Question 1

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

Accepted Answer

A)  Most exclusions from gross income are reported on page 2 of Form 1040.
B)  An "above the line deduction" refers to a deduction from AGI.
C)  A "page 1 deduction" refers to a deduction for AGI.
D)  The taxable income (TI)  amount appears both at the bottom of page 1 and at the top of page 2 of Form 1040.
E)  None of the above.F) A) and B)
G) A) and C)

Question 2

The basic and additional standard deductions are not subject to an annual adjustment for inflation.

Accepted Answer

A) True 
 B)False

Question 3

In terms of timing as to any one year, the Tax Tables are available before the Tax Rate Schedules.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

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 the above.F) A) and B)
G) A) and C)

Question 5

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

Accepted Answer

· Unearned income of $1,900 or less.
· Age 19 (or age 24 if a full-time student) or older.
· Both parents deceased.
· Earned income in excess of 50% of support.
· Married and filing a joint return with spouse.

Question 6

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

Accepted Answer

$90,000.$90,000 (salary) + $5,000 (inter...

Question 7

Once a child reaches age 19, the kiddie tax no longer applies.

Accepted Answer

A) True 
 B)False

Question 8

Nelda is married to Chad, who abandoned her in early June of 2012.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 Nelda's filing status in 2012 is correct?

Accepted Answer

A)  Nelda can use the rates for single taxpayers.
B)  Nelda can file a joint return with Chad.
C)  Nelda can file as a surviving spouse.
D)  Nelda can file as a head of household.
E)  None of the above statements is appropriate.F) A) and C)
G) None of the above

Question 9

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:

Accepted Answer

A)  Only her father.
B)  Only her grandfather and uncle.
C)  Only her uncle.
D)  All parties involved (i.e., father, grandfather, and uncle) .
E)  None of the above.F) C) and E)
G) C) and D)

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Meg, age 23, is a full-time law student and is claimed by her parents as a dependent.During 2012, she received $1,400 interest income from a bank savings account and $5,800 from a part-time job.What is Meg's taxable income for 2012?

Accepted Answer

$1,250.Meg's standard deduction is the greater of $5,800 (earned income) + $300 or $950.But the $6,100 is limited to $5,950 (the standard deduction allowed a single person).Thus, $1,400 + $5,800 - $5,950 = $1,250 taxable income.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Kirby is in the 15% tax bracket and had the following capital asset transactions during 2012:  Kirby's tax consequences from these gains are as follows:

Accepted Answer

A)  (5% ´ $10,000)  + (15% ´ $13,000) .
B)  (15% ´ $13,000)  + (28% ´ $11,000) .
C)  (0% ´ $10,000)  + (15% ´ $13,000) .
D)  (15% ´ $23,000) .
E)  None of the above.F) A) and D)
G) A) and E) C

Question 15

In order to claim a dependency exemption for other than a qualifying child, a taxpayer must meet the support test.Generally, this is done by furnishing more than 50% of a dependent's support.What exceptions exist, if any, where the support furnished need not be more than 50%?

Accepted Answer

One exception involves the multiple supp...

Question 16

Clara, age 68, claims head of household filing status.If she has itemized deductions of $9,500 for 2012, she should not claim the standard deduction.

Accepted Answer

A) True 
 B)False

Question 17

During 2012, Trevor has the following capital transactions:  After the netting process, the following results:

Accepted Answer

A)  Long-term collectible gain of $2,000.
B)  LTCG of $6,000, Long-term collectible gain of $2,000, and a STCL of $6,000.
C)  LTCG of $6,000, Long-term collectible gain of $2,000, and a STCL carryover to 2013 of $3,000.
D)  LTCG of $2,000.
E)  None of the above.F) A) and D)
G) A) and C)

Question 18

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.

Accepted Answer

A) True 
 B)False

Question 19

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.

Accepted Answer

A) True 
 B)False

Question 20

Heloise, age 74 and a widow, is claimed as a dependent by her daughter.For 2012, she had income as follows: $2,500 interest on municipal bonds; $3,200 Social Security benefits; $3,000 income from a part-time job; and $2,800 dividends on stock investments.What is Heloise's taxable income for 2012?

Accepted Answer

$1,050.$3,000 (income from job) + $2,800...

Exam 3: Computing the Tax

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

Correct AnswerverifiedShow Answer

The basic and additional standard deductions are not subject to an annual adjustment for inflation.

Correct AnswerverifiedShow Answer

In terms of timing as to any one year, the Tax Tables are available before the Tax Rate Schedules.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct Answerverified· Unearned income of $1,900 or less. · Age 19 (or age 24 if a full-time student) or older. · Both parents deceased. · Earned income in excess of 50% of support. · Married and filing a joint return with spouse.

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

Correct Answerverified$90,000.$90,000 (salary) + $5,000 (inter...View AnswerShow Answer

Once a child reaches age 19, the kiddie tax no longer applies.

Correct AnswerverifiedShow Answer

Nelda is married to Chad, who abandoned her in early June of 2012.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 Nelda's filing status in 2012 is correct?

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Meg, age 23, is a full-time law student and is claimed by her parents as a dependent.During 2012, she received $1,400 interest income from a bank savings account and $5,800 from a part-time job.What is Meg's taxable income for 2012?

Correct Answerverified$1,250.Meg's standard deduction is the greater of $5,800 (earned income) + $300 or $950.But the $6,100 is limited to $5,950 (the standard deduction allowed a single person).Thus, $1,400 + $5,800 - $5,950 = $1,250 taxable income.

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Kirby is in the 15% tax bracket and had the following capital asset transactions during 2012: Kirby's tax consequences from these gains are as follows:

Correct AnswerverifiedC

In order to claim a dependency exemption for other than a qualifying child, a taxpayer must meet the support test.Generally, this is done by furnishing more than 50% of a dependent's support.What exceptions exist, if any, where the support furnished need not be more than 50%?

Correct AnswerverifiedOne exception involves the multiple supp...View AnswerShow Answer

Clara, age 68, claims head of household filing status.If she has itemized deductions of $9,500 for 2012, she should not claim the standard deduction.

Correct AnswerverifiedShow Answer

During 2012, Trevor has the following capital transactions: After the netting process, the following results:

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Heloise, age 74 and a widow, is claimed as a dependent by her daughter.For 2012, she had income as follows: $2,500 interest on municipal bonds; $3,200 Social Security benefits; $3,000 income from a part-time job; and $2,800 dividends on stock investments.What is Heloise's taxable income for 2012?

Correct Answerverified$1,050.$3,000 (income from job) + $2,800...View AnswerShow Answer

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· Unearned income of $1,900 or less. · Age 19 (or age 24 if a full-time student) or older. · Both parents deceased. · Earned income in excess of 50% of support. · Married and filing a joint return with spouse.

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$90,000.$90,000 (salary) + $5,000 (inter...
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$1,250.Meg's standard deduction is the greater of $5,800 (earned income) + $300 or $950.But the $6,100 is limited to $5,950 (the standard deduction allowed a single person).Thus, $1,400 + $5,800 - $5,950 = $1,250 taxable income.

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C

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One exception involves the multiple supp...
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$1,050.$3,000 (income from job) + $2,800...
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