Andre (20) attends State University and is a qualifying student for the purpose of the American Opportunity Tax Credit (AOTC). His parents will claim him as a dependent on their jointly filed 2019 return. Their adjusted gross income is $120,000, and they paid $13,000 for Andre's tuition during the year. What is the maximum AOTC Andre's parents may be eligible to receive?

A. $0

B. $2,000

C. $2,500

D. $4,000

Which tax benefit for education is partially refundable?

A. American Opportunity Tax Credit.

B. Distribution from a Qualified Tuition Program.

C. Lifetime learning credit.

D. Student loan interest deduction.

All of these are due diligence requirements for tax preparers who are paid to prepare returns for taxpayers claiming the American Opportunity Tax Credit (AOTC) EXCEPT:

A. Complete Form 8863, Education Credits, and attach it to the return.

B. Complete and submit Form 8867, Paid Preparer's Due Diligence Checklist.

C. Request and maintain a copy of the student's academic transcripts.

D. Request that the taxpayer provide substantiation for the credit, such as a Form 1098-T and/or receipts for the qualifying expenses.

What happens if basis is not established for an asset which is sold?

A. Basis will be assumed to be one-half of the sale price.

B. The IRS will assume the basis is $0 and consider all the proceeds to be gain.

C. The basis will be adjusted to reflect the fair market value at the time of the sale.

D. Basis becomes the amount originally paid for the asset with no adjustments.

Which of the following is NOT defined as a capital asset?

A. Jewelry.

B. Investment-use property, such as land.

C. Personal residence.

D. Real property used in a trade or business.