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Exam 9: Individuals As the Taxpayers

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Question 31

True/False

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A child who is married cannot be subject to the kiddie tax.

A) True
B) False

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Question 32

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During 2017, Sarah had the following transactions: $\begin{array}{lr}\text { Salary } & \$ 80,000 \\\text { Interest income on City of B altimore bonds } & 1,000 \\\text { Damages for personal injury (car accident) } & 100,000 \\\text { Punitive damages (same car accident) } & 200,000 \\\text { Cash dividends from Chevron Corporation stock } & 7,000\end{array}$ Sarah's AGI is:

A) $185,000.
B) $187,000.
C) $285,000.
D) $287,000.
E) $387,000.

F) B) and C)
G) A) and E)

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Question 33

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Once a child reaches age 19, the kiddie tax no longer applies.

Butch and Minerva are divorced in December of 2017.Since they were married for more than one-half of the year, they are considered as married for 2017.

Deductions for AGI are often referred to as "above-the-line" or "page 1" deductions.Explain.

Emily had the following transactions during 2016: $\begin{array}{lr}\text { Salary }&&\$90,000\\\text { Interest income on bonds- }\\\text { Issued by City of Nashville }&\$4,000\\\text { Issued by Chevron Corporation } & 5,000&9,000 \\\text { Alimony received } && 5,000 \\\text { Child support received } && 20,000 \\\text { City and state income taxes paid } && (5,000) \\\text { Bank loan obtained to pay for car purchase } && 15,000\end{array}$ What is Emily's AGI for 2017?

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

In determining whether the gross income test is met for dependency exemption purposes, only the taxable portion of a scholarship is considered.

Tony, age 15, is claimed as a dependent by his grandmother.During 2017, Tony had interest income from Boeing Corporation bonds of $1,000 and earnings from a part-time job of $800.Tony's taxable income is:

Regarding the Tax Tables applicable to the Federal income tax, which of the following statements is correct?

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

Howard, age 82, dies on January 2, 2017.On Howard's final income tax return, the full amount of the basic and additional standard deductions will be allowed even though Howard lived for only 2 days during the year.

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

Roy and Linda were divorced in 2016.The divorce decree awards custody of their children to Linda but is silent as to who is entitled to claim them as dependents.If Roy furnished more than half of their support, he can claim them as dependents in 2017.

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?

Match the statements that relate to each other. -Multiple support agreement

Pedro is married to Consuela, who lives with him.Both are U.S.citizens and residents of Nebraska.Pedro furnishes all of the support of his parents, who are citizens and residents of Mexico.He also furnishes all of the support of Consuela's parents, who are citizens and residents of El Salvador.Consuela has no gross income for the year.If Pedro files as a married person filing separately, how many personal and dependency exemptions can he claim on his return?

A child who has unearned income of $2,100 or less cannot be subject to the kiddie tax.

An "above the line" deduction refers to a deduction for AGI.

Match the statements that relate to each other. -Kiddie tax may be imposed