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

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Question 71

True/False

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Under the Federal income tax formula for individuals,a choice must be made between claiming deductions for AGI and itemized deductions.

A) True
B) False

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Question 72

Multiple Choice

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Which,if any,of the following is a deduction for AGI?

A) State and local sales taxes
B) Interest on home mortgage
C) Charitable contributions
D) Unreimbursed moving expenses of an employee
E) None of these

F) A) and E)
G) A) and D)

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Question 73

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Match the statements that relate to each other. Note: Choice l. may be used more than once. a.Not available to 65-year old taxpayer who itemizes. b.Exception for U.S. citizenship or residency test (for dependency exemption purposes). c.Largest basic standard deduction available to a dependent who has no earned income. d.Considered for dependency exemption purposes. e.Qualifies for head of household filing status. f.A child (age 15) who is a dependent and has only earned income. g.Considered in applying gross income test (for dependency exemption purposes). h.Not considered in applying the gross income test (for dependency exemption purposes). i.Unmarried taxpayer who can use the same tax rates as married persons filing jointly. j.Exception to the support test (for dependency exemption purposes). k.A child (age 16) who is a dependent and has only unearned income of $4,500. l.No correct match provided. -Basic standard deduction

Stuart has a short-term capital loss,a collectible long-term capital gain,and a long-term capital gain from land held as investment.The short-term loss is first applied to the collectible capital gain.

Emily,whose husband died in December 2015,maintains a household in which her dependent mother lives.Which (if any) of the following is her filing status for the tax year 2016? (Note: Emily is the executor of her husband's estate. )

During 2016,Esther had the following transactions: Salary $70,000 Interest income on Xerox bonds 2,000 Inheritance from uncle 40,000 Contribution to traditional IRA 5,500 Capital losses 2,500 Esther's AGI is:

As opposed to itemizing deductions from AGI,the majority of individual taxpayers choose the standard deduction.

A qualifying child cannot include:

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 half-brother who lives with taxpayer.

In 2016,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 2015.Hal may claim the father-in-law and the ex-wife as dependents.

Under the income tax formula,a taxpayer must choose between deductions for AGI and the standard deduction.

When separate income tax returns are filed by married taxpayers,one spouse cannot claim the other spouse as an exemption.

Since an abandoned spouse is treated as not married and has one or more dependent children,he or she qualifies for the standard deduction available to head of household.

Emily had the following transactions during 2016: Salary $90,000 Interest income on bonds- Issued by City of Nashville $4,000 Issued by Chevron Corporation 5,000 9,000 Alimony received 5,000 Child support received 20,000 City and state income taxes paid (5,000) Bank loan obtained to pay for car purchase 15,000 What is Emily's AGI for 2016?

For dependents who have income,special filing requirements apply.

The additional standard deduction for age and blindness is greater for married taxpayers than for single taxpayers.

In which,if any,of the following situations may the individual not be claimed as a dependent of the taxpayer?

Millie,age 80,is supported during the current year as follows: Percent of Support Weston (a son) 20% Faith (a daughter) 35% Jake (a cousin) 25% Brayden (unrelated close family friend) 20% 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.

Homer (age 68)and his wife Jean (age 70)file a joint return.They furnish all of the support of Luther (Homer's 90-year old father),who lives with them.In 2016,they received $6,000 of interest income on city of Chicago bonds and interest income on corporate bonds of $48,000.Compute Homer and Jean's taxable income for 2016.

Frank sold his personal use automobile for a loss of $9,000.He also sold a personal coin collection for a gain of $10,000.As a result of these sales,$10,000 is subject to income tax.