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Exam 3: Tax Determination: Personal and Dependency Exemptions: an Overview of Property Transactions

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Question 61

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Darren,age 20 and not disabled,earns $3,500 during 2011.Darren's parents cannot claim him as a dependent unless he is a full-time student.

A) True
B) False

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Question 62

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Jim is single and for 2011 has AGI of $50,000.He is age 75 and has no dependents.For 2011,he has itemized deductions from AGI of $7,000.Determine Jim's taxable income for 2011.

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$39,050.Jim's standard deduction is $5,8...

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Question 63

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Currently,the top income tax rate in effect is the highest it has ever been.

In 2011,Justin had the following transactions: Justin's AGI is:

Katelyn is divorced and maintains a household in which she and her daughter,Crissa,live.Crissa,age 22,earns $11,000 during 2011 as a model.Katelyn does qualify for head of household filing status.

An individual taxpayer uses a fiscal year February 1-January 31.The due date of this taxpayer's Federal income tax return is May 15 of each tax year.

For the past few years,Corey's filing status has been as follows: 2007 (married/joint); 2008 (married/separate); 2009 (surviving spouse); 2010 (surviving spouse); and 2011 (head of household).Explain what probably has happened.

List several categories of persons that cannot be a qualified child but can be a qualified relative for dependency exemption purposes.

All exclusions from gross income are reported on Form 1040.

For 2011,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.

Because they appear on page 1 of Form 1040,itemized deductions are also referred to as "page 1 deductions."

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?

The Hutters filed a joint return for 2011.They provide more than 50% of the support of Carla,Melvin,and Aaron.Carla (age 20) is a cousin and earns $3,000 from a part-time job.Melvin (age 25) is their son and is a full-time law student.He received from the university a $3,800 scholarship for tuition.Aaron is a brother who is a citizen of Israel but resides in France.Carla and Melvin live with the Hutters.How many personal and dependency exemptions can the Hutters claim on their Federal income tax return?

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

Merle is a widow,age 80 and blind,who is claimed as a dependent by her son.During 2011,she received $4,800 in Social Security benefits,$2,200 in bank interest,and $1,800 in cash dividends from stocks.Merle's taxable income is:

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 2011 is $15,050 ($11,600 + $1,150 + $1,150 + $1,150).

Tony,age 15,is claimed as a dependent by his grandmother.During 2011,Tony had interest income from Boeing Corporation bonds of $1,000 and earnings from a part-time job of $700.Tony's taxable income is:

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.For 2011,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 2011.

In which,if any,of the following situations will the kiddie tax not apply?

The filing status of a taxpayer (e.g.,single,head of household)must be identified before taxable income is determined.