Question 1

If an individual is classified as an employee,the employer is required to withhold the employee's share of the FICA tax and to provide a matching amount.

Accepted Answer

This is true. As an employee, FICA taxes are withheld from your paycheck, and your employer is required to match that amount.

Question 2

One-half of the self-employment tax imposed is allowed as a for AGI deduction.

Accepted Answer

This statement is true. As per the IRS, one-half of the self-employment tax paid by an individual is allowed as an above-the-line deduction on Form 1040 as an adjustment to gross income.

Question 3

Suzanne,a single taxpayer,has the following tax information for the current year. • Charitable contribution of real property with a FMV of $25,000 (adjusted basis $20,000)for which a $25,000 deduction was taken for regular tax.
• Research and experimental expenses of $40,000 deducted in full for regular tax.
Suzanne's total tax preferences and adjustments equals

Accepted Answer

The answer of Suzanne,a single taxpayer,has the following tax information...

Question 4

In calculating a taxpayer's AMT,adjustments for timing differences will be made for all of the following assets except for

Accepted Answer

An office building placed in service in 2015 typically does not require a timing adjustment for AMT, as it is not subject to bonus depreciation or other accelerated depreciation methods. However, adjustments for timing differences would be necessary for incentive stock options and machinery placed in service in 2016.

Question 5

Self-employed individuals are subject to the self-employment tax if their net earnings are more than the personal exemption amount.

Accepted Answer

Individuals are subject to self-employment tax if their net earnings are more than $400.

Question 6

Joan earns $110,000 in her job as a physician's assistant.She also has her own business selling cosmetics.This business generated $10,000 of earnings.What is Joan's self-employment tax for 2016?

Accepted Answer

The answer of Joan earns $110,000 in her job as...

Question 7

Lavonne has a regular tax liability of $13,271 on taxable income of $70,000.She also has tax preferences of $25,000 and positive adjustments attributable to limitations on itemized deductions of $15,000.Lavonne is single and takes a $4,050 personal exemption for herself only.Lavonne's alternative minimum tax for 2016 is

Accepted Answer

First, we need to calculate Lavonne's Alternative Minimum Taxable Income (AMTI):
Taxable Income: $70,000 
Add Back Tax Preferences: + $25,000 
Add Back Adjustments: + $15,000

Total AMTI: $110,000

Next, we need to calculate Lavonne's Alternative Minimum Tax (AMT) using the AMTI:
Step 1: Calculate the Exemption Amount
$84,500 for single taxpayers 
- AMTI: $110,000
= $0 Exemption

Step 2: Calculate the Alternative Minimum Taxable Income (AMTI) 
AMTI: $110,000 
- Exemption: $0 
= $110,000 AMTI

Step 3: Calculate the Tentative Minimum Tax:
(AMTI - AMT Exemption) * 26% 
($110,000 - $0) * 26% 
= $28,600

Step 4: Compare the Tentative Minimum Tax to the Regular Tax Liability:
Tentative Minimum Tax: $28,600 
Regular Tax Liability: $13,271

Since the Tentative Minimum Tax is greater than the Regular Tax Liability, Lavonne owes the AMT.

AMT Liability: Tentative Minimum Tax - Regular Tax Liability 
$28,600 - $13,271 = $15,329

Therefore, the answer is B) $2,368.

Question 8

If an individual is an employee and also has self-employment income,the maximum tax base for computing self-employment tax is reduced by the wages that are subject to the FICA tax.

Accepted Answer

This is true. When an individual has both self-employment income and wages subject to FICA tax, the maximum tax base for calculating the self-employment tax is reduced by the amount of wages subject to FICA tax. This is because the individual has already paid a portion of their Social Security and Medicare taxes through their employment, so they are only required to pay the remaining portion on their self-employment income.

Question 9

John has $55,000 net earnings from a sole proprietorship.John is also employed part-time by a major corporation and is paid $25,000.John's self-employment tax for 2016 is

Accepted Answer

The answer of John has $55,000 net earnings from a...

Question 10

In computing AMTI,all of the following must be added back except

Accepted Answer

A)The home mortgage interest on the mortgage related to the home's acquisition will be "qualified housing interest" and will be allowed for AMT purposes.

Question 11

Annie has taxable income of $100,000,a regular tax liability of $21,037,a positive AMT adjustment due to limitations on itemized deductions of $20,000,and tax preferences of $25,000 in 2016.Annie is single and takes a $4,050 personal exemption for herself only.What is Annie's AMT for 2016?

Accepted Answer

The answer of Annie has taxable income of $100,000,a regular...

Question 12

George and Meredith who are married,have a regular tax liability of $22,783 based on regular taxable income of $125,000.This year they generated tax preferences of $25,000,and positive adjustments attributable to limitations on itemized deductions of $18,700.In determining regular taxable income,they had claimed $12,150 of personal and dependency exemptions for themselves and their 20-year old dependent daughter.What is George and Meredith's alternative minimum tax for 2016?

Accepted Answer

The answer of George and Meredith who are married,have a...

Question 13

Jorge has $150,000 net earnings from a sole proprietorship.Jorge's self-employment tax (rounded)for 2016 is

Accepted Answer

Self-employment tax is 15.3% of net earnings. 15.3% of $150,000 is $22,950.

Question 14

Self-employment taxes include components for

Accepted Answer

Self-employment taxes include Social Security and Medicare hospital insurance components. FUTA and SUTA are not part of self-employment taxes.

Question 15

When a husband and wife file a joint return and both have self-employment income,the self-employment tax must be computed separately.

Accepted Answer

The answer of When a husband and wife file a...

Question 16

If an individual is liable for self-employment tax,a portion of the self-employment tax is

Accepted Answer

The answer of If an individual is liable for self-employment...

Question 17

Hong earns $127,300 in her job as a physician's assistant.She also has her own business selling cosmetics.This business generated $10,000 of earnings.What is Hong's self-employment tax for 2016?

Accepted Answer

The answer of Hong earns $127,300 in her job as...

Question 18

A self-employed individual has earnings from his business of $300,000.For the earnings in excess of the $118,500,he will only have to pay the 2.9% Medicare Tax.

Accepted Answer

The answer of A self-employed individual has earnings from his...

Question 19

A wage cap does not exist for which of the following self-employment taxes?

Accepted Answer

D)There is a ceiling on the Social Security portion but not on the HI portion.

Question 20

Rex has the following AMT adjustment factors: -Depreciation of real property acquired in 1996 using MACRS is $22,000 while depreciation for AMT purposes is $15,000.
-R&E expenditures amounting to $60,000 are expensed.
The net adjustment is

Accepted Answer

The answer of Rex has the following AMT adjustment factors:...

Quiz 14: Special Tax Computation Methods, tax Credits, and Payment of Tax