Question 1

Arnold is married to Sybil,who abandoned him in 2016.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 2017,Arnold's filing status is:
A)Married, filing jointly.
B)Head of household.
C)Married, filing separately.
D)Surviving spouse.
E)Single.

Accepted Answer

The answer of Arnold is married to Sybil,who abandoned him...

Question 2

Which of the following taxpayers may file as a head of household in 2017?
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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.
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Tammy provides over one-half the support for her 18-year old brother,Dan.Dan earned $4,200 in 2017 working at a fast food restaurant and is saving his money to attend college in 2018.Dan lives in Tammy's home.
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Joe's wife left him late in December of 2016.No legal action was taken and Joe has not heard from her in 2017.Joe supported his 6-year-old son,who lived with him throughout 2017.
A)Ron only
B)Tammy only
C)Joe only
D)Ron and Joe only
E)Ron, Tammy, and Joe

Accepted Answer

The answer of Which of the following taxpayers may file...

Question 3

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

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

Accepted Answer

The answer of In 2017,Cindy had the following transactions:
Cindy's AGI...

Question 4

Kyle,whose wife died in December 2014,filed a joint tax return for 2014.He did not remarry,but has continued to maintain his home in which his two dependent children live.What is Kyle's filing status in 2017?
A)Head of household
B)Surviving spouse
C)Single
D)Married filing separately
E)None of these

Accepted Answer

The answer of Kyle,whose wife died in December 2014,filed a...

Question 5

Tony,age 15,is claimed as a dependent by his grandmother.During 2017,Tony had interest income from Boeing Corporation bonds of $1,000 and earnings from a part-time job of $800.Tony's taxable income is:
A)$1,800.
B)$1,800 - $800 - $1,050 = ($50).
C)$1,800 - $1,150 = $650.
D)$1,800 - $1,050 = $750.
E)None of these.

Accepted Answer

Tony's taxable income is the sum of his interest income and earnings from his part-time job minus the standard deduction for a dependent ($1,050). So, $1,000 + $800 - $1,050 = $650.

Question 6

Sylvia,age 17,is claimed by her parents as a dependent.During 2017,she had interest income from a bank savings account of $2,000 and income from a part-time job of $4,200.Sylvia's taxable income is:
A)$4,200 - $4,550 = ($350).
B)$6,200 - $5,700 = $500.
C)$6,200 - $4,550 = $1,650.
D)$6,200 - $1,000 = $5,200.
E)None of these.

Accepted Answer

Sylvia's total income is $6,200 ($2,000 interest income + $4,200 part-time job income). However, she can't claim her personal exemption because she is claimed as a dependent by her parents. Therefore, her taxable income is her total income minus the standard deduction for a dependent, which is $4,550 for tax year 2017.

Taxable income = $6,200 - $4,550 = $1,650.

Question 7

Evan and Eileen Carter are husband and wife and file a joint return for 2017.Both are under 65 years of age.They provide more than half of the support of their daughter,Pamela (age 25),who is a full-time medical student.Pamela receives a $5,000 scholarship covering her tuition at college.They furnish all of the support of Belinda (Evan's grandmother),who is age 80 and lives in a nursing home.They also support Peggy (age 66),who is a friend of the family and lives with them.How many dependency exemptions may the Carters claim?
A)Two
B)Three
C)Four
D)Five
E)None of these

Accepted Answer

The Carters may claim three dependency exemptions for Pamela, Belinda and Peggy. Pamela meets the relationship test as their daughter, Belinda as a qualifying relative and Peggy as a member of their household for the entire year. The scholarship income that Pamela received is not counted towards the support test as it was used for tuition only.

Question 8

Ellen,age 12,lives in the same household with her father,grandfather,and uncle.The cost of maintaining the household is provided by her grandfather (40%) and her uncle (60%).Disregarding tie-breaker rules,Ellen is a qualifying child as to:
A)Only her father.
B)Only her grandfather and uncle.
C)Only her uncle.
D)All parties involved (i.e., father, grandfather, and uncle).
E)None of these.

Accepted Answer

The answer of Ellen,age 12,lives in the same household with...

Question 9

Regarding the rules applicable to filing of income tax returns,which,if any,of the following is an incorrect statement:
A)Married persons who file joint returns cannot later (after the due date of the return) substitute separate returns.
B)Married persons who file separate returns can later (after the due date of the return) substitute a joint return.
C)The usual test as to when a taxpayer must file a return is based on the total of the following: personal exemption + basic standard deduction + both additional standard deductions.
D)Special filing requirement rules exist for taxpayers who are claimed as dependents of another.
E)None of these.

Accepted Answer

The statement regarding the test for when a taxpayer must file a return is incorrect. The usual test is based on the taxpayer's income level and filing status, not on personal exemption, basic standard deduction, and additional standard deductions.

Question 10

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

Accepted Answer

The answer of During 2017,Lisa (age 66) furnished more than...

Question 11

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:
A)$700.
B)$900.
C)$1,750.
D)$2,250.
E)None of these.

Accepted Answer

The answer of Wilma,age 70 and single,is claimed as a...

Question 12

Emily,whose husband died in December 2016,maintains a household in which her dependent mother lives.Which (if any) of the following is her filing status for the tax year 2017? (Note: Emily is the executor of her husband's estate.)
A)Single
B)Married, filing separately
C)Surviving spouse
D)Head of household
E)Married, filing jointly

Accepted Answer

Emily may qualify as a "qualifying widow" for the tax year 2017, which would allow her to file as a surviving spouse. To meet this status, she must have maintained a household for the entire year, be unmarried at the end of the year, and have a dependent child or stepchild for whom she can claim a dependency exemption. Even though her dependent is her mother and not a child, the tax code allows for this exception. If Emily does not qualify as a surviving spouse, the next best option would be to file as head of household, which requires her to have paid more than half the cost of maintaining a household for herself and a qualifying dependent (which her mother would still qualify for).

Question 13

The Hutters filed a joint return for 2017.They provide more than 50% of the support of Carla,Melvin,and Aaron.Carla (age 18) is a cousin and earns $2,800 from a part-time job.Melvin (age 25) is their son and is a full-time law student.He received from the university a $3,800 scholarship for tuition.Aaron is a brother who is a citizen of Israel but resides in France.Carla and Melvin live with the Hutters.How many personal and dependency exemptions can the Hutters claim on their Federal income tax return?
A)Two
B)Three
C)Four
D)Five
E)None of these

Accepted Answer

The answer of The Hutters filed a joint return for...

Question 14

Nelda is married to Chad,who abandoned her in early June of 2017.She has not seen or communicated with him since then.She maintains a household in which she and her two dependent children live.Which of the following statements about Nelda's filing status in 2017 is correct?
A)Nelda can use the rates for single taxpayers.
B)Nelda can file a joint return with Chad.
C)Nelda can file as a surviving spouse.
D)Nelda can file as a head of household.
E)None of these statements is appropriate.

Accepted Answer

Nelda can file as a head of household since she maintained a household for her two dependent children and her spouse did not live with her for the last six months of the year. She cannot file a joint return with Chad since he abandoned her and they did not live together for the last six months of the year. She also cannot file as a surviving spouse since her spouse is not deceased. The rates for single taxpayers would only apply if Nelda did not have any dependents.

Question 15

Regarding the Tax Tables applicable to the Federal income tax,which of the following statements is correct?
A)For any one year, the Tax Tables are issued by the IRS after the Tax Rate Schedules.
B)The Tax Tables will always yield the same amount of tax as the Tax Rate Schedules.
C)Taxpayers can elect as to whether the use the Tax Tables or the Tax Rate Schedules.
D)The Tax Tables can be used by an estate but not by a trust.
E)No correct answer given.

Accepted Answer

The Tax Tables are issued by the IRS after the Tax Rate Schedules for any one year.

Question 16

Millie,age 80,is supported during the current year as follows:
During the year,Millie lives in an assisted living facility.Under a multiple support agreement,indicate which parties can qualify to claim Millie as a dependent.

A)Weston and Faith.
B)Faith.
C)Weston, Faith, Jake, and Brayden.
D)Faith, Jake, and Brayden.
E)None of these.

Accepted Answer

The answer of Millie,age 80,is supported during the current year...

Question 17

Kyle and Liza are married and under 65 years of age.During 2017,they furnish more than half of the support of their 19-year old daughter,May,who lives with them.She graduated from high school in May 2016.May earns $15,000 from a part-time job,most of which she sets aside for future college expenses.Kyle and Liza also provide more than half of the support of Kyle's cousin who lives with them.Liza's father,who died on January 3,2017,at age 90,has for many years qualified as their dependent.How many personal and dependency exemptions should Kyle and Liza claim?
A)Two
B)Three
C)Four
D)Five
E)None of these

Accepted Answer

Kyle and Liza can claim the following exemptions:
- Two personal exemptions for themselves
- One dependency exemption for their daughter May, since she qualifies as a qualifying child due to her age, residency, and support.
- One dependency exemption for Kyle's cousin, since he qualifies as a qualifying relative due to his residency and support.
- One dependency exemption for Liza's deceased father, since he passed away in 2017 but was alive for part of the year and would have otherwise qualified as a qualifying relative.

Question 18

Which of the following characteristics correctly describes the procedure for the phaseout of exemptions?
A)The threshold amounts are different and depend on filing status (e.g., joint return, single).
B)The threshold amounts are indexed for inflation each year.
C)The phaseout procedure is known as a "stealth tax."
D)For the phaseout procedure to be applied, a taxpayer's AGI must exceed the threshold amount.
E)All of these.

Accepted Answer

All of the characteristics listed correctly describe the procedure for the phaseout of exemptions. The threshold amounts vary by filing status, are adjusted for inflation annually, the phaseout is often referred to as a "stealth tax," and the phaseout only applies when a taxpayer's AGI exceeds the applicable threshold amount.

Question 19

A qualifying child cannot include:
A)A nonresident alien.
B)A married son who files a joint return.
C)A daughter who is away at college.
D)A brother who is 28 years of age and disabled.
E)A grandmother.

Accepted Answer

The answer of A qualifying child cannot include:
A)A nonresident alien.
B)A...

Question 20

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.

Accepted Answer

The answer of In which,if any,of the following situations may...

Quiz 3: Computing the Tax

Arnold is married to Sybil,who abandoned him in 2016.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 2017,Arnold's filing status is:

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

Kyle,whose wife died in December 2014,filed a joint tax return for 2014.He did not remarry,but has continued to maintain his home in which his two dependent children live.What is Kyle's filing status in 2017?

Tony,age 15,is claimed as a dependent by his grandmother.During 2017,Tony had interest income from Boeing Corporation bonds of $1,000 and earnings from a part-time job of $800.Tony's taxable income is:

Sylvia,age 17,is claimed by her parents as a dependent.During 2017,she had interest income from a bank savings account of $2,000 and income from a part-time job of $4,200.Sylvia's taxable income is:

Ellen,age 12,lives in the same household with her father,grandfather,and uncle.The cost of maintaining the household is provided by her grandfather (40%) and her uncle (60%) .Disregarding tie-breaker rules,Ellen is a qualifying child as to:

Regarding the rules applicable to filing of income tax returns,which,if any,of the following is an incorrect statement:

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?

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:

Emily,whose husband died in December 2016,maintains a household in which her dependent mother lives.Which (if any) of the following is her filing status for the tax year 2017? (Note: Emily is the executor of her husband's estate.)

Nelda is married to Chad,who abandoned her in early June of 2017.She has not seen or communicated with him since then.She maintains a household in which she and her two dependent children live.Which of the following statements about Nelda's filing status in 2017 is correct?

Regarding the Tax Tables applicable to the Federal income tax,which of the following statements is correct?

Millie,age 80,is supported during the current year as follows: During the year,Millie lives in an assisted living facility.Under a multiple support agreement,indicate which parties can qualify to claim Millie as a dependent.

Which of the following characteristics correctly describes the procedure for the phaseout of exemptions?

A qualifying child cannot include:

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