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

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Question 41

Multiple Choice

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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?

A) $76,000.
B) $77,000.
C) $78,000.
D) $89,000.
E) None of the above.

F) A) and E)
G) B) and D)

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Question 42

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The additional standard deduction for age and blindness is not the same amount for single as for married taxpayers.

A) True
B) False

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Question 43

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Warren,age 17,is claimed as a dependent by his father.In 2012,Warren has dividend income of $1,500 and earns $400 from a part-time job.

For tax purposes,married persons filing separate returns are treated the same as single taxpayers.

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

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

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?

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

Keith,age 17 and single,earns $3,000 during 2012.Keith's parents cannot claim him as a dependent even if he does not live with them.

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:

Clara,age 68,claims head of household filing status.If she has itemized deductions of $9,500 for 2012,she should not claim the standard deduction.

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).

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

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.

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?

When married persons file a joint return,joint and several liability results.What does this mean?

In terms of timing as to any one year,the Tax Tables are available before the Tax Rate Schedules.

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

A child who is married can be subject to the kiddie tax.

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?