Questions and Answers of Fundamentals Taxation 2020

Tyrone and Akira, who are married, incurred and paid the following amounts of interest during 2019: Home acquisition debt interest.................$15,000 Credit card
Use the information in Table 1-3. If the federal tax system was changed to a proportional tax rate structure with a tax rate of 17%, calculate the amount of tax liability for 2017 for all taxpayers.
Jennifer and Paul, who file a joint return, have taxable income of $82,825 and the following tax liability:$19,400 × 10% = $ 1,940.00($78,950 − $19,400) × 12% = 7,146.00($82,825 − $78,950) ×
Jennifer and Paul, who file a joint return, have taxable income of $82,825 and the following tax liability:$19,400 × 10% = $ 1,940.00($78,950 − $19,400) × 12% = 7,146.00($82,825 − $78,950) ×
Determine the retirement savings contributions credit in each of the following cases.a) A married couple filing jointly with modified AGI of $37,500 and an IRA contribution of $1,600.b) A married
In 2019, Jeremy and Celeste who file a joint return, paid the following amounts for their daughter, Alyssa, to attend University of Colorado, duringacademic year 2019-2020. Alyssa was in her first
In each of the following cases, certain qualifying education expenses were paid during the tax year for individuals who were the taxpayer, spouse, or dependent. The taxpayer has a tax liability and
Adrienne is a single mother with a 6-year-old daughter who lived with her during the entire year. Adrienne paid $3,900 in child care expenses so that she would be able to work. Of this amount, $500
Tim and Martha paid $7,900 in qualified employment-related expenses for their three young children who live with them in their household. Martha received $1,800 of dependent care assistance from her
Dwayne is single with two dependents. He enrolled in a qualified plan through the Marketplace at a cost of $4,200 per year. His household income was $43,730. The SLCSP premium is $4,950. What is
Thomas and Stephani are married with four qualifying children. Their earned income is $28,500. Calculate their EIC using the EIC formula.a. $4,563.b. $5,782.c. $6,002.d. $6,557.
Juan and Lydia both work, file a joint return, and have one qualifying child. They have earned income of $19,000. What is their EIC?a. $529.b. $3,036.c. $3,526.d. $6,460.
Abel and Loni adopted a boy (a U.S. citizen), during the current tax year and incurred a total of $15,675 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 2019,
Marcia is a single filer and has AGI of $26,000. During the year, she contributed $800 to a Roth IRA. What amount of retirement savings contributions credit can Marcia take?a. $0.b. $80.c. $160.d.
Justin and Janet, whose AGI is $456,000, have one daughter, age 5. How much child tax credit can they take?a. $0.b. $500.c. $2,000.d. $2,800.
Michael paid $3,350 in foreign income taxes to Argentina. His total worldwide income was $75,000, which included $9,800 of income from Argentina. His U.S. tax liability is $18,750. How much can
Joyce has $82,000 total worldwide income, which includes $11,000 of taxable income from China. She paid $2,300 in foreign income taxes to China, and her U.S.tax liability is $21,610. Joyce’s
Darren paid the following expenses during November 2019 for his son Sean’s college expenses for spring 2020semester,which begins in January
DJ and Gwen paid $3,200 in qualifying expenses for their son, Nikko, who is a freshman attending the University of Colorado. DJ and Gwen have AGI of $170,000 and file a joint return. What is their
Allie and Buddy are married, file a joint return, and have one son, Zack, age 5. Buddy has earned income of $47,000 and Allie was a full-time student for 8 months (with no income). They paid a
Jamison is a single dad with two dependent children, Zoey, age 7 and Conner, age 3. He hasan AGI of $39,000 and paid $4,300 to a qualified day care center for the two children. What amount can
Leonardo’s filing status is head of household. He has modified Adjusted Gross Income of $33,000, and he made a $3,000 contribution to his IRA. What is the amount of his retirement savings
Assume the same facts as Question 22, except that James rented the Lake Tahoe home for 40 days for $4,600. What is hisnet income or loss from the rental of his home (without considering the passive
Jermaine owns a rental home in Lake Tahoe and traveled there from his home in San Francisco for maintenance and repairs three times this year. The round trip from San Francisco to Lake Tahoe is
Suzette inherited property from her father on April 19,2019. 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. What
During 2019, Roberto sold 830 shares of Casual Investor Mutual fund for $8.875 per share. The shares were purchased on the following dates: Calculate the gain (loss) on the sale under the following
Lois purchased the following blocks of Westgate Stock: Lois sold 1,600 shares of the stock on November 20,2019 for $5.00 per share for a total of $8,000. Using the first-in, first-out method, what
In 2019, Rosalva sold stock considered short-term for a gain of $1,240 and stock considered long-term for a loss of $2,143. She also had a $3,000 short-term loss carryover from 2018 and a $1,530
Davidson Industries, a sole proprietorship, sold the following assets in 2019: a. The following questions relate to the sale of the warehouse: (1). What is the adjusted basis of the warehouse? (2).
Ricardo acquired a warehouse for business purposes on August 30,2000. The building cost $420,000. He took $227,600 of depreciation on the building, and then sold it for $500,000 on July 1,2019. What
Antoine sold the following stock in2019. ABC, Inc., is a ?1202 qualified small business (QSB). a. Complete the chart: b. After netting, what is the total gain or loss?? c. If Antoine is in the
Umair sold some equipment he used in his business on August 29, 2019, that was originally purchased for $65,000 on November 21,2018. The equipment was depreciated using the 7-year MACRS method for a
In 2019 Ann received 1,000 shares of stock as a gift from her husband, Tim, who purchased them in 2010. At the time of the gift, the FMV of the stock was $29,300 and Tim’s basis was $31,000. If Ann
In 2019 Ann received 1,000 shares of stock as a gift from her husband, Tim, who purchased them in 2010. 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 $95,360. He also has a short-term capital loss of $6,309 a short-term capital gain of $2,400, and a long-term capital gain of
Shannon bought an apartment building in July 2013 for $360,000 and sold it for $480,000 in2019. 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, 2018, and sold it on October 22, 2019. His basis in
Blair sold the following stocks in2019: 200 shares of Dearborn Investments purchased May 15, 2018, for $3,050 and sold on January 9, 2019for $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. In2019, Duncan sold the stock for $68,000. How is the gain treated for tax
On May 20,2018, Jessica purchased land for $105,647 to use in her business. She sold it on May 21, 2019 for $102,595. What is the amount and type of loss on this sale if Jessica does not have any
In 2016, Grant purchased land for $103,000 for use in his business. He sold it in 2019for $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 2019: Casper is a new client and unfortunately does not have a copy of his prior year tax return. He recalls
In 2019 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.
Eric, who is single, has income from his Schedule C of $150,000. His taxable income is $120,000 after his other deductions. What is Eric’s QBI deduction for 2019?
Jose purchased a vehicle for business and personal use. In 2019 he used the vehicle 18,000 miles (80%) for business and calculated his vehicle expenses using the standard mileage rate (mileage was
In 2017 Jessica bought a new heavy truck for $45,000 to use 80% for her sole proprietorship. Total miles driven include 12,000 in 2017, 14,500 in 2018, and 13,000 in 2019.a. If Jessica uses the
Brittany purchased a building for $500,000 on January 1, 2011. The purchase price does not include land. Calculate the cost recovery for 2011 and 2019 if the real property is:a. Residential
On June 10, 2019, Huron purchased equipment (7-year class property) for $75,000. Determine Huron’s cost recovery deduction for computing 2019 taxable income. Assume Huron does not make the §179
Michael is the sole proprietor of a small business. In June 2019 his business income is $12,000 before consideration of any §179 deduction. He spends $245,000 on furniture and equipment in 2019. If
Rueben acquires a warehouse on September 1, 2019, for $3 million. On March 1, 2023, he sells the warehouse. Determine Rueben’s cost recovery for 2019 through 2023:
On February 4, 2019 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 2019 assuming
Janet purchased her personal residence in 2009 for $250,000. In January 2019 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, 2019 (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 2017, Gerald loaned Main Street Bakery $55,000. In 2018, he learned that he would probably receive only $6,400 of the loan. In 2019, Gerald received $3,000 in final settlement of the loan.
The maximum tax bases and percentages for 2019for the two portions of the self-employment tax are which of the following? Social Security 132,900; 12.4% Medicare a. Unlimited; 15.3%. b. Unlimited;
Frank purchased a vehicle for business and personal use. In 2019, he used the vehicle 70% for business (11,000 business miles incurred equally throughout the year) and calculated his vehicle expenses
On June 30, 2019, Ken purchased an apartment building for $500,000. Determine the cost recovery deduction for 2019:a. $4,925.b. $5,335.c. $6,955.d. $9,850.
Roy purchased an office building on March 30, 2016, for $250,000. $25,000 of which was for the land. On July 30, 2019, he sold the office building. What is the cost recovery deduction for
Lawrence purchased an apartment building on February 10, 2019, for $330,000, $30,000 of which was for the land. What is the cost recovery deduction for 2019?a. $0.b. $6,741.c. $9,546.d. $10,660.
On April 15, 2017, Andy purchased some furniture and fixtures (7-year property) for $10,000 to be used in his business. He did not elect to expense the equipment under §179 or bonus depreciation. On
On May 5, 2014, Jill purchased equipment for $40,000 to be used in her business. She did not elect to expense the equipment under Section 179 or bonus depreciation. On January 1, 2019, she sells the
Hortencia is employed as an accountant for a large firm in San Diego. For relaxation she likes to go to a nearby casino and play in blackjack tournaments. During 2019, she incurred $6,475 in gambling
During the year 2019, Ricki, who is not self-employed and does not receive employer reimbursement for business expenses,drove her car 5,000 miles to visit clients, 10,000 miles to get to her
Reynaldo and Sonya, a married couple, had flood damage in their home due to a dam break near their home in 2019, which was declared a federally designated disaster area, which totally ruined the
In 2018, Tomas, a single taxpayer, had $3,750 in state tax withheld from his paycheck. He properly deducted that amount on his 2018 tax return as an itemized deduction that he qualified for, thus
On April 1, 2019, Paul sold a house to Amy. The property tax on the house, which is based on a calendar year, was due September 1, 2019. Amy paid the full amount of property tax of $2,500. Calculate
Leslie and Jason, who are married and filing jointly, paid the following expenses during 2019:Interest on a car loan...................................................$ 100Interest on lending
Dante and Rosa, both under 65 and married, have a combined AGI of $45,000 in year 2019. Due to certain heart issues, Dante has been prescribed Lipitor® by a physician. For year 2019, Dante spent a
Reggie, who is 55, had AGI of $32,000 in 2019. During the year, he paid the following medical expenses:Drugs (prescribed by physicians)$500Marijuana (prescribed by physicians)1,400Health insurance
Mickey is a 12-year-old dialysis patient. Three times a week for the entire year he and his mother, Sue, drive 20 miles one way to Mickey’s dialysis clinic. On the way home, they go 10 miles out of
Raquel, who works in medical sales, drives her own vehicle to various locations for client sales meetings.Her employer reimburses her $400each month for various business expenses and does notexpect
Which expense, incurred and paid in 2019, can be claimed as an other itemized deduction?a. Self-employed health insurance.b. Unreimbursed moving expenses.c. Gambling Losses.d.
In 2019, the Rinaldis’ vacation cottage was severely damaged by an earthquake in a location that was a presidentially declared disaster area. They had AGI of $110,000 in 2019. Following is
In 2019, the president of the United States declared a federal disaster due to brush fires in the Southwest. Lisa lives in that area and lost her home in the fires.What choice does she have regarding
Referring to the previous question, what is the treatment for the interest expense that Thomas could not deduct in 2019?a. It is lost.b. It cannot be used except as a carry back to previous
For 2019,Thomas, a single parent, reported the following amounts relating to his investments:Net investment
For 2019, the deduction by a taxpayer for investment interest expense isa. Not limited.b. Limited to the taxpayer’s net investment income for 2019.c. Limited to the investment interest paid in
During 2019Noriko paid the following taxes related to her home:Real Estate property taxes on residence (paid from escrow account).................$1,800State personal property tax on her automobile
Daryl, who had significant itemized deductions for 2019 and therefore was eligible to use Schedule A, purchased a new vehicle in 2019 for $40,000 with a state sales tax of 10%. The allocated
For 2019, the amount of the sales tax deduction is calculated by:a. Determining the actual sales tax paid during the year.b. Using the IRS sales tax deduction calculator.c. Using the sales
Which of the following statements is not true?a. A taxpayer can deduct medical expenses incurred for members of his family who are dependents.b. The AGI threshold for deductible medical expenses is
For2019, Perla, who is single and 55 years of age, had AGI of $60,000. During the year,she incurred and paid the following medical costs:Doctor and dentist
During 2019, Raul incurred and paid the following expenses:Prescription drugs...............................................................$470Vitamins and over-the-counter cold
For gambling losses, what is the process for determining their deductibility?
For 2019, how can the amount of the sales tax deduction be determined?
Indicate whether each of the following items is considered a for AGI, (above-the line) deduction for the 2019 tax year.a. Student loan interest.b. Gambling losses.c. Early withdrawal penalty.d. Child
Under the alimony recapture rules, what amounts are designated for recapture reclassification, and what are the tax consequences for those agreements executed before 2019 and remain unchanged post
Under the terms of a divorce decree executed May 1, 2018, Ahmed transferred a house worth $650,000to his ex-wife, Farah, and was to make alimony payments of $3,000 per month. The property has a tax
Chantel has received a 1099-INT from her financial institution showing $75 in box 2 of the form. How should she handle this on her 2019 tax return and why?
In May2019, Regina graduated from the Naval Academy with a degree in engineering and was assigned to San Diego as a permanent duty station. In her move toSan Diego, Regina incurred the
Fabian, a single member of the military, was stationed at White Sands, New Mexico. On July 1, 2019, his army company transferred him to Florida as a permanent duty station.Fabian worked full-time for
Zach attended Champion University during 2014-2018. He lived at home and was claimed by his parents as a dependent during the entire duration of his education. He incurred education expenses of
At the beginning of June 2019, Julia left her husband and is currently living in an apartment. The couple has no children.At the end of the current year, no formal proceedings have occurred in
The Renfros were granted a decree of divorce in 2018 that has remained unchanged. In accordance with the decree, Josh Renfro is to pay his ex-wife $24,000 a year until their only child, Evelyn now
Mia is required under a 2018 divorce decree, that has remained unchanged, to pay $600 of alimony and $300 of child support per month for 12 years. In addition, Mia makes a voluntary payment of $100
For 2019, the maximum aggregate annual contribution that ataxpayer, under age 55, can make to a Health Savings Account (HSA) for family coverage is:a. $1,350.b. $3,500.c. $7,000d. $13,500.
In 2015 through 2018, Korey, who is single, borrowed a total of $25,000 for higher education expenses on qualified education loans. In 2019, while still living at home and being claimed by his
How do the time and distance factors for qualifying moving expenses come into play for 2019?

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