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Exam 12: Tax Credits and Payments

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Question 31

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Which of the following statements concerning the credit for child and dependent care expenses is not correct?

A) A taxpayer is not allowed both an exclusion from income and the credit for child and dependent care expenses on the same amount.
B) A taxpayer is not allowed both a deduction as a medical expense and the credit for child and dependent care expenses on the same amount.
C) If a taxpayer's adjusted gross income exceeds $43,000,the rate for the credit for child and dependent care expenses is 20%.
D) If a taxpayer's adjusted gross income exceeds $15,000 but is not over $17,000,the rate for the credit for child and dependent care expenses is 35%.
E) All of the above are correct.

F) C) and D)
G) B) and D)

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Question 32

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If the cost of a building constructed and placed into service by an eligible small business in the current year includes the cost of a wheelchair ramp,the cost of the ramp qualifies for the disabled access credit.

A) True
B) False

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Question 33

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Qualified rehabilitation expenditures include the cost of acquiring the building,but not the cost of acquiring the land.

Any unused general business credit must be carried back 3 years and then forward for 20 years.

Qualified research and experimentation expenditures are not only eligible for the 20% tax credit,but also can be expensed in the year incurred.

The education tax credits (i.e. ,the American Opportunity credit and the lifetime learning credit) are available to help defray the cost of higher education regardless of the income level of the taxpayer.

Nonrefundable credits are those that reduce the taxpayer's tax liability but are not paid when the amount of the credit (or credits) exceeds the taxpayer's tax liability.

Cheryl is single,has one child (age 6) ,and files as head of household during 2015.Her salary for the year is $19,500.She qualifies for an earned income credit of the following amount:

Only self-employed individuals are required to make estimated tax payments.

In March 2015,Gray Corporation hired two individuals,both of whom were certified as long-term recipients of family assistance benefits.Each employee was paid $11,000 during 2015.Only one of the individuals continued to work for Gray Corporation in 2016,earning $9,000 during the year.No additional workers were hired in 2016.Gray Corporation's work opportunity tax credit amounts for 2015 and 2016 are:

In January 2015,Tammy acquired an office building in downtown Syracuse,New York for $400,000.The building was originally constructed in 1932.Of the $400,000 cost,$40,000 was allocated to the land.Tammy immediately placed the building into service,but quickly realized that substantial renovation would be required to keep and attract new tenants.The renovations,costing $600,000,were of the type that qualifies for the rehabilitation credit.The improvements were completed in October 2015. a.Compute Tammy's rehabilitation tax credit for the year of acquisition. b.Determine the cost recovery deduction for 2015. c.What is the basis in the property at the end of its first year of use by Tammy?

Bob and Sally are married,file a joint tax return,report AGI of $114,000,and have two children.Del is beginning her freshman year at State College during Fall 2015,and Owen is beginning his senior year at Southwest University during Fall 2015.Owen completed his junior year during the Spring semester of 2014 (i.e. ,he took a "leave of absence" during the 2014-2015 school year) .Both Del and Owen are claimed as dependents on their parents' tax return.Del's qualifying tuition expenses and fees total $5,000 for the Fall semester,while Owen's qualifying tuition expenses were $6,100 for the Fall 2015 semester. ​ Del's room and board costs were $3,200 for the Fall semester.Owen did not incur room and board costs,as he lived with his aunt and uncle during the year. ​ Full payment is made for the tuition and related expenses for both children at the beginning of each semester.In addition to the children's college expenses,Bob also spent $3,000 on professional education seminars during the year in order to maintain his license as a practicing dentist.Bob attended the seminars during July and August 2015.Compute the available education tax credits for Bob and Sally for 2015.

The child tax credit is based on the number of the taxpayer's qualifying children under age 17.

Pat generated self-employment income in 2015 of $76,000.The self-employment tax is:

Realizing that providing for a comfortable retirement is up to them,Jim and Julie commit to making regular contributions to their IRAs,beginning this year.Consequently,they each make a $2,000 contribution to their traditional IRA.If their AGI is $35,000 on their joint return,what is the amount of their credit for certain retirement plan contributions?

Which of the following issues does not need resolution in an employer's effort to comply with employment tax payment requirements?

In terms of the withholding procedures,which statement does not reflect current rules?

Amber is in the process this year of renovating the office building (originally placed in service in 1976) used by her business.Because of current Federal Regulations that require the structure to be accessible to handicapped individuals,she incurs an additional $11,000 for various features,such as ramps and widened doorways,to make her office building more accessible.The $11,000 incurred will produce a disabled access credit of what amount?

Child and dependent care expenses include amounts paid for general household services.

Golden Corporation is an eligible small business for purposes of the disabled access credit.During the year,Golden makes the following expenditures on a structure originally placed in service in 1988. Removal of architectural barriers $ 8,500 Acquired equipment for disabled persons 6,250 $14,750 ​ In addition,$8,000 was expended by Golden on a building originally placed in service in the current year to ensure easy accessibility by disabled individuals.Calculate the amount of the disabled access credit available to Golden Corporation.