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Exam 3: Computing the Tax

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Question 81

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A qualifying child cannot include:

A) A nonresident alien.
B) A married son who files a joint return.
C) A daughter who is away at college.
D) A brother who is 28 years of age and disabled.
E) A grandmother.

F) All of the above
G) B) and C)

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Question 82

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Mandeep's parents live in another state and she cannot claim them as her dependents. If Mandeep pays their medical expenses, can she derive any tax benefit from doing so? Explain.

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If Mandeep could otherwise cla...

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Question 83

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In 2019, Nai-Yu had the following transactions: $\begin{array}{lc}\text { Salary } & \$ 90,000 \\\text { Short-term capital gain from a stock investment } & 4,000 \\\text { Moving expense to change jobs } & (11,000) \text { Receipt of } \\\text { repayment of } \$ 20,000 \text { loan she made to her sister in } 2014 \text { (includes no interest) } & 20,000 \\\text { State income taxes } & (5,000) \end{array}$ Nai-Yu's AGI is:

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

Ashley had the following transactions during 2019: $\begin{array} { l } \text {Salary }&&\$90,000\\ \text {Interest income on bonds- }\\ \text {Issued by City of Nashville }&\$4,000\\ \text {Issued by Chevron Corporation }&5,000&9,000\\ \text { Alimony received (divorce finalized in 2011)}&&5,000\\ \text {Child support received (divorce finalized in 2011) }&&20,000\\ \text {City and state income taxes paid }&&(5,000)\\ \text {Bank loan obtained to pay for car purchase }&&15,000\\\end{array}$ What is Ashley's AGI for 2019?

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

Lena is 66 years of age, single, and blind and is not claimed as a dependent. How much gross income must she have before she is required to file a Federal income tax return for 2019?

In applying the gross income test in the case of dependents that are married, could the application of community property laws have any effect? Explain.

For dependents who have income, special filing requirements apply.

Tony, age 15, is claimed as a dependent by his grandmother. During 2019, he had interest income from Boeing Corporation bonds of $1,000 and earnings from a part-time job of $800. Tony's taxable income is:

Monique is a resident of the United States and a citizen of France. If she files a U.S. income tax return, Monique cannot claim the standard deduction.

In order to claim someone other than a qualifying child as a dependent, a taxpayer must meet the support test. Generally, this is done by furnishing more than 50% of a dependent's support. What exceptions exist, if any, where the support furnished need not be more than 50%?

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.

For the current year, David has wages of $80,000 and the following property transactions: $\begin{array}{llr} \text { Stock investment sales- } &\\ \text { Long-term capital gain} &\$ 9,000\\ \text { Short-term capital loss} &(12,000) \\ \text { Loss on sale of camper (purchased four years ago and used for family vacations) } &(2,000) \\\end{array}$ What is David's AGI for the current year?

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

As opposed to itemizing deductions from AGI, the majority of individual taxpayers choose the standard deduction.

Married taxpayers who file a joint return cannot later (i.e., after the filing due date) switch to separate returns for that year.

Match the statements that relate to each other. Note: Some choices may be used more than once. -$1,100

Katelyn is divorced and maintains a household in which she and her daughter, Crissa, live. Crissa, age 22, earns $11,000 during 2019 as a model. Katelyn does not qualify for head of household filing status.

When filing their Federal income tax returns, the Youngs always claimed the standard deduction. After they purchased a home, however, they started to itemize their deductions from AGI.2019. Why the delay as to itemizing? a. Explain the reason for the change. b. Suppose they purchased the home in November 2018, but did not start itemizing until tax year