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

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Question 41

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Which of the following taxpayers may file as a head of household in 2012? Ron provides all the support for his mother,Betty,who lives by herself in an apartment in Fort Lauderdale.Ron pays the rent and other expenses for the apartment and properly claims his mother as a dependent. Tammy provides over one-half the support for her 18-year old brother,Dan.Dan earned $4,200 in 2012 working at a fast food restaurant and is saving his money to attend college in 2013.Dan lives in Tammy's home. Joe's wife left him late in December of 2011.No legal action was taken and Joe has not heard from her in 2012.Joe supported his 6-year-old son,who lived with him throughout 2012.

A) Ron only.
B) Tammy only.
C) Joe only.
D) Ron and Joe only.
E) Ron, Tammy, and Joe.

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

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Question 42

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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.

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Question 43

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Monique is a resident of the U.S.and a citizen of France.If she files a U.S.income tax return,Monique can claim the standard deduction.

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?

Darren,age 20 and not disabled,earns $4,000 during 2012.Darren's parents cannot claim him as a dependent unless he is a full-time student.

Jayden and Chloe Harper are husband and wife and use the calendar year for tax purposes.

Since an abandoned spouse is treated as single and has one or more dependent children,he or she qualifies for the standard deduction available to head of household.

In which,if any,of the following situations may the individual not be claimed as a dependent of the taxpayer?

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

In early 2012,Ben sold a yacht,held for 9 months and for pleasure,for a $5,000 gain.Concerned about offsetting the gain before year-end,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.

DeWayne is a U.S.citizen and resident.He spends much of each year in the United Kingdom on business.He is married to Petula,a U.K.citizen and resident of London.DeWayne has heard that it is possible that he can file a joint income tax return for U.S.purposes.If this is so,what are the constraints he should consider in making any such decision?

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

An "above the line" deduction refers to a deduction for AGI.

During 2012,Madison had salary income of $80,000 and the following capital transactions: How are these transactions handled for income tax purposes?

Tom is single and for 2012 has AGI of $50,000.He is age 70 and has no dependents.For 2012,he has itemized deductions from AGI of $7,000.Determine Tom's taxable income for 2012.

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

For the past few years,Corey's filing status has been as follows: 2008 (married/joint); 2009 (married/separate); 2010 (surviving spouse); 2011 (surviving spouse); and 2012 (head of household).Explain what probably has happened.

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?

Mr.Lee is a citizen and resident of Hong Kong,while Mr.Anderson is a citizen and resident of the U.S.In the taxation of income,Hong Kong uses a territorial approach,while the U.S.follows the global system.In terms of effect,explain what this means to Mr.Lee and Mr.Anderson.

Married taxpayers who file separately cannot later change to a joint return.