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

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Question 61

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In meeting the criteria of a qualifying child for dependency exemption purposes,when if ever,might the child's income become relevant?

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The amount of income earned by the quali...

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Question 62

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

A) $32,000.
B) $38,000.
C) $44,000.
D) $56,000.
E) $64,000.

F) A) and D)
G) C) and D)

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Question 63

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For the qualifying relative category (for dependency exemption purposes) :

In satisfying the support test and the gross income test for claiming a dependency exemption,a scholarship received by the person being claimed is handled the same way for each test.Do you agree or disagree with this statement? Why?

Under the Federal income tax formula for individuals,a choice must be made between claiming deductions for AGI and itemized deductions.

Many taxpayers who previously itemized will start claiming the standard deduction when they purchase a home.

For the current year,David has salary income of $80,000 and the following property transactions: What is David's AGI for the current year?

The Deweys are expecting to save on their taxes for 2012.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.

Perry is in the 33% tax bracket.During 2012,he had the following capital asset transactions: Perry's tax consequences from these gains are as follows:

In terms of the tax formula applicable to individual taxpayers,which,if any,of the following statements is correct?

In applying the gross income test in the case of dependents that are married,could the application of community property laws have any effect? Explain.

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:

When the kiddie tax applies and the parents are divorced,the applicable parent (for determining the parental tax)is the one who has custody.

Nelda is married to Chad,who abandoned her in early June of 2012.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 2012 is correct?

In determining the filing requirement based on gross income received,both additional standard deductions (i.e.,age and blindness)are taken into account.

Heloise,age 74 and a widow,is claimed as a dependent by her daughter.For 2012,she had income as follows: $2,500 interest on municipal bonds; $3,200 Social Security benefits; $3,000 income from a part-time job; and $2,800 dividends on stock investments.What is Heloise's taxable income for 2012?

In terms of income tax consequences,abandoned spouses are treated the same way as married persons filing separate returns.

The major advantage of being classified as an abandoned spouse is that the taxpayer is treated for tax purposes as being single and not married.This means that an abandoned spouse can use the more favorable tax rates available to single persons than those available to married persons filing separately.Comment on the accuracy of this conclusion.

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).

Kyle,whose wife died in December 2009,filed a joint tax return for 2009.He did not remarry,but has continued to maintain his home in which his two dependent children live.What is Kyle's filing status as to 2012?