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Exam 12: Tax Credits and Payments

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Question 1

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Unused foreign tax credits can be carried back three years and forward fifteen years.

A) True
B) False

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Question 2

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Certain high-income individuals are subject to three additional Medicare taxes-on wages,unearned income,and tax credits claimed.

A) True
B) False

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Question 3

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The disabled access credit is computed at the rate of 50% of all access expenditures incurred by the taxpayer during the year.

Summer Corporation's business is international in scope and is subject to income taxes in several countries.Summer's earnings and income taxes paid in the relevant foreign countries are: ​ If Summer Corporation's worldwide income subject to taxation in the United States is $2,400,000 and the U.S.income tax due prior to the foreign tax credit is $816,000,compute the allowable foreign tax credit.If,instead,the total foreign income taxes paid were $550,000,compute the allowable foreign tax credit.

George and Jill are husband and wife,ages 67 and 65 respectively.During the year,they receive Social Security benefits of $4,000 and have adjusted gross income of $11,000.Assuming they file a joint return,their tax credit for the elderly,before considering any possible limitation due to their tax liability,is:

The tax benefits resulting from tax credits and tax deductions are affected by the tax rate bracket of the taxpayer.

A taxpayer may qualify for the credit for child and dependent care expenses if the taxpayer's dependent is under age 17.

Julia is 30 years old,unmarried with a 9 year-old daughter,and has earnings during 2017 of $19,700.Does she qualify for the earned income credit? If so,calculate the amount of credit that is available to her.

Rick spends $750,000 to build a qualified low-income housing project,which is placed in service on January 1,2017.He financed the project using his personal funds.What is the amount of the low-income housing credit that Rick may claim in 2017 (assuming a rate of 7.40%)? What is the total amount of the credit that Rick may claim as a result of the $750,000 expenditure?

In January 2017,Tammy acquired an office building in downtown Syracuse,New York for $400,000.The building was constructed in 1932.Of the $400,000 cost,$40,000 was allocated to the land.Tammy immediately placed the building into service,but she quickly realized that substantial renovation would be required to keep and attract new tenants.The renovations,costing $600,000,were of the type that qualifies for the rehabilitation credit.The improvements were completed in October 2017. a.Compute Tammy's rehabilitation tax credit for the year of acquisition. b.Determine the cost recovery deduction for 2017. c.What is the basis in the property at the end of its first year of use by Tammy?

BlueCo incurs $900,000 during the year to construct a facility that will be used exclusively for the care of its employees' pre-school age children during normal working hours.The credit for employer-provided child care available to BlueCo this year is $225,000.

In terms of the withholding procedures,which statement does not reflect current rules?

Discuss the treatment of unused general business credits.

Which of the following statements regarding the adoption expenses credit is not true?

Phil and Audrey,husband and wife,both are employed by Laurel Corporation.Phil earns $125,000 in salary in 2017,and Audrey earns $70,000.How much FICA tax must they pay for 2017?

On October 2,Ross quits his job with Blue Corporation.If requested by Ross,Blue Corporation must furnish a Form W-2 to Ross within 45 days after the date of the request or the final wage payment,whichever is later.

If a taxpayer is required to recapture any tax credit for rehabilitation expenditures,the recapture amount need not be added to the adjusted basis of the rehabilitation expenditures.

For purposes of computing the credit for child and dependent care expenses,the qualifying employment-related expenses are limited to an individual's actual or deemed earned income.

The purpose of the work opportunity tax credit is to encourage employers to hire individuals from specified target groups traditionally subject to high rates of unemployment.

In May 2013,Cindy incurred qualifying rehabilitation expenditures of $500,000 on a certified historic structure and properly claimed the tax credit for rehabilitation expenditures.In March 2017,she sold the building at a loss.Calculate the rehabilitation expenditures credit recapture that she must report in 2017.