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Exam 3: Computing the Tax

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Question 61

True/False

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Using borrowed funds from a mortgage on her home, Leah provides 52% of her own support, while her sons furnished the rest.Leah cannot be claimed as a dependent under a multiple support agreement.

A) True
B) False

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Question 62

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Nelda is married to Chad, who abandoned her in early June of 2012.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 2012 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 the above statements is appropriate.

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

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Question 63

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During 2012, Madison had salary income of $80,000 and the following capital transactions: How are these transactions handled for income tax purposes?

In order to claim a dependency exemption for other than a qualifying child, a taxpayer must meet the support test.Generally, this is done by furnishing more than 50% of a dependent's support.What exceptions exist, if any, where the support furnished need not be more than 50%?

When separate income tax returns are filed by married taxpayers, one spouse cannot claim the other spouse as an exemption.

The Hutters filed a joint return for 2012.They provide more than 50% of the support of Carla, Melvin, and Aaron.Carla (age 18) is a cousin and earns $5,000 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?

Under the income tax formula, a taxpayer must choose between deductions from AGI and the standard deduction.

Perry is in the 33% tax bracket.During 2012, he had the following capital asset transactions: Perry's tax consequences from these gains are as follows:

In 2012, Ed is 66 and single.If he has itemized deductions of $7,300, he should claim the standard deduction alternative.

Lena is 66 years of age, single, and blind and is not claimed as a dependent.How much gross income must she have before she is required to file a Federal income tax return for 2012?

When the kiddie tax applies, the child need not file an income tax return because the child's income will be reported on the parents' return.

Kim, a resident of Oregon, supports his parents who are residents of Canada but citizens of Korea.Kim can claim his parents as dependents.

Which, if any, of the following is a deduction for AGI?

Which, if any, of the statements regarding the standard deduction is correct?

During 2012, Addison has the following gains and losses:

Once a child reaches age 19, the kiddie tax no longer applies.

Sylvia, age 17, is claimed by her parents as a dependent.During 2012, 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:

Darren, age 20 and not disabled, earns $4,000 during 2012.Darren's parents cannot claim him as a dependent unless he is a full-time student.

For tax purposes, married persons filing separate returns are treated the same as single taxpayers.

Clara, age 68, claims head of household filing status.If she has itemized deductions of $9,500 for 2012, she should not claim the standard deduction.