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

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Question 21

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Kirby is in the 15% tax bracket and had the following capital asset transactions during 2012: Kirby's tax consequences from these gains are as follows:

A) (5% ´ $10,000) + (15% ´ $13,000) .
B) (15% ´ $13,000) + (28% ´ $11,000) .
C) (0% ´ $10,000) + (15% ´ $13,000) .
D) (15% ´ $23,000) .
E) None of the above.

F) B) and C)
G) B) and D)

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Question 22

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

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As an ex-spouse does not meet the relati...

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Question 23

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For the year a spouse dies,the surviving spouse is considered married for the entire year for income tax purposes.

Lee,a citizen of Korea,is a resident of the U.S.Any rent income Lee receives from land he owns in Korea is not subject to the U.S.income tax.

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

Which,if any,of the statements regarding the standard deduction is correct?

Adjusted gross income (AGI)appears at the bottom of page 1 and at the top of page 2 of Form 1040.

Sarah furnishes more than 50% of the support of her son and daughter-in-law who live with her.If the son and daughter-in-law file a joint return,Sarah cannot claim them as dependents.

A dependent cannot claim a personal exemption on his or her own return.

Which,if any,of the following is a deduction for AGI?

During 2012,Addison has the following gains and losses:

Ed is divorced and maintains a home in which he and a dependent friend live.Ed does not qualify for head of household filing status.

List at least three exceptions to the application of the kiddie tax.

Using borrowed funds from a mortgage on her home,Leah provides 52% of her own support,while her sons furnished the rest.Leah cannot be claimed as a dependent under a multiple support agreement.

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

Currently,the top income tax rate in effect is not the highest it has ever been.

The Martins have a teenage son who has become an accomplished bagpiper.With proper promotion and scheduling,the son has good income potential by charging for his services at special events (particularly funerals).However,the Martins are fearful that the income could generate a kiddie tax and cause them the loss of a dependency exemption deduction.Are the Martins' concerns justified? Explain.

The Hutters filed a joint return for 2012.They provide more than 50% of the support of Carla,Melvin,and Aaron.Carla (age 18) is a cousin and earns $5,000 from a part-time job.Melvin (age 25) is their son and is a full-time law student.He received from the university a $3,800 scholarship for tuition.Aaron is a brother who is a citizen of Israel but resides in France.Carla and Melvin live with the Hutters.How many personal and dependency exemptions can the Hutters claim on their Federal income tax return?

Evan and Eileen Carter are husband and wife and file a joint return for 2012.Both are under 65 years of age.They provide more than half of the support of their daughter,Pamela (age 25) ,who is a full-time medical student.Pamela receives a $5,000 scholarship covering her tuition at college.They furnish all of the support of Belinda (Evan's grandmother) ,who is age 80 and lives in a nursing home.They also support Peggy (age 66) ,who is a friend of the family and lives with them.How many dependency exemptions may the Carters claim?

An individual taxpayer uses a fiscal year March 1-February 28.The due date of this taxpayer's Federal income tax return is May 15 of each tax year.