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Exam 3: Tax Determination: Personal and Dependency Exemptions: an Overview of Property Transactions

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Question 51

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Benjamin,age 16,is claimed as a dependent by his parents.During 2011,he earned $700 at a car wash.Benjamin's standard deduction is $1,250 ($950 + $300).

A) True
B) False

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Question 52

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A taxpayer who itemizes his deductions from AGI can claim the property taxes on his personal residence as a deduction.

A) True
B) False

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Question 53

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In applying the gross income test in the case of dependents that are married,could the application of community property laws have any effect? Explain.

An increase in the amount of a taxpayer's AGI will not affect the amount of medical expenses allowed as a deduction.

After her divorce,Hope continues to support her ex-husband's sister,Cindy,who does not live with her.Hope can claim Cindy as a dependent.

Wilma,age 70 and single,is claimed as a dependent on her daughter's tax return.During 2011,she had interest income of $2,400 and $800 of earned income from baby sitting.Wilma's taxable income is:

Millie,age 80,is supported during the current year as follows: During the year,Millie lives in an assisted living facility.Under a multiple support agreement,indicate which parties can qualify to claim Millie as a dependent.

The additional standard deduction for age and blindness is the same amount for single as for married taxpayers.

Which,if any,of the following statements relating to the standard deduction is correct?

Katrina,age 16,is claimed as a dependent by her parents.During 2011,she earned $5,600 as a checker at a grocery store.Her standard deduction is $5,900 ($5,600 earned income + $300).

The major advantage of being classified as an abandoned spouse is that the taxpayer is treated for tax purposes as being single and not married.This means that an abandoned spouse can use the more favorable tax rates available to single persons than those available to married persons filing separately.Comment on the accuracy of this conclusion.

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

Regarding the tax formula and its relationship to Form 1040,which,if any,of the following statements is correct?

When filing their Federal income tax returns,the Youngs always claimed the standard deduction.After they purchased a home,however,they started to itemize their deductions from AGI.

An "above the line" deduction refers to a deduction for AGI.

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

During 2011,Trevor has the following capital transactions: After the netting process,the following results:

Since an abandoned spouse is treated as single and has one or more dependent children,he or she qualifies for the standard deduction available to head of household.

Kim and Alice are husband and wife and Alice files a separate return (Kim does not file).Consider the following issues:

Kirby is in the 15% tax bracket and had the following capital asset transactions during 2011: Kirby's tax consequences from these gains are as follows: