access credit. The disabled access credit is:

Which, if any, of the following correctly describes the earned income credit?

Cardinal Corporation hires two persons certified to be eligible employees for the work opportunity tax credit under the general rules (e.g., food stamp recipients) , each of whom is paid $9,000 during the year.As a result of this event, Cardinal Corporation may claim a work opportunity credit of:

Realizing that providing for a comfortable retirement is up to them, Jim and Julie commit to making regular contributions to their IRAs, beginning this year.Consequently, they each make a $2,000 contribution to their traditional IRA.If their AGI is $35,000 on their joint return, what is the amount of their credit for certain retirement plan contributions?

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.

Some foreign taxes do not qualify for the foreign tax credit.

In May 2012, Blue Corporation hired Camilla, Jolene, and Tyrone, all of whom are certified as long-term family assistance recipients.Each employee is paid $12,000 during 2012.Camilla and Tyrone continued to work for Blue Corporation in 2013, earning $14,000 each.Blue hired no additional employees during 2013.

Which of the following statements concerning the credit for child and dependent care expenses is not correct?

Summer Corporation's business is international in scope and is subject to income taxes in several countries.Summer's earnings and income taxes paid in the relevant foreign countries are: If Summer Corporation's worldwide income subject to taxation in the United States is $2,400,000 and the U.S.income tax due prior to the foreign tax credit is $816,000, compute the allowable foreign tax credit.If, instead, the total foreign income taxes paid were $550,000, compute the allowable foreign tax credit.