Chapter 1 part 4 Individual Income Taxation PDF

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Quiz for Chapter 1 An Introduction to Taxation and Understanding the Federal Tax Law for class Accounting 4301 Individual Income Taxation....

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98. Regarding the rules applicable to filing of income tax returns, which of the following, if any, is an incorrect statement 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. 98. Evan and Eileen Carter are husband and wife and file a joint return for 2020. 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. Evan and Eileen 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 dependents may the Carters claim? Three 98. A qualifying child cannot include: Grandmother 98. Regarding the Tax Tables related to the Federal income tax, which of the following statements is correct? For any one year, the Tax Tables are issued by the IRS after the Tax Rate Schedules. 98. Regarding the tax formula and its relationship to Form 1040, which of the following statements, if any, is correct? A “Schedule 1 deduction” refers to a deduction for AGI. 98. Which of the following taxpayers may file as a head of household in 2020? Marco provides all of the support for his mother, Sienna, who lives by herself in an apartment in Fort Lauderdale. Marco 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. He earned $4,500 in 2020 working at a fast-food restaurant and is saving his money to attend college in 2021. Dan lives in Tammy’s home. Juan’s wife left him late in December of 2019. No legal action was taken, and Juan has not heard from her in 2020. Juan supported his 6-year-old son, who lived with him throughout 2020. Marco, Tammy, and Juan 108. Which of the following items, if any, is deductible? Substantiated gambling losses (not in excess of gambling winnings) from state lottery. 108. Tony, age 15, is claimed as a dependent by his grandmother. During 2020, he had interest income from Boeing Corporation bonds of $1,000 and earnings from a parttime job of $800. Tony’s taxable income is: $1,800 – $1,150 = $650. 108. Which court decision would probably carry more weight? Reviewed U.S. Tax Court decision. 108. Memorandum decision of the U.S. Tax Court could be cited as: T.C. Memo. 1990-650. 108. A taxpayer may not appeal a case from which court: Small Case Division of the U.S. Tax Court 108. A jury trial is available in the following trial court: U.S. District Court 108. Which is not a judicial citation? CCA 200909002., T.C. Memo 2008-289, 39 TCM 32, (1979), 592 F.Supp 18 108. Which is presently not a major tax service? Federal Taxes 108. Which publisher offers the Standard Federal Tax Reporter? Commerce Clearing House 108. Which of the following, if any, is a deduction for AGI? Unreimbursed moving expenses of an employee (who is in the military).

108. Which of the following, if any, is a deduction for AGI? Contributions to a traditional Individual Retirement Account 108. During the year, Kim sold the following assets: business auto for a $1,000 loss, stock investment for a $1,000 loss, and pleasure yacht for a $1,000 loss. Presuming adequate income, how much of these losses may Kim claim? $2,000 108. 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: All parties involved (i.e., father, grandfather, and uncle). 108. Perry, a single taxpayer, has taxable income of $198,000 and is in the 32% tax bracket. During 2020, he had the following capital asset transactions: Gain from the sale of a stamp collection (held for 10 years)

$30,000

Gain from the sale of an investment in land (held for 4 years) 10,000 Gain from the sale of stock investment (held for 8 months)

4,000

Perry’s tax consequences from these gains are as follows: (15% × $10,000) + (28% × $30,000) + (32% × $4,000). 122. Regarding the rules applicable to filing of income tax returns, which of the following, if any, is an incorrect statement: 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. 122. The taxable portion of Social Security benefits may be affected by: The individual’s tax-exempt interest income. 122. Under the terms of a divorce agreement entered into in 2017, Kim was to pay her husband Tom $7,000 per month in alimony. Kim’s payments will be reduced to $3,000 per month when their 9 year-old son becomes 21. The husband has custody of their son. For a 12 month period, Kim can deduct from gross income (and Tom must include in gross income): $36,000...