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Exam 3: Computing the Tax

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Question 51

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In resolving qualified child status for dependency purposes, why are tiebreaker rules necessary? Can these rules be waived?

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A person being claimed as a dependent ma...

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Question 52

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In terms of the tax formula applicable to individual taxpayers, which of the following statements, if any, is correct?

A) In arriving at AGI, a taxpayer must elect between claiming deductions for AGI and deductions from AGI.
B) In arriving at taxable income, a taxpayer must elect between claiming deductions for AGI and deductions from AGI.
C) If a taxpayer has deductions for AGI, the standard deduction is not available.
D) In arriving at taxable income, a taxpayer must elect between deductions for AGI and the standard deduction.
E) None of these.

F) None of the above
G) B) and D)

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Question 53

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Lucas, age 17 and single, earns $6,000 during 2019. His parents cannot claim him as a dependent if he does not live with them.

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

Buddy and Hazel are ages 72 and 71, respectively, and file a joint return. If they have itemized deductions of $25,100 for 2019, they should not claim the standard deduction.

Using borrowed funds from a mortgage on her home, Leah provides 52% of her own support, and her sons furnished the rest. Leah can be claimed as a dependent under a multiple support agreement.

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

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

Evan and Eileen Carter are husband and wife and file a joint return for 2019. Both are under 65 years of age. They provide more than half of the support of their daughter, Pamela (age 25) , who is a full-time medical student. Pamela receives a $5,000 scholarship covering her tuition at college. Evan and Eileen furnish all of the support of Belinda (Evan's grandmother) , who is age 80 and lives in a nursing home. They also support Peggy (age 66) , who is a friend of the family and lives with them. How many dependents may the Carters claim?

Jayden and Chloe Harper are husband and wife and use the calendar year for tax purposes. a. If the Harpers file a joint return for 2019, can they later switch to separate returns for 2019? b. If the Harpers file separate returns for 2019, can they later switch to a joint return for 2019?

Regarding the Tax Tables related to the Federal income tax, which of the following statements is correct?

Which of the following items, if any, is deductible?

Ed is divorced and maintains a home in which he and a dependent friend live. Ed does not qualify for head of household filing status.

Surviving spouse filing status begins in the year in which the deceased spouse died.

In 2019, Ashley earns a salary of $55,000, has capital gains of $3,000, and receives interest income of $5,000. Her husband died in 2018. Ashley has a dependent son, Tyrone, who is age eight. Her itemized deductions are $9,000. a. What is her filing status? b. Calculate Ashley's taxable income for 2019.

Match the statements that relate to each other. Note: Some choices may be used more than once. -Resident of Canada or Mexico

Kohsei had the following transactions for 2019: $\begin{array}{llr} \text { Salary } &&\$80,000\\ \text { Alimony paid } &&(4,000)\\ \text { Recovery from car accident- } &\\ \text { Personal injury damages} &\$40,000\\ \text { Punitive damages} &70,000&110,000\\ \text { Gift from parents } &&20,000\\ \text {Property sales- } &\\ \text { Loss on sale of boat (used for pleasure and owned 4 years) } &(\$4,000)\\ \text { Gain on sale of ADM stock (held for 10 months as an investment) } &4,000&(-0-)\\\end{array}$ What is Kohsei's AGI for 2019?

During the year, Irv had the following transactions: $\begin{array}{lr}\text { Long-term loss on the sale of business use equipment } & \$ 7,000 \\\text { Long-term loss on the sale of personal use camper } & 6,000 \\\text { Long-term gain on the sale of personal use boat } & 3,000 \\\text { Short-term loss on the sale of stock investment } & 4,000 \\\text { Long-term loss on the sale of land investment } & 5,000\end{array}$ How are these transactions handled for income tax purposes?

Match the statements that relate to each other. Note: Some choices may be used more than once. -Age of a qualifying child

Howard, age 82, died on January 2, 2019. On his final income tax return, the full amount of the basic and additional standard deductions will be allowed even though Howard lived for only two days during the year.