Saudi Electronic University

ACCT 422

CH2:

1)Taxable income for an individual is defined as

2. All of the following items are generally excluded from income except

3. All of the following items are included in gross income except

4. All of the following items are deductions for adjusted gross income except

5. All of the following items are deductions for (not from) adjusted gross income except

6. Which of the following credits is considered a refundable credit?

7. A single taxpayer provided the following information for 2013:

What is taxable income?

8. Which of the following types of itemized deductions are included in the category of miscellaneous expenses that are deductible only if the aggregate amount of such expenses exceeds 2% of the taxpayer's adjusted gross income?

9. In 2013 the standard deduction for a married taxpayer filing a joint return and who is 67 years old with a spouse who is 65 years old is

10. In 2013 Brett and Lashana (both 50 years old) file a joint tax return claiming as a dependent their son who is blind. Their standard deduction is

11. Annisa, who is 28 and single, has adjusted gross income of $55,000 and itemized deductions of

$5,000. In 2013, Annisa will have taxable income of

12. On June 1, 2013, Ellen turned 65. Ellen has been a widow for five years and has no dependents. Her standard deduction is

13. The regular standard deduction is available to which one of the following taxpayers?

14. Husband and wife, who live in a common law state, are eligible to file a joint return for 2013, but elect to file separately. They do not have dependents. Wife has adjusted gross income of $25,000 and has $2,200 of expenditures which qualify as itemized deductions. She is entitled to one exemption. Husband deducts itemized deductions of $11,200. What is the taxable income for the wife?

15. Lewis, who is single, is claimed as a dependent on his parents' tax return. He received $2,000 during the year in dividends, which was his only income. What is his standard deduction?

16. Charlie is claimed as a dependent on his parents' tax return in 2013. He received $8,000 during the year from a part-time acting job, which was his only income. What is his standard deduction?

17. Deborah, who is single, is claimed as a dependent on her parents' tax return. She had a part-time job during 2013 and earned $850 during the year, which was her only income. What is her standard deduction?

18. Cheryl is claimed as a dependent on her parents' tax return. She had a part-time job during 2013 and earned $4,900 during the year, in addition to $600 of interest income. What is her standard deduction?

19. A married person who files a separate return can claim a personal exemption for his spouse if the spouse is not the dependent of another and has

20. Ben, age 67, and Karla, age 58, have two children who live with them and for whom they provide total support. Their daughter is 21 years old, blind, is not a full-time student and has no income. Her twin brother is 21 years old, has good sight, is a full-time student and has income of $4,500. Ben and Karla can claim how many personal and dependency exemptions on their tax return?

21. Sarah, who is single, maintains a home in which she, her 15-year old brother, and her 21-year-old niece live. Sarah provides the majority of the support for her brother, her niece, and her cousin, age 18, who is enrolled full-time at the university and lives in an apartment. While the niece and cousin have no income, her brother has a part-time job and earns $4,000 per year. How many personal and dependency exemptions may Sarah claim?

22. Anita, who is divorced, maintains a home in which she and her 16 year old daughter live. Anita provides the majority of the support for her daughter and for a son, age 23, who is enrolled part-time at the university and lives in the dorm. The son also works in the campus bookstore and earns spending money of $4,500. How many personal and dependency exemptions may Anita claim?

23. Amber supports four individuals: Erin, her stepdaughter, who lives with her; Amy, her cousin, who lives in another state; Britney, her friend, who lives legally in Amber's home all year long; and Charlie, her father, who lives in another state. Assume that the dependency requirements other than residence are all met. How many personal and dependency exemptions may Amber claim?

24. John supports Kevin, his cousin, who lived with him throughout 2013. John also supports three other individuals who do not live with him:

Donna, who is John's mother Melissa, who John's stepsister Morris, who is Kevin's brother

Assume that Donna, Melissa, Morris and Kevin each earn less than $3,900. How many personal and dependency exemptions may John claim?

25. Julia provides more than 50 percent of the support for three individuals: Theresa, an unrelated child who lives with Julia all year long; Margaret, Julia's cousin, who lives in another city; and Emma, Julia's daughter who lives in her own home. Each of the potential dependents earned less than $3,900. How many dependency exemptions can Julia claim on her 2013 tax return?

26. Tony supports the following individuals during the current year: Miranda, his former mother-in-law who lives in her own home and has no gross income; his cousin, Jeff, age 23, who is a full-time student, earns $7,000 during the year, and lives with Tony all year long; and Matt, age 22, who is Tony's brother, is a full-time student living on campus and earns $8,000 during the year. How many dependency exemptions may Tony claim?

27. David's father is retired and receives $14,000 per year in social security benefits. David's father saves $4,000 of the benefits and spends the remaining $10,000 for his support. How much support must David provide for his father to meet the dependent support requirement?

28. Which of the following is not considered support for the dependent support test?

29. Juanita's mother lives with her. Juanita purchased clothing for her mother costing $1,000 and provided her with a room that Juanita estimates she could have rented for $4,000. Juanita spent $5,000 on groceries she shared with her mother. Juanita also paid $700 for her mother's life insurance coverage. How much of these costs is considered support?

30. Anna is supported entirely by her three sons John, James, and Joseph who provide for her support in the following percentages:

John: 10%, James: 40%, Joseph: 50%

Assuming a multiple support declaration exists, which of the brothers may claim his mother as a dependent?

31. Blaine Greer lives alone. His support comes from the following sources:

Assuming a multiple support declaration exists, which of the individuals may claim Blaine as a dependent?

32. The child credit is for taxpayers with dependent children under the age of

33. Steven and Susie Tyler have three dependent children ages 13, 15, and 17. Their modified AGI is

$108,000. What is the amount of the child credit to which they are entitled?

34. Nate and Nikki have three dependent children ages 12, 15, and 17. Their modified AGI is $120,000. What is the amount of the child credit to which they are entitled?

35. Ryan and Edith file a joint return showing $130,000 of AGI (with no exclusions under Secs. 911, 931, and 933). They have three dependent children ages 7, 9, and 13. What is the amount of their child credit?

36. Paul and Sally file a joint return showing $87,000 of AGI (with no exclusions under Secs. 911, 931, and 933). They have three dependent children ages 6, 8, and 13. What is the amount of their child credit?

37. Amanda has two dependent children, ages 10 and 12. She earned $15,000 from her waitress job. How much of her child credit is refundable?

38. You may choose married filing jointly as your filing status if you are married and both you and your spouse agree to file a joint return. Which of the following facts would prevent you from being considered married for filing purposes?

39. Tom and Alice were married on December 31 of last year. What is their filing status for last year?

40. When a spouse dies, the surviving spouse for the year of death

41. In 2010, Leo's wife died. Leo has two small children, ages 2 and 4, living at home whom he supports entirely. Leo does not remarry and is not claimed as a dependent on another's return during any of this period. In 2011, 2012, and 2013, Leo's most advantageous filing status is, respectively

42. Carter dies on January 1, 2012. A joint return election is made in 2012 and Marjorie properly qualifies as a surviving spouse for the two following years. Marjorie has one child that she claims as a dependent for this same period. The number of personal and dependency exemptions allowed Marjorie in 2012 and in 2013 is, respectively

43. Edward, a widower whose wife died in 2010, maintains a household for himself and his daughter who qualifies as his dependent. Edward's most favorable filing status for 2013 is

44. In order to qualify to file as surviving spouse, all of the following criteria must be met by the widow or widower except

45. Which of the following dependent relatives does not have to live in the same household as the

taxpayer who is claiming head of household filing status?

46. Sally divorced her husband three years ago and has not remarried. Since the divorce she has maintained her home in which she and her now sixteen-year-old daughter reside. The daughter is a qualified child. Sally signed the dependency exemption over to her ex-spouse. What is Sally's filing status for the current year and how many exemptions may she claim?

47. Dave, age 59 and divorced, is the sole support of his mother age 83, who is a resident of a local nursing home for the entire year. Dave's mother had no income for the year. Dave's filing status and exemptions claimed are

48. Liz and Bert divorce and Liz receives custody of their child. Bert is ordered by the court to pay child support of $10,000 per year, and Liz agrees in writing to allow Bert to claim the dependency exemption for the child. If Liz maintains the home in which she and her child live, her filing status and exemptions claimed will be

49. The filing status in which the rates increase most rapidly is

50. A married taxpayer may file as head of household under the abandoned spouse provisions if all of the following are met except

51. To qualify as an abandoned spouse, the taxpayer is not required to

52. In October 2012, Joy and Paul separated and have not lived with each other since, but they are still legally married. They do not file a joint return. Joy supports their children after the separation and pays the cost of maintaining their home. Joy's filing status in 2012 and 2013 is, respectively,

53. The oldest age at which the "Kiddie Tax" could apply to a dependent child is

54. Elise, age 20, is a full-time college student with earned income from wages of $4,400 and interest income of $500. Elise's parents provide more than half of her support. Elise's taxable income is

55. Michelle, age 20, is a full-time college student with earned income from wages of $5,200 and interest income of $700. Michelle's parents provide more than half of Michelle's support. Michelle's taxable income is

56. Frank, age 17, received $4,000 of dividends and $1,500 from a part-time job. Frank is a dependent of his parents who are in the 28% percent bracket. Frank's taxable income is

57. Vincent, age 12, is a dependent of his parents. During 2013, Vincent's earned income from wages is

$2,600 and Vincent received $3,000 of interest income. The parent's marginal rate is 28% and Vincent's marginal rate is 10%. Vincent's tax is

58. Keith, age 17, is a dependent of his parents. During 2013, he received $3,000 of dividend income. The parent's marginal rate is 28% and Keith's rate is 10%. Keith's tax is

59. A corporation has revenue of $350,000 and deductible business expenses of $240,000. What is the federal income tax, before credits?

60. Ray is starting a new business and trying to decide between a C corporation, S corporation and partnership. Which of the following statements regarding his decision is correct?

61. If an individual with a marginal tax rate of 15% has a long-term capital gain, it is taxed at

62. Lila and Ted are married and have AGI of $327,000. They had their first children this year, twins. Lila and Ted will be allowed a deduction for personal and dependency exemptions of

63. Shane and Alyssa (a married couple) have AGI of $340,000 in 2013. They bought a house this year and paid $16,000 of interest expense on the mortgage and paid $6,500 of property taxes. They will be allowed a deduction from AGI of

64. Rena and Ronald, a married couple, each earn a salary of $200,000.  They will be required to pay additional payroll taxes in 2013 of

65. Rob is a taxpayer in the top tax bracket, with over a million in taxable income. He plans to sell stock held long-term for a $100,000 gain. This sale will result in an increase to his tax liability of
66. In order to shift the taxation of dividend income from a parent to a child,

67. Married couples will normally file jointly. Identify a situation where a married couple may prefer to file separately.

1. The spouse with lower income has substantial medical expenses.
2. A couple is separated and contemplating divorce.
3. One spouse can be held responsible for the entire tax liability.
4. All of the above.