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Claude's deductions from AGI exceed the standard deduction allowed for the current year. Under these circumstances, Claude cannot claim the standard deduction.

A) True
B) False

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Which of the following taxpayers may file as a head of household in 2016? ​ Ron provides all the support for his mother, Betty, who lives by herself in an apartment in Fort Lauderdale. Ron pays the rent and other expenses for the apartment and properly claims his mother as a dependent. ​ Tammy provides over one-half the support for her 18-year old brother, Dan. Dan earned $4,200 in 2016 working at a fast food restaurant and is saving his money to attend college in 2017. Dan lives in Tammy's home. ​ Joe's wife left him late in December of 2015. No legal action was taken and Joe has not heard from her in 2016. Joe supported his 6-year-old son, who lived with him throughout 2016.


A) Ron only
B) Tammy only
C) Joe only
D) Ron and Joe only
E) Ron, Tammy, and Joe

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

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Taylor had the following transactions for 2016: What is Taylor's AGI for 2016? Taylor had the following transactions for 2016: What is Taylor's AGI for 2016?

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$76,000. $85,000 (salary) + $3,000 (raff...

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

A) True
B) 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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Adjusted gross income (AGI) appears at the bottom of page 1 and at the top of page 2 of Form 1040.

A) True
B) False

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Match the statements that relate to each other. Note: Choice l. may be used more than once. -Abandoned spouse


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.

M) F) and G)
N) F) and K)

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Match the statements that relate to each other. Note: Choice l. may be used more than once. -Age of a qualifying child


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.

M) B) and E)
N) D) and J)

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In 2016, Cindy had the following transactions: Cindy's AGI is: In 2016, Cindy had the following transactions: Cindy's AGI is: A) $114,000. B) $103,000. C) $98,000. D) $94,000. E) $83,000.


A) $114,000.
B) $103,000.
C) $98,000.
D) $94,000.
E) $83,000.

F) D) and E)
G) B) and D)

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The Deweys are expecting to save on their taxes for 2016. 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.

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The Deweys are expecting to qualify for ...

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In 2016, Ashley earns a salary of $55,000, has capital gains of $3,000, and receives interest income of $5,000. Her husband died in 2015. Ashley has a dependent son, Tyrone, who is age 8. Her itemized deductions are $9,000. a.What is her filing status? b.Calculate Ashley's taxable income for 2016.

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Mel is not quite sure whether an expenditure he made is a deduction for AGI or a deduction from AGI. Since he plans to choose the standard deduction option for the year, does the distinction matter? Explain.

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It makes a great deal of difference if t...

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


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 39.6%.
I) Applicable rate could be as low as 0%.
J) Maximum rate is 28%.
K) Income from foreign sources is not subject to tax.
L) No correct match provided.

M) H) and K)
N) C) and E)

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The Martins have a teenage son who has become an accomplished bagpiper. With proper promotion and scheduling, the son has good income potential by charging for his services at special events (particularly funerals). However, the Martins are fearful that the income could generate a kiddie tax and cause them the loss of a dependency exemption deduction. Are the Martins' concerns justified? Explain.

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The income received by the son would be ...

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After Ellie moves out of the apartment she had rented as her personal residence, she recovers her damage deposit of $1,000. The $1,000 is not income to Ellie.

A) True
B) False

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In order to claim a dependency exemption for other than a qualifying child, 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%?

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One exception involves the multiple supp...

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In which, if any, of the following situations may the individual not be claimed as a dependent of the taxpayer?


A) A former spouse who lives with the taxpayer (divorce took place last year) .
B) A stepmother who does not live with the taxpayer.
C) A married daughter who lives with the taxpayer.
D) A half-brother who does not live with the taxpayer and is a citizen and resident of Canada.
E) A cousin who does not live with the taxpayer.

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

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Arnold is married to Sybil, who abandoned him in 2015. He has not seen or communicated with her since April of that year. He maintains a household in which their son, Evans, lives. Evans is age 25 and earns over $6,000 each year. For tax year 2016, Arnold's filing status is:


A) Married, filing jointly.
B) Head of household.
C) Married, filing separately.
D) Surviving spouse.
E) Single.

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

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A taxpayer who itemizes must use Form 1040, and cannot use Form 1040EZ or Form 1040A.

A) True
B) False

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List at least three exceptions to the application of the kiddie tax.

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∙ Unearned income of $2,100 or less.
∙ A...

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