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Exam 3: Computing the Tax

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Question 1

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Match the statements that relate to each other. Note: Choice l. may be used more than once. a. Available to a 70-year-old father claimed as a dependent by his son. b. Equal to tax liability divided by taxable income. c. The highest income tax rate applicable to a taxpayer. d. Not eligible for the standard deduction. e. No one qualified taxpayer meets the support test. f. Taxpayer's ex-husband does not qualify. g. A dependent child (age 18) who has only unearned income. h. Highest applicable rate is 37%. i. Applicable rate could be as low as 0%. j. Maximum rate is 28%. k. No correct match provided. -Relationship test (for dependency exemption purposes)

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Question 2

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Jason and Peg are married and file a joint return. Both are over 65 years of age and Jason is blind. Their standard deduction for 2018 is $27,900 ($24,000 + $1,300 + $1,300 + $1,300).

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B) False

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Question 3

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Match the statements that relate to each other. Note: Some choices 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 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. -Additional standard deduction

In terms of income tax consequences, abandoned spouses are treated the same way as married persons filing separate returns.

During 2018, Trevor has the following capital transactions: After the netting process, the following results:

The deduction for personal and dependency exemptions has been suspended from 2018 through 2025.

Katelyn is divorced and maintains a household in which she and her daughter, Crissa, live. Crissa, age 22, earns $11,000 during 2018 as a model. Katelyn does not qualify for head of household filing status.

Regarding head of household filing status, comment on the following: a. A taxpayer qualifies even though he maintains a household which he and the dependent do not share. b. A taxpayer does not qualify even though the person sharing the household is a dependent. c. The usual eventual filing status of a surviving spouse.

Regarding classification as a dependent, 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 stepdaughter who does not live with taxpayer.

In 2018, Ed is 66 and single. If he has itemized deductions of $12,700, he should not claim the standard deduction alternative.

For the past few years, Corey's filing status has been as follows: 2014 (married/joint)? 2015 (married/separate)? 2016 (surviving spouse)? 2017 (surviving spouse)? and 2018 (head of household). Explain what probably has happened.

In meeting the criteria of a qualifying child for dependency purposes, when if ever, might the child's income become relevant?

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

Natalie is married to Chad, who abandoned her in early June of 2018. She has not seen or communicated with him since then. She maintains a household in which she and her two dependent children live. Which of the following statements about Natalie's filing status in 2018 is correct?

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

In 2018, Nai-Yu had the following transactions: Nai-Yu's AGI is:

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

During 2018, Marvin had the following transactions: Marvin's AGI is:

For the current year, David has wages of $80,000 and the following property transactions: What is David's AGI for the current year?

List at least three exceptions to the application of the kiddie tax.