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

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Question 61

True/False

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Under the Federal income tax formula for individuals, the determination of adjusted gross income (AGI) precedes that of taxable income (TI).

A) True
B) False

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Question 62

Multiple Choice

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Match the statements that relate to each other.Note: Choice k.may be used more than once. -Tax Rate Schedule

A) Available to a 70-year-old father claimed as a dependent by his son.
B) Equal to tax liability divided by taxable income.
C) The highest income tax rate applicable to a taxpayer.
D) Not eligible for the standard deduction.
E) No one qualified taxpayer meets the support test.
F) Taxpayer's ex-husband does not qualify.
G) A dependent child (age 18) who has only unearned income.
H) Highest applicable rate is 37%.
I) Applicable rate could be as low as 0%.
J) Maximum rate is 28%.
K) No correct match provided.

L) J) and K)
M) All of the above

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Question 63

True/False

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Kim, a resident of Oregon, supports his parents who are residents of Canada but citizens of Korea.Kim can claim a dependent tax credit for his parents.

Match the statements that relate to each other.Note: Choice k.may be used more than once. -Additional standard deduction

The Hutters filed a joint return for 2019.They provide more than 50% of the support of Carla, Ellie, and Aaron. Carla (age 18) is a cousin and earns $2,800 from a part-time job.Ellie (age 25) is their daughter and is a full-time law student.She received a $7,500 scholarship for tuition from her law school.Aaron is a brother who is a citizen of Israel but resides in France.Carla and Ellie live with the Hutters.How many dependents can the Hutters claim?

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.

During 2019, Enrique had the following transactions: $\begin{array} { l r } \text { Salary } & \$ 70,000 \\\text { Interest income on Xerox bonds } & 2,000 \\\text { Inheritance from uncle } & 40,000 \\\text { Contribution to traditional IRA } & 5,500 \\\text { Capital losses } & 2,500\end{array}$ Enrique's AGI is:

In any given year, that year's Tax Tables are released by the IRS before the Tax Rate Schedules for that year.

Match the statements that relate to each other.Note: Choice k.may be used more than once. -Multiple support agreement

Jeremy is married to Amy, who abandoned him in 2018.He has not seen or communicated with her since April of that year.He maintains a household in which their son, Evan, lives.Evan is age 25 and earns over $6,000 each year.For tax year 2019, Jeremy's filing status is:

Matching Regarding classification as a dependent, classify each statement in one of the four categories: -A son lives with taxpayer and earns $3,000.

In 2019, a child who has unearned income of $2,200 or less cannot be subject to the kiddie tax.

Matching Regarding classification as a dependent, classify each statement in one of the four categories: -A niece who lives with taxpayer, is 20 years old, earns $5,000, and is a full-time student.

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

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

Butch and Minerva divorced in December 2019.Since they were married for more than one-half of the year, they are considered as married for 2019.

Millie, age 80, is supported during the current year as follows: $\begin{array} { l c } & \begin{array} { c } \text { Percent of } \\\text { Support }\end{array} \\\text { Weston (a son) } & 20 \% \\\text { Faith (a daughter) } & 35 \% \\\text { Jake (a cousin) } & 25 \% \\\text { Brayden (unrelated close family friend) } & 20 \%\end{array}$ During the year, Millie lives in an assisted living facility.Under a multiple support agreement, indicate which parties can qualify to claim Millie as a dependent.

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

Matching Regarding classification as a dependent, classify each statement in one of the four categories: -A daughter who does not live with taxpayer.

Match the statements that relate to each other.Note: Some choices may be used more than once. -Resident of Canada or Mexico