Questions and Answers of Fundamentals Taxation 2019

June, age 76, and Augustus, age 78, are married. They purchased a single life annuity contract that will pay $1,500 per month for the life of June. The expected return on the contract:a. Is
Julio is 62 and single. He purchased a single life annuity contract that will pay him $1,000 a month for life with a minimum payout of 10 years. His expected return on the contract:a. Is
Regarding a Coverdell Education Savings Account:a. Distributions are tax-free to the beneficiary if they are used for his or her qualified education expenses.b. Qualified education expenses
Withdrawals from a Roth IRA are:a. Subject to the required minimum distribution rules.b. Taxable if made after the five-tax-year period beginning with the first tax year in which a Roth
Juanita, age 62, retired in 2018. During the year, she received distributions of $9,000 from her IRA. She made nondeductible contributions of $20,000 to the IRA in prior years and has never received
Mark, who is single, must start making distributions from his pension plan beginning April 1, 2018. At the end of 2017 when Mark was 71 years old, the plan had a balance of $220,000. He will use a
Juan is single and retired on January 1, 2018 at age 62. He is entitled to receive monthly payments of $1,500 over his life from his employer’s qualified pension plan. The payments began January 1,
Ellen is attending college less than half-time. In the current year, she had education-related expenses of $8,000 for tuition and fees, $4,000 for room and board, $500 in transportation to and from
Which of the following statements is true for a Qualified Tuition Plan (QTP).a. Undergraduate or graduate students must be attending full-time.b. Tax-free distributions are permitted of up
Vanessa and Martin file a joint return for 2018. They have one child age 12. They have combined AGI of $202,000 in 2018. What is their maximum permitted contribution to a Coverdell Education Savings
Without regard to AGI limitations, what is the maximum contribution permitted to a Coverdell Education Savings Account in 2018?a. $500b. $2,000c. $5,500d. The lower of $5,500 or 100%
Vickie is single and age 43. She reported AGI of $126,000 in tax year 2018. She is an active participant in her employer’s pension plan. What is the maximum Roth IRA contribution she can make in
Patrice is single and age 26. She reported AGI of $67,000 in tax year 2018. She is an active participant in her employer’s pension plan. What is the maximum deductible Roth IRA contribution she can
Jack is single and age 53. He reported AGI of $67,000 in 2018. He is an active participant in his employer’s pension plan. What is the maximum deductible IRA contribution he can make in
Ed and Cathy, both under age 50, file a joint return. Neither is covered under an employer pension plan. Cathy earned compensation of $53,000 in 2018. Ed worked part-time and earned $1,200.
Terri is single and age 32. She reported AGI of $71,000 in tax year 2018. She is an active participant in her employer’s pension plan. What is the maximum deductible IRA contribution she can make
Which of the following is true regarding SEPs?a. The plan cannot discriminate in favor of highly compensated employees.b. Deductible contributions cannot exceed the lower of 15% of the
Thomas is a self-employed plumber under the age of 50. His earnings from self- employment, before the Keogh deduction but after deducting half of the self-employment tax, are $80,000. What is his
A participant in a 401(k) plan under the age of 50 may contribute up to what amount in 2018?a. $5,500.b. $12,500.c. $18,500.d. $55,000.
A participant in a Keogh plan over the age of 50 may contribute up to what amount in 2018?a. $6,500.b. $24,500.c. The lower of $55,000 or 25% of earned income from self-employment.d.
What is a Qualified Tuition Plan? What can non-taxable distributions from such a plan be used for?
Baker Company is trying to determine how often it needs to deposit payroll taxes for calendar year 2018. The company made the following quarterly payroll tax deposits during the last two
Roberto’s salary is $129,600 in 2018. Roberto is paid on a semimonthly basis, is single, and claims one allowance. Use the percentage method table in the Appendix to this chapter.a. What is
Henry, who earned $113,840 during 2018, is paid on a monthly basis, is married, and claims four allowances. Use the percentage method table in the Appendix to this chapter.a. What is Henry’s
Jacob Turner hired Jen Hatcher as a housekeeper starting on January 2 at $750 per month. Jacob does not withhold any federal taxes. Assume that Jen is not a housekeeper for anyone else. Assume Jacob
Adam received a bonus of $5,000 from his employer. Which one of the following federal income withholding tax amounts is not in accordance with IRS rules regarding supplemental wage payments? Adam
A taxpayer with 2018 AGI of $160,000 has no income tax withholding and is required to pay estimated taxes. The taxpayer can avoid an underpayment penalty by payinga. At least 90% of the 2018
On January 3, 2018, Jane employed a part-time household worker in her home. She paid the household worker $350 per month for 2018. What amount of FICA tax is Jane required to record on Schedule
Carol works for ABC Company and earned $63,000 for the entire 2018 year. How much in FUTA tax is her employer required to withhold in her name? Assume that the employer receives the maximum
Employers pay a maximum federal unemployment tax of 6.0% on how much of an employee’s taxable wages for 2018?a. $1,800.b. $3,800.c. $5,800.d. $7,000.
Household employees are subject to FICA withholding if they are paid at least what amount during any calendar quarter in 2018?a. $1,800.b. $1,900c. $2,000.d. $2,100.
Employers are required to deposit FUTA taxes when their liability exceedsa. $100.b. $500.c. $1,000.d. $1,500.
To what amount of employer tax accumulation does the one-day deposit rule apply?a. $75,000.b. $100,000.c. More than $100,000.d. An amount between $75,000 and $99,999.
What is the penalty for sending a required tax payment (unless specifically allowed) directly to the Internal Revenue Service?a. 2% .b. 5%.c. 10%.d. 15%.
Lauer Company started its business on July 24, 2018. On August 10, it paid wages for the first time and accumulated a tax liability of $48,000. On Friday, August 17, it incurred a tax liability of
Carmen earned $75 in tips in September. When must she inform her employer of her tips on Form 4070 for federal income tax and FICA withholding purposes?a. By September 30.b. By October 10.c. By
Dewoun has two jobs, and both employers withheld FICA tax. From his first job, he earned $102,100, and from his second job, he earned $30,300. How much can Dewoun claim as an additional payment on
Carlos earned a total of $225,000 for 2018. How much in FICA tax will his employer be required to withhold in his name?a. $11,223.30b. $11,373.90.c. $11,448.30.d. $11,484.30.
Erica earned $129,800 during 2018. How much will her employer withhold from her, in total, for FICA taxes?a. $9,754.00.b. $9,842.90.c. $9,900.40.d. $9,929.70.
Marla is married, is paid $3,125 semimonthly, and claims four withholding allowances. What is the amount of federal income tax withheld on Marla’s gross wages for the semimonthly period? Use the
Employees claim withholding allowances on Form W-4. Each withholding allowance claimed lowers their annual withholding base by what amount for calendar year 2018?a. $4,050.b. $4,100.c. $4,150.d.
Niles and Marsha adopted an infant boy (a U.S. citizen). They paid $14,500 in 2017 for adoption-related expenses. The adoption was finalized in early 2018. Marsha received $3,000 of
Determine the amount of child tax credit in each of the following cases.a) A single parent with modified AGI of $213,400 and one child.b) A single parent with modified AGI of $77,058 and three
In 2018, Jeremy and Celeste who file a joint return, paid the following amounts for their daughter, Alyssa, to attend University of Colorado, during academic year 2018-2019. Alyssa was in her first
Use the information in Problem 51. What education tax credits are available if Walt and Deloris report modified AGI of $117,300? Does your answer change if Tiffany is taking one class a semester (is
What is the AGI limit above which each the following taxpayers would not be eligible to receive a credit for the elderly or the disabled?a) A single taxpayer eligible for the credit who
Dwayne is single with one dependent. He enrolled in a qualified plan through the Marketplace at a cost of $4,200 per year. His household income was $41,890. The SLCSP premium is $4,700. What is
Which of the following credits is never a refundable credit?a. Earned Income Creditb. Foreign Tax Creditc. Child tax creditd. American opportunity tax credit
Thomas and Stephani are married with four qualifying children. Their AGI is $27,500. Calculate their EIC using the EIC formula.a. $6,431.b. $5,792.c. $5,768.d. $5,053.
Juan and Lydia both work, file a joint return, and have one qualifying child. They have AGI of $19,000. What is their EIC?a. $519.b. $3,461.c. $5,716.d. $10,180.
Abel and Loni adopted a boy (a U.S. citizen), during the current tax year and incurred a total of $14,675 in qualified adoption expenses. Abel and Loni have modified AGI of $225,000. What is the
After two and one-half years of working with the orphanage and the government, Jake and Nikki adopted a two-year-old girl from Korea. The adoption process, which became final in January 2018,
Julian is a single father with a son, Alex, who is 8 years old. If Julian’s AGI is $187,000, what is his child tax credit for Alex?a. $0.b. $500.c. $1,000.d. $2,000.
Justin and Janet, whose AGI is $456,000, have one daughter, age 5. How much child tax credit can they take?a. $0.b. $1,000.c. $2,000.d. $2,800.
Darren paid the following expenses during November 2018 for his son Sean’s college expenses for spring 2019 semester, which begins in January 2019:Tuition
Leonardo’s filing status is head of household. He has modified Adjusted Gross Income of $29,500, and he made a $3,000 contribution to his IRA. What is the amount of his retirement savings
Paul and Olivia filed a joint tax return and reported modified AGI of $192,000. They have two qualifying children for the purposes of the child tax credit. What is the amount of their child tax
From which of the following flow-through entities is ordinary income (K-1) considered self-employment income? a. Partnership.b. S Corporation.c. Trusts.d. Estates.
Which of the following entity (ies) is (are) considered flow-through? a. Partnership.b. S Corporation.c. LLC.d. All are considered flow-through entities.
What is the maximum amount of passive losses from a rental activity that a taxpayer can deduct against active and portfolio income per year (assuming no passive loss limitation due to AGI or personal
Sally is a full-time author and recently published her third mystery novel. The royalty income she receives from the publisher this year should be reported on what schedule?a. Schedule
Colin is a high school chemistry teacher who owns some land in Oklahoma that produces oil from its small oil reserve. On what schedule should Colin report the royalty income he
Darren and Nikki own a cabin in Mammoth, California. During the year, they rented it for 45 days for $9,000 and used it for 12 days for personal use. The house remained vacant for the remainder of
Using the following independent situations, answer the following questions:Situation # 1Clara received from her Aunt Sona property with an FMV at the date of the gift of $40,000. Aunt Sona purchased
Suzette inherited property from her father on April 19, 2018. The FMV at the date of death was $40,000. The property was worth $35,000 six months later and had a basis to her father of $25,000.a.
During 2018, Roberto sold 830 shares of Casual Investor Mutual fund for $8.875 per share. The shares were purchased on the following dates:
Lois purchased the following blocks of Westgate Stock:DateSharesPriceJune 12, 20151,000$4.225October 21, 20152,000$4.775December 18, 20171,500$5.500a. Lois sold 1,600 shares of the stock on November
In 2018, Rosalva sold stock considered short-term for a gain of $1,060 and stock considered long-term for a loss of $2,376. She also had a $3,000 short-term loss carryover from 2017 and a $1,420
Davidson Industries, a sole proprietorship, sold the following assets in 2018:AssetCostAcquiredDepreciationSale PriceSale
Ricardo acquired a warehouse for business purposes on August 30, 1999. The building cost $420,000. He took $227,600 of depreciation on the building, and then sold it for $500,000 on July 1, 2018.
Antoine sold the following stock in 2018. ABC, Inc., is a §1202 qualified small business (QSB).AssetCostAcquiredSale PriceSale DateABC, Inc. 200 shares $153,0001/10/10$200,0004/30/18DEF, Inc.
Jake purchased a $235,000 crane for his construction business. He sold the crane for $175,000 after taking $115,000 of depreciation. Assume Jake is in the 35% tax rate bracket.a. On what form would
Respond to the following independent situations:a. Masa and Haiming, husband and wife, filing jointly, earn $275,000 in salaries and do not have any net investment income.(1). How much in surtax will
Respond to the following independent situations:a. Jacob is a single taxpayer who has net investment income consisting of $10,000 interest on a certificate of deposit, $5,000 from dividends from a
Haneen has taxable income of $115,000 without consideration of capital gain or loss transactions. She has a short-term capital gain of $18,000, a long-term capital loss of $10,000, and a short-term
Umair sold some equipment he used in his business on August 29, 2018, that was originally purchased for $65,000 on November 21, 2017. The equipment was depreciated using the 7-year MACRS method for a
In 2018 Ann received 1,000 shares of stock as a gift from her husband, Tim, who purchased them in 2009. At the time of the gift, the FMV of the stock was $29,300 and Tim’s basis was $31,000. If Ann
In 2018 Ann received 1,000 shares of stock as a gift from her husband, Tim, who purchased them in 2009. At the time of the gift, the FMV of the stock was $29,300 and Tim’s basis was $31,000. If Ann
Francisco, a single taxpayer, has income from his W-2 of $93,250. He also has a short-term capital loss of $7,311 a short-term capital gain of $2,100, and a long-term capital gain of $4,680. What is
Shannon bought an apartment building in July 2012 for $360,000 and sold it for $480,000 in 2018. There was $77,994 of accumulated depreciation allowed on the apartment building. Assuming that Shannon
Amal received a Form 1099-DIV with a capital gain distribution of $210. She also received a Form 1099-B from the sale of 240 shares of AMS stock she purchased for $2,900 plus a $28 commission fee on
Alton received a Form 1099-B that shows a net sales price of $3,500 on the sale of 600 shares of FNP Company. He bought the stock on October 21, 2017, and sold it on October 22, 2018 His basis in the
Blair sold the following stocks in 2018: 200 shares of Dearborn Investments purchased May 15, 2017, for $3,050 and sold on January 9, 2018 for $4,135; and 40 shares of State Street Investments,
In 2006, Duncan purchased 2,000 shares of stock for $50,000 in a midsize local company with gross assets of $15,000,000. In 2018, Duncan sold the stock for $68,000. How is the gain treated for tax
On May 20, 2017, Jessica purchased land for $105,647 to use in her business. She sold it on May 21, 2018for $102,595. What is the amount and type of loss on this sale if Jessica does not have any
In 2015, Grant purchased land for $103,000 for use in his business. He sold it in 2018 for $114,000. What is the amount and type of gain on this sale, before netting of any other gains and/or
Casper used the following assets in his Schedule C trade or business in the tax year 2017:AssetDate PurchasedDateSoldBusinessUse Percentage CostComputer 103/12/15100%$3,000Computer
In 2018 Landon has self-employment earnings of $195,000. Compute Landon’s self- employment tax liability and the allowable income tax deduction of the self-employment tax paid.
Jose purchased a vehicle for business and personal use. In 2018 he used the vehicle 18,000 miles (80%) for business and calculated his vehicle expenses using the standard mileage rate (mileage was
In 2016 Jessica bought a new heavy truck for $45,000 to use 80% for her sole proprietorship. Total miles driven include 12,000 in 2016, 14,500 in 2017, and 13,000 in 2018.a. If Jessica uses the
Brittany purchased a building for $500,000 on January 1, 2010. The purchase price does not include land. Calculate the cost recovery for 2010 and 2018 if the real property is:a. Residential real
On June 10, 2018, Huron purchased equipment (7-year class property) for $75,000. Determine Huron’s cost recovery deduction for computing 2018 taxable income. Assume Huron does not make the §179
Michael is the sole proprietor of a small business. In June 2018 his business income is $12,000 before consideration of any §179 deduction. He spends $245,000 on furniture and equipment in 2018. If
Rueben acquires a warehouse on September 1, 2018, for $3 million. On March 1, 2022, he sells the warehouse. Determine Rueben’s cost recovery for 2018-2022:
On February 4, 2018 Jackie purchased and placed in service a car she purchased for $21,500. The car was used exclusively for her business. Compute Jackie’s cost recovery deduction in 2018 assuming
Janet purchased her personal residence in 2007 for $250,000. In January 2018 she converted it to rental property. The fair market value at the time of conversion was $210,000. a. Determine
Betsy acquired a new network system on June 5, 2018 (5-year class property) for $75,000. She expects taxable income from the business will always be about $175,000 without regard to the §179
In 2016, Gerald loaned Main Street Bakery $55,000. In 2017, he learned that he would probably receive only $6,400 of the loan. In 2018, Gerald received $3,000 in final settlement of the loan.
The maximum tax bases and percentages for 2018 for the two portions of the self-employment tax are which of the following? Social Security
Annie is self-employed and has $58,000 in income from her business. She also has investments that generated dividends of $3,000 and interest of $2,500. What is Annie’s self-employment tax for the

Showing 600 - 700 of 809