Question 1

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.

Accepted Answer

The answer of Mr.Lee is a citizen and resident of...

Question 2

Heloise,age 74 and a widow,is claimed as a dependent by her daughter.For 2011,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 2011?

Accepted Answer

The answer of Heloise,age 74 and a widow,is claimed as...

Question 3

Meg,age 23,is a full-time law student and is claimed by her parents as a dependent.During 2011,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 2011?

Accepted Answer

The answer of Meg,age 23,is a full-time law student and...

Question 4

Bertha had the following transactions during 2011:
  What is Bertha's AGI for 2011?

Accepted Answer

The answer of Bertha had the following transactions during 2011:
...

Question 5

Ashley earns a salary of $35,000,has capital gains of $4,000,and interest income of $3,000 in 2011.Her husband died in 2010.Ashley has a dependent son,Tyrone,who is age 8.Her itemized deductions are $9,000.

Accepted Answer

The answer of Ashley earns a salary of $35,000,has capital...

Question 6

During 2011,Lana has the following gains and losses:

Accepted Answer

The answer of During 2011,Lana has the following gains and...

Question 7

Bill had the following transactions for 2011:
  What is Bill's AGI for 2011?

Accepted Answer

The answer of Bill had the following transactions for 2011:
...

Question 8

During 2011,Dena had salary income of $90,000 and the following capital transactions:
  How are these transactions handled for income tax purposes?

Accepted Answer

The answer of During 2011,Dena had salary income of $90,000...

Question 9

Jim is single and for 2011 has AGI of $50,000.He is age 75 and has no dependents.For 2011,he has itemized deductions from AGI of $7,000.Determine Jim's taxable income for 2011.

Accepted Answer

The answer of Jim is single and for 2011 has...

Question 10

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.

Accepted Answer

The answer of Mel is not quite sure whether an...

Question 11

During 2011,Marcus had the following capital gains and losses:

Accepted Answer

The answer of During 2011,Marcus had the following capital gains...

Question 12

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 2011,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 2011.

Accepted Answer

The answer of Homer (age 68)and his wife Jean (age...

Question 13

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

Accepted Answer

The answer of During the year,Herb had the following transactions:
...

Question 14

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

Accepted Answer

The answer of Pedro is married to Consuela,who lives with...

Question 15

Darcy had the following transactions for 2011:
  What is Darcy's AGI for 2011?

Accepted Answer

The answer of Darcy had the following transactions for 2011:
...

Question 16

The Deweys are expecting to save on their taxes for 2011.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.

Accepted Answer

The answer of The Deweys are expecting to save on...

Question 17

Deductions for AGI are often referred to as "above-the-line" or "page 1" deductions.Explain.

Accepted Answer

The answer of Deductions for AGI are often referred to...

Question 18

Warren,age 17,is claimed as a dependent by his father.In 2011,Warren has dividend income of $1,500 and earns $400 from a part-time job.

Accepted Answer

The answer of Warren,age 17,is claimed as a dependent by...

Question 19

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.

Accepted Answer

The answer of During the current year,Doris received a large...

Question 20

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 2011 of $120,000.Her deductions are as follows: $30,000 business and $8,100 itemized.

Accepted Answer

The answer of Ellen,age 39 and single,furnishes more than 50%...

Quiz 3: Tax Determination: Personal and Dependency Exemptions: an Overview of Property Transactions