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

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Question 91

Multiple Choice

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During 2017, Lisa (age 66) furnished more than 50% of the support of the following persons: Presuming all other dependency tests are met, on a separate return how many personal and dependency exemptions may Lisa claim?

A) Two
B) Three
C) Four
D) Five
E) None of these

F) C) and D)
G) D) and E)

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Question 92

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Benjamin, age 16, is claimed as a dependent by his parents. During 2017, he earned $850 at a car wash. Benjamin's standard deduction is $1,400 ($1,050 + $350).

A) True
B) False

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Question 93

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Edgar had the following transactions for 2017: What is Edgar's AGI for 2017?

Married taxpayers who file separately cannot later (i.e., after the due date for filing) change to a joint return.

In early 2017, 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.

For dependents who have income, special filing requirements apply.

Kim, a resident of Oregon, supports his parents who are residents of Canada but citizens of Korea. Kim can claim his parents as dependents.

During 2017, Jackson had the following capital gains and losses: ​ a.How much is Jackson's tax liability if he is in the 15% tax bracket? b.If his tax bracket is 33% (not 15%)?

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

Wilma, age 70 and single, is claimed as a dependent on her daughter's tax return. During 2017, she had interest income of $2,500 and $800 of earned income from babysitting. Wilma's taxable income is:

The additional standard deduction for age and blindness is greater for married taxpayers than for single taxpayers.

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 2017?

If an individual does not spend funds that have been received from another source (e.g., interest on municipal bonds), the unexpended amounts are not considered for purposes of the support test.

Which, if any, of the following is a correct statement relating to the kiddie tax?

Regarding dependency exemptions, classify each statement in one of the four categories: a.Could be a qualifying child. b.Could be a qualifying relative. c.Could be either a qualifying child or a qualifying relative. d.Could be neither a qualifying child nor a qualifying relative. -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. a.Not available to 65-year old taxpayer who itemizes. b.Exception for U.S. citizenship or residency test (for dependency exemption purposes). c.Largest basic standard deduction available to a dependent who has no earned income. d.Considered for dependency exemption purposes. e.Qualifies for head of household filing status. f.A child (age 15) who is a dependent and has only earned income. g.Considered in applying gross income test (for dependency exemption purposes). h.Not considered in applying the gross income test (for dependency exemption purposes). i.Unmarried taxpayer who can use the same tax rates as married persons filing jointly.j.Exception to the support test (for dependency exemption purposes).k.A child (age 16) who is a dependent and has only unearned income of $4,500.l.No correct match provided. -Scholarship funds for tuition

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

During 2017, Sarah had the following transactions: Sarah's AGI is:

The Deweys are expecting to save on their taxes for 2017. 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.

In 2017, Cindy had the following transactions: Cindy's AGI is: