Question 1

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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Question 2

Gene is single and for 2010 has AGI of $40,000.He is age 65 and has no dependents.For 2010,he has itemized deductions from AGI of $7,000.Determine Gene's taxable income for 2010.

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Question 3

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.

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Question 4

In meeting the criteria of a qualifying child for dependency exemption purposes,when if ever,might the child's income become relevant?

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Question 5

Heloise,age 74 and a widow,is claimed as a dependent by her daughter.For 2010,she had income as follows: $2,500 interest on municipal bonds;$3,200 Social Security benefits;$3,000 income from a part-time job;and $2,800 dividends on stock investments.What is Heloise's taxable income for 2010?

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Question 6

In satisfying the support test and the gross income test for claiming a dependency exemption,a scholarship received by the person being claimed is handled the same way for each test.Do you agree or disagree with this statement? Why?

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Question 7

During 2010,Marlo had the following capital gains and losses:

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Question 8

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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Question 9

Mr.Lee is a citizen and resident of Hong Kong,while Mr.Anderson is a citizen and resident of the U.S.In the taxation of income,Hong Kong uses a territorial approach,while the U.S.follows the global system.In terms of effect,explain what this means to Mr.Lee and Mr.Anderson.

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Question 10

Homer (age 68)and his wife Jean (age 70)file a joint return.They furnish all of the support of Luther (Homer's 90-year old father),who lives with them.For 2010,they received $6,000 of interest income on city of Chicago bonds and interest income on corporate bonds of $48,000.Compute Homer and Jean's taxable income for 2010.

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Question 11

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

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Question 12

Ellen,age 39 and single,furnishes more than 50% of the support of her parents,who do not live with her.Ellen practices as a self-employed interior decorator and has gross income in 2010 of $120,000.Her deductions are as follows: $30,000 business and $8,100 itemized.

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Question 13

Meg,age 23,is a full-time law student and is claimed by her parents as a dependent.During 2010,she received $1,400 interest income from a bank savings account and $5,600 from a part-time job.What is Meg's taxable income for 2010?

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Question 14

During the current year,Doris received a large gift from her parents and a sizeable inheritance from an uncle.She also paid premiums on an insurance policy on her life.Doris is confused because she cannot find any place on Form 1040 to report these items.Explain.

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Question 15

During the year,Marcus had the following transactions:
  How are these transactions handled for income tax purposes?

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...

Question 16

Mickey,age 12,lives in the same household with his mother,grandmother,and uncle.

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Question 17

Ashley earns a salary of $35,000,has capital gains of $4,000,and interest income of $3,000 in 2010.Her husband died in 2009.Ashley has a dependent son,Tyrone,who is age 8.Her itemized deductions are $9,000.

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Question 18

During 2010,Dena has the following gains and losses:

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Question 19

During 2010,Carmen had salary income of $90,000 and the following capital transactions:
  How are these transactions handled for income tax purposes?

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Question 20

Warren,age 17,is claimed as a dependent by his father.In 2010,Warren has dividend income of $1,500 and earns $400 from a part-time job.

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Quiz 3: Computing the Tax