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Exam 3: Computing the Tax

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Question 31

True/False

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In January 2012, Jake's wife dies and he does not remarry.For tax year 2012, Jake may not be able to use the filing status available to married persons filing joint returns.

A) True
B) False

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Question 32

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Gain on the sale of collectibles held for more than 12 months could be subject to tax at a rate lower than 28%.

A) True
B) False

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Question 33

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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 2012?

An increase in a taxpayer's AGI will increase the amount of medical expenses that can be deducted.

For dependents who have income, special filing requirements apply.

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

Regarding head of household filing status, comment on the following:

During 2012, Leona had the following transactions: Leona's AGI is:

In 2012, Warren sold his personal use automobile for a loss of $9,000.He also sold a personal coin collection for a gain of $10,000.As a result of these sales, $1,000 is subject to income tax.

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

Under what circumstances, if any, may an ex-spouse be claimed as a dependent?

Under the income tax formula, a taxpayer must choose between deductions from AGI and the standard deduction.

Howard, age 82, dies on January 2, 2012.On Howard's final income tax return, the full amount of the basic and additional standard deductions will be allowed even though Howard lived for only 2 days during the year.

Tony, age 15, is claimed as a dependent by his grandmother.During 2012, 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:

Benjamin, age 16, is claimed as a dependent by his parents.During 2012, he earned $700 at a car wash.Benjamin's standard deduction is $1,250 ($950 + $300).

Dan and Donna are husband and wife and file separate returns for the year.If Dan itemizes his deductions from AGI, Donna still can claim the standard deduction.

After paying down the mortgage on their personal residence, the Hills have found that their itemized deductions for each year are always slightly less than the standard deduction option.

When can a taxpayer not use Form 1040EZ? Form 1040A?

During 2012, Marvin had the following transactions: Marvin's AGI is:

Mel is not quite sure whether an expenditure he made is a deduction for AGI or a deduction from AGI. Since he plans to choose the standard deduction option for the year, does the distinction matter? Explain.