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Exam 3: Tax Formula and Tax Determination; an Overview of Property Transactions

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Question 1

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Adjusted gross income (AGI)sets the ceiling or the floor for certain deductions.Explain and illustrate what this statement means.

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By a ceiling what is meant is that the d...

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Question 2

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Albert buys his mother a TV.For purposes of meeting the support test,Albert cannot include the cost of the TV.

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B) False

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Question 3

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Debby,age 18,is claimed as a dependent by her mother.During 2012,she earned $1,100 in interest income on a savings account.Debby's standard deduction is $1,400 ($1,100 + $300).

Emma had the following transactions for 2012: What is Emma's AGI for 2012?

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.

In 2012,Hal furnishes more than half of the support of his ex-wife and her father,both of whom live with him.The divorce occurred in 2011.Hal may claim the father-in-law and the ex-wife as dependents.

An individual taxpayer uses a fiscal year March 1-February 28.The due date of this taxpayer's Federal income tax return is May 15 of each tax year.

Monique is a resident of the U.S.and a citizen of France.If she files a U.S.income tax return,Monique can claim the standard deduction.

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:

After Carolyn moves out of the apartment she had rented as her personal residence,she recovers her damage deposit of $500.The $500 is income to Carolyn.

Regarding the rules applicable to filing of income tax returns,which,if any,of the following is an incorrect statement:

A taxpayer who itemizes must use Form 1040,and cannot use Form 1040EZ or Form 1040A.

Which of the following taxpayers may file as a head of household in 2012? Ron provides all the support for his mother,Betty,who lives by herself in an apartment in Fort Lauderdale.Ron pays the rent and other expenses for the apartment and properly claims his mother as a dependent. Tammy provides over one-half the support for her 18-year old brother,Dan.Dan earned $4,200 in 2012 working at a fast food restaurant and is saving his money to attend college in 2013.Dan lives in Tammy's home. Joe's wife left him late in December of 2011.No legal action was taken and Joe has not heard from her in 2012.Joe supported his 6-year-old son,who lived with him throughout 2012.

During 2012,Marvin had the following transactions: Marvin's AGI is:

In which,if any,of the following situations will the kiddie tax not apply?

During 2012,Esther had the following transactions: Esther's AGI is:

Katelyn is divorced and maintains a household in which she and her daughter,Crissa,live.Crissa,age 22,earns $11,000 during 2012 as a model.Katelyn does qualify for head of household filing status.

Ashley earns a salary of $55,000,has capital gains of $3,000,and interest income of $5,000 in 2012.Her husband died in 2011.Ashley has a dependent son,Tyrone,who is age 8.Her itemized deductions are $9,000.

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.

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.