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Exam 3: Computing the Tax

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Question 61

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Claude's deductions from AGI slightly exceed the standard deduction allowed for 2012.Under these circumstances, Claude cannot claim the standard deduction.

A) True
B) False

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Question 62

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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.

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$38,800. Tom's standard deduction is $5,...

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Question 63

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

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

Buddy and Hazel are ages 72 and 71 and file a joint return.If they have itemized deductions of $14,000 for 2012, they should not claim the standard deduction.

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?

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.

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.

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

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

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

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.

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.

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

Merle is a widow, age 80 and blind, who is claimed as a dependent by her son.During 2012, she received $4,800 in Social Security benefits, $2,200 in bank interest, and $1,800 in cash dividends from stocks.Merle's taxable income is:

Regarding the rules applicable to filing of income tax returns, which, if any, of the following is an incorrect statement:

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

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

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?

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?