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

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Question 51

Multiple Choice

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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:

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 these.

F) A) and B)
G) A) and C)

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Question 52

Multiple Choice

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

A) Parking expenses incurred in connection with jury duty-taxpayer is a dentist.
B) Substantiated gambling losses (not in excess of gambling winnings) from state lottery.
C) Contributions to mayor's reelection campaign.
D) Speeding ticket incurred while on business.
E) Premiums paid on personal life insurance policy.

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

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Question 53

Multiple Choice

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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.

During 2014,Trevor has the following capital transactions: $\begin{array} { l } \text {LTCG }&\$6,000\\ \text { Long-term collectible gain}&2,000\\ \text { STCG }&4,000\\ \text {STCL }&10,000\\\end{array}$ After the netting process,the following results:

During 2014,Marvin had the following transactions: $\begin{array} { l } \text { Salary}&\$50,000\\ \text {Bank loan (proceeds used to buy personal auto) }&10,000\\ \text {Alimony paid }&12,000\\ \text {Child support paid }&6,000\\ \text {Gift from aunt }&20,00\\\\\text { Marvin's AGI is: }&\\\end{array}$

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

In early 2014,Ben sold a yacht,held for 9 months and for pleasure,for a $5,000 gain.Concerned about offsetting the gain before year­end,Ben is considering selling one of the following-each of which would yield a $5,000 loss: -Houseboat used for recreation. -Truck used in business. -Stock investment held for 13 months. Evaluate each choice.

Match the statements that relate to each other.Note: Choice L may be used more than once. -Tax Rate Schedule

In January 2014,Jake's wife dies and he does not remarry.For tax year 2014,Jake may not be able to use the filing status available to married persons filing joint returns.

Nelda is married to Chad,who abandoned her in early June of 2014.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 2014 is correct?

Lena is 66 years of age,single,and blind and is not claimed as a dependent.How much gross income must she have before she is required to file a Federal income tax return for 2014?

The Deweys are expecting to save on their taxes for 2014.Not only have both incurred large medical expenses,but both reached age 65.During the year,they also recognized a $30,000 loss on some land they sold which was purchased as an investment several years ago.Are the Deweys under a mistaken understanding regarding their tax position? Explain.

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

Match the statements that relate to each other.Note: Choice L may be used more than once. -Global system of taxation

For dependents who have income,special filing requirements apply.

During the year,Kim sold the following assets: business auto for a $1,000 loss,stock investment for a $1,000 loss,and pleasure yacht for a $1,000 loss.Presuming adequate income,how much of these losses may Kim claim?

Buddy and Hazel are ages 72 and 71 and file a joint return.If they have itemized deductions of $14,600 for 2014,they should not claim the standard deduction.

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

Monique is a resident of the U.S.and a citizen of France.If she files a U.S.income tax return,Monique cannot claim the standard deduction.

The Martins have a teenage son who has become an accomplished bagpiper.With proper promotion and scheduling,the son has good income potential by charging for his services at special events (particularly funerals).However,the Martins are fearful that the income could generate a kiddie tax and cause them the loss of a dependency exemption deduction.Are the Martins' concerns justified? Explain.