1. Explain the difference between a proportional tax rate structure and a progressive tax rate structure. Which term explains the structure of the tax rate used in our country? CHAPTER 2 2. Using the information provided in your text, state what the filing requirements are in the following situations (taxpayer must file tax returns if gross income is this amount or more): a. Bob and Susan are married and file a joint tax return. Both are over 65 years old. They must file a tax return if their gross income is b. Thomas is a 45-year-old widower and has 2 children, Thomas, Jr, age 12, and Ellen, age 16. Thomas files as Head of Household. He must file a tax return if his gross income is c. Alex is 27, a student at Trinity Baptist College and files single. His filing requirement is 3. What is the statute of limitations for Jan to file an amended tax return for his 2021 federal taxes? He filed his original return on April 10, 2022. 4. Jolene files her 2021 tax return late, July 24,2022 . She did not file an extension. She owes $750. Name the types of penalties that will be assessed against her taxes. CHAPTER 3 5. Mabel received $3,500 interest from an investment, held in her name. She does not want to include this income on her tax return, so she deposited the check into her daughter's bank account. Her daughter is 19 , a full-time college student and has no income. What is this strategy and is it legal? 6. State whether the following are examples of tax evasion or tax avoidance and why: a. Geraldine normally itemizes her deductions but this year she is not able to unless she gives an extra $5,000 to her church, which she does so that she will be able to itemize. b. Fred received a bonus check from work in the amount of $1,500. The check was received December 28, 2021. Fred held the check and did not deposit it until January 4,2022 , so he would not have to report it on his 2021 tax return. CHAPTER 4 7. In the situations that follow, state whether the individuals in question can be claimed as dependents. If they cannot be claimed, state why they can't be claimed: a. Timothy is 14 years old and lives with his parents. He is in high school and makes a little money cutting the neighbor's grass. His parents provide his support. His grandparents deposited $1,200 into a bank account for college. Can Timothy's parents claim his as a dependent? b. Jacques is a citizen of France. He is a foreign exchange student who lives with Bob and Cheryl for 9 months of the year while he is in Jacksonville going to school. He goes back to France for 3 months of the year. Jacques' family provide his support, but he lives with Bob and Cheryl. Can Bob and Cheryl claim Jacques as a dependent? c. Emily's mother, age 87 , lives with Emily. She receives $1,500 a month in social security benefits, $2,000 a month pension from her former employer and an annuity of $750a month for her deceased husband. So, she receives $4,250 a month or $51,000 a year. She gives her daughter $1,000 a month for rent and food and sometimes contributes extra for groceries. She pays her own medical expenses. Can Emily claim her mother as a dependent? 8. What is the best filing status to be used in the following situations: a. Jessie and Arnie got married December 31, 2021. What should be their filing status for the 2021 tax return? b. Evan and his wife divorced December 24, 2021. They want to file their 2021 tax return as married filing joint since they were married for most of the year. Can they do that? If not, how should they file? There are no children. c. Lisa's husband died January 14,2021. Lisa did not remarry and has no children. How should she fite her 2021 tax return? HAPTER 5 9. Under the realization principle, when must a taxpayer include income in his/her gross income? 10. Under the return of capital principle, if Joe paid $14,000 for a truck, and he sold the truck for $25,000, how much of the $25,000 should be included in income? 11. According to the constructive receipt doctrine, if Charles receives $60,000 on June 20th but the funds may not be accessed until July 20th, when does Charles have constructive receipt of the funds? 12. Under the assignment of income doctrine, Ned wants to give the annual interest earned on an investment to his daughter to put into her bank account for school. Ned does not want to have to include this income on his tax return. What one thing must Ned do in order for this to allowable? 13. What is the maximum percentage of social security income that is taxable to the recipient under the present law? 14. Andy and Ashley sold their home for $760,000. Their basis in the sale was $204,000. How much of their gain is taxable? HAPTER 6 15. In order for business expenses to be allowable deductions from business income, what must be the characteristics of the expenses? 16. How old must a taxpayer be before he/she can withdraw from an IRA without penalty? 17. What is the maximum amount of student loan interest that can be deducted in 2021 ? 18. Which of the following items is not a deduction for medical expenses on Schedule A? a. Medical insurance premiums b. Eyeglasses c. Dental work d. Toothpaste and brushes e. Prescriptions from doctor f. Braces for back prescribed by doctor g. Vitamins h. Mileage to and from medical facilities 19. Only medical expenses that exceed a certain percentage of Adjusted gross income are deductible. What is that percentage? 20. A taxpayer who is self-employed or has his/her own business and is not incorporated or a partnership, should file what tax schedule to report gross revenue and expenses