Ch. 13: ACC 4301 Individual Taxes Income

1. Gray Corporation has $110,000 worth of excess qualified incremental research expenditures. What is Gray's incremental research credit?

$55,000

$20,000

$50,000

$22,000

2. Teddy and Abby are married and file a joint return. Abby works and she contributes $2,300 to her Section 401(k) plan. Teddy does not work. If their AGI is $37,000, what is the amount of Abby's retirement plan contribution credit?

$0

$1,150

$400

$460

3. In 2015, Ramon and Michelle pay $10,000 in adoption fees and $5,500 in legal fees to adopt a new baby. How much is their adoption expense credit before considering any AGI limitations?

$13,400

$10,000

$5,500

$15,500

4. Green Company established a qualified retirement plan for its 20 employees. It paid $2,500 to startup this plan. What is Green's small employer pension credit for qualified startup costs?

$2,500

$0

$500

$1,250

5. The basic research credit rate is:

10%

20%

50%

15%

6. Victor is 68-years-old and single. He has adjusted gross income of $13,000 and does not receive any social security benefits. What is Victor's tax credit for the elderly?

$0

$338

$825

$750

7. Yellow Corporation incurred the following research expenses: (1) $100,000 in-house expenditures and (2) $60,000 paid to Breen University for contract research. What is the total of Yellow's qualified research expenditures?

$160,000

$139,000

$60,000

$100,000

8. Which of the following is a refundable credit?

Foreign tax credit

Withholding

Rehabilitation credit

Child and dependent care credit

9. Tim is 68-years-old and single. He has adjusted gross income of $5,000 and does not receive any social security benefits. What is Tim's tax credit for the elderly?

$1,125

$375

$0

$750

10. During the current year, Green Hills Corporation had $250,000 in income from Ireland, which imposes a 10% income tax on income earned within its borders. Thus, the income tax imposed by Ireland on Green Hills Corporation is $25,000 ($250,000 x 10%). Green Hills also had income of $500,000 from within the United States. The tentative U.S. tax on the $750,000 total income is $255,000. How much is Green Hill's foreign tax credit for the year?

$8,333

$85,000

$0

$25,000

11. John is single and has one child who is qualified for the American Opportunity Credit. In the fall of 2015, John pays $2,400 in tuition for his son to attend college. John's AGI for 2015 is $105,000. What is his American Opportunity Credit for 2015?

$0

$2,000

$1,900

$800

12. Bill and Betty have one child, Bobby, who is six-years-old. Bill's earnings are $15,000 and Betty's are $14,000. Other income includes interest on a savings account at San Diego Federal Savings of $450. They paid $2,600 to the Tiny Tot Day Care Center to keep Bobby so they could both work. What is their childcare credit?

$728

$910

$884

$702

13. Sheila spends $60,000 to rehabilitate a commercial building originally placed in service in 1910. The building is not a certified historic structure. What is Sheila's rehabilitation credit on the building?

$9,000

$0

$12,000

$6,000

14. Which of the following taxpayers would not be subject to the penalty for the underpayment of estimated tax in 2015?

The taxpayer whose CPA forget to fill out the appropriate forms and send them to the taxpayer.

The taxpayer who does not have the cash to make the payments.

The taxpayer whose estimated payments this year are equal to 70% of the current tax liability.

The taxpayer whose estimated payments are 115% of his liability for the prior year.

15. Toni has $75,000 net earnings from self-employment. What is her total self-employment tax in 2015?

$9,000

$5,299

$10,597

$9,975

16. Lew and Martha are married and have AGI of $70,000. They have two children, Bill and Betty. In fall 2015, Bill started his first year of college and Betty was enrolled in graduate school working on her master's degree. Bill has qualified tuition expenses of $2,700 and Betty's are $3,000 for the fall semester. Bill and Betty are dependents of Lew and Martha and both are full-time students. What is Lew and Martha's American Opportunity Credit for 2015?

$2,175

$675

$1,700

$2,675

17. Green Corporation's general business credit is $75,000. The net income tax for the year is $125,000 and the tentative AMT is $70,000. Assuming Green has no other tax credits for the year, what is the amount of general business credit allowed?

$70,000

$75,000

$50,000

$55,000

18. John and Fay are married and file a joint return showing AGI of $105,000. Their children are ages 12, 13, 17, and 20. The 20-year-old is a full-time student at State University. What amount may John and Fay take as a child tax credit in 2015?

$4,000

$1,000

$2,000

$3,000

19. Teri, a single taxpayer, maintains a household for her child, who is 13-years-old. Teri's adjusted gross income is $8,000, all from salary. How much is Teri's 2015 earned income credit?

$2,720

$0

$3,050

$3,200

20. Sheila spends $60,000 to rehabilitate a commercial building originally placed in service in 1910. What is Sheila's rehabilitation credit if the building is a certified historic structure?

$6,000

$0

$12,000

$9,000

21. White, an eligible small business, made $12,000 of capital improvements that qualify for the disabled access credit. What is the amount of White's credit?

$5,750

$6,000

$5,000

$0

22. Gerard and his wife, Wilma, pay $3,000 to keep their son, Gerard Jr., in a day care center. Gerard Jr. is five-years-old. Gerard's earnings are $11,000 and Wilma's earnings are $1,500. What amount of childcare credit can Gerard and Wilma claim on a joint return assuming no other income or losses for the year?

$1,050

$0

$1,500

$525

23. Orange Corporation's general business credit is $75,000. The net income tax for the year is $125,000 and the tentative AMT is $15,000. Assuming Orange has no other tax credits for the year, what is the amount of general business credit allowed?

$110,000

$100,000

$15,000

$75,000

24. In 2015, Ray and Monica pay $8,000 in adoption fees and $5,500 in legal fees to adopt a new baby. If Ray and Michelle's AGI is $204,520, what is the amount of their adoption expense credit?

$12,224

$0

$2,810

$13,190

25. Blue Company constructed a childcare facility for $600,000 to be used by it employees with preschool- aged children while they are at work. Blue paid $200,000 for childcare workers and other administrative costs to run the child care center for the year. What is Blue's employer-provided childcare credit?

$200,000

$170,000

$50,000

$150,000

26. Ted and his wife, Rita, pay $3,000 to keep their son, Ted Jr., in a day care center. Ted Jr. is five-years-old. Ted's earnings are $11,000 and Rita's earnings are $15,000. What amount of childcare credit can Ted and Rita claim on a joint return assuming no other income or losses for the year?

$1,050

$870

$840

$1,020

27. Bob and Jane have two children, ages 10 and 12. Their AGI for 2015 is $115,300. What is Bob and Jane's child tax credit?

$300

$1,000

$1,700

$2,000

28. Luis and Marta are married and have AGI of $70,000. They have two children, Benito and Betty. In fall 2015, Benito started his first year of college and Betty was enrolled in graduate school. Benito's qualified tuition expenses were $2,700 and Betty's were $3,000 for the fall semester. Benito and Betty are dependents of Luis and Marta and both are full-time students in California. What is Luis and Marta's lifetime learning credit for 2015?

$3,300

$600

$2,000

$940

29. During 2015, Jan earned $65,000 in wages subject to FICA. Jan also had net earnings of $50,000 from an outside consulting business. Jan sold IBM stock for a gain of $4,000 during the year. What is the amount of Jan's net earnings from self-employment for purposes of determining the Social Security portion of the self-employment tax?

$53,500

$46,000

$0

$50,000

can i please get help with my homework?

Question 1

A taxpayer may exclude which of the following from their gross income?

An allocation of income from a business structured as a partnership, based on the

taxpayer's percentage of ownership.

An inheritance from a deceased relative.

Dividend income from a mutual fund investment.

Gain from the sale of rental property.

Question 2

Which of the following is included in an individual taxpayer's federal gross income?

Disaster relief payments.

A federal income tax refund.

Interest on state and local municipal bonds.

Unemployment compensation.

Question 3

Choose the response that best defines gross income.

All worldwide income realized in any form, from whatever source derived, unless

specifically excluded by law.

Financial gain derived from labor or capital, less any deductions or adjustments.

Income less allowable reductions.

Specific income items identified and classified as taxable income

Question 4

What is the 2020 gross income filing requirement for a married couple, filing

jointly, where neither is blind, but one is

age 65, and the other is age 60? They lived together all year.

$23,500

$24,400

$25,700

$26,000

Question 5

Which taxpayer(s) is/are required to file a 2019 federal income tax return? None of

the individuals are blind.

Larry (67) has gross income of $13,700. He is single and has no dependents.

Stephanie (34) has gross income of $18,150. She will file as head of household with

one dependent.

Glenn (37) and Lana (35) are married and have gross income of $24,280. They lived

together all year and wish to file a joint

return.

Dan (66) and Leslie (63) have gross income of $25,950. They wish to file a joint

return.

Question 6

Which taxpayer(s) is/are required to file a 2019 federal income tax return? None of

the individuals are blind.

Antonio (33) has gross income of $4,300. His filing status is married filing

separately.

Robert (69) has gross income of $11,950. He is single and has no dependents.

Jose (36) has gross income of $17,600. He is a qualifying widower with one

dependent.

Tom (65) and Louise (62) are married and have gross income of $24,150. They lived

together all year and wish to file a joint

return.

Question 7

In which of the following situations might it be appropriate for a married taxpayer

filing a joint return to file an injured

spouse claim?

The joint overpayment was applied to a prior tax liability of the taxpayer and their

spouse.

The joint overpayment was applied to their spouse's past-due child support.

The taxpayer is unable to pay the tax liability because their spouse has suffered

some type of injury.

There is an understatement of tax due because the taxpayer's spouse omitted income

on the original return.

Question 8

Howard and Teresa were married for 52 years. Howard died on May 9, 2019. Teresa has

no dependents, and she did not

remarry. The correct and most favorable filing status for Teresa's 2019 return is:

Married filing jointly.

Married filing separately.

Single.

Qualifying widow.

Question 9

Marcus and Petrice were divorced on October 16, 2019. Neither has any dependents.

Neither has remarried. The correct

filing status they should each use is:

Head of household.

Married filing jointly.

Married filing separately.

Single.

Question 10

Grant and Haley married in 2019. Grant owes $19,000 on his student loans, but he has

not been paying on them, and

they are in default. The couple filed a joint return for 2019, but the IRS offset

their refund because of Grant's default on

the loans. Haley is not obligated to pay Grant's loans, and she would like to

receive her portion of their tax refund. As

the couple's tax preparer, what advice would you offer?

Grant should request a certificate of non-attachment.

Grant and Haley should submit a joint offer in compromise.

Haley should request relief as an injured spouse.

Haley should request relief as an innocent spouse

Question 11

Which of the following expense items should be included when determining whether a

taxpayer who wishes to file as

head of household paid more than half the cost of keeping up their home?

Education.

Medical expenses.

Real estate taxes.

Rental value of the home owned by the taxpayer.

Question 12

Failure to meet the due diligence requirements when determining eligibility for the

Child Tax Credit, Earned Income Tax

Credit, American Opportunity Tax Credit, and head of household filing status could

result in a penalty of:

$50, per return, assessed towards the taxpayer.

$500, per return, assessed towards the tax preparer.

$520, per return, assessed towards the taxpayer.

$530, for each item on each return, assessed towards the tax preparer.

Question 13

Roy (39) is a U.S. citizen. He was married at the beginning of 2019. His wife lived

in the household until August. Their

divorce was finalized on September 30, and Roy has not remarried. Roy provided 100%

of the support for his son, who

lived with him all year and is his qualifying child. Roy's most advantageous filing

status is:

Head of household.

Married filing jointly.

Married filing separately.

Single.

Question 14

Sandra's (57) husband, Ben, died in 2017, and she has not remarried. Sandra's

mother, Dorothy, lives in a nursing

home. Dorothy's only income for 2019 consisted of $17,650 in social security

benefits. Sandra pays the entire cost of

the nursing home and more than 50% of Dorothy's support. Sandra does not have any

children, and no one else lives

with her. What is Sandra's correct and most favorable filing status?

Head of household.

Married filing jointly.

Qualifying widow.

Single.

Question 15

Jesse and Erin have four dependent children, ages 17, 15, 12, and 10. What is the

maximum amount Jesse and Erin may

be eligible to receive for the Child Tax Credit and the credit for other dependents?

$4,000

$6,000

$6,500

$8,000

Question 16

In 2019, Ana's (28) brother, Todd (19), her fiance, Jay (30), and her daughter,

Alaina (4), lived with her for the entire year.

Ana's adjusted gross income is $32,700, Todd's gross income is $5,000, Jay's gross

income is $4,500, and Alaina has

no income. None of the individuals in the household were students during the year.

Neither Todd, nor Jay, nor Alaina

provided over 50% of their own support. Ana qualifies for and files as head of

household in 2019. How many qualifying

dependents can Ana claim on her return?

One.

Two.

Three.

Four.

Question 17

Which taxpayer is potentially eligible to receive the Child Tax Credit? In each

scenario, the child mentioned is the

taxpayer's only dependent or potential dependent, and the taxpayer provided more

than half the child's support.

Abigail has a daughter, Malena, who was 7 years old at the end of 2019. Malena lived

in Mexico for all of 2019 and is not a

U.S. citizen, U.S. national, or U.S. resident alien.

Lucia has a niece, Alejandra, who was 9 years old at the end of 2019. Alejandra is

not a citizen of the United States.

Alejandra does have an Individual Taxpayer Identification Number (ITIN), and she

lived in Mexico for all of 2019.

Ian has a nephew, Dylan, who is a resident alien. Dylan was 16 years old at the end

of 2019. Dylan lived with Ian all year.

Dylan obtained a social security number valid for employment before the due date of

the return.

Perry has a son, Ryan, who was 17 years old at the end of 2019. Ryan is a citizen of

the United States and qualifies as a

dependent on Perry's 2019 tax return.

Question 18

Interest from a municipal bond investment is:

Federally taxable and must be reported on Form 1040.

Nontaxable and does not have to be reported.

Not federally taxable, but must be reported on Form 1040.

Not federally taxable and only reportable on Form 1040 when the amount received

exceeds $1,500.

Question 19

Elliana, a single taxpayer, had wage income of $58,750 in 2019. Her only other

income was dividend income reported to

her on Form 1099-DIV. She is required to file a Schedule B if her dividend income is

greater than:

$350

$1,000

$1,500

$2,000

Question 20

A taxpayer whose only capital gain income consists of dividend distributions from a

mutual fund investment should

compute their tax liability using:

Form 8949, Sales and Other Dispositions of Capital Assets.

The Qualified Dividends and Capital Gain Tax Worksheet.

Schedule D, Capital Gains and Losses.

The 2019 Tax Tables for Form 1040.

Question 21

Interest income from U.S. Treasury obligations, such as Treasury bills, notes, and

bonds, is:

Federally taxable and must be reported on Form 1040.

Nontaxable and does not have to be reported on Form 1040.

Not federally taxable but should be reported on Form 1040.

Not federally taxable and only reportable on Form 1040 when the amount received

exceeds $1,500.

Question 22

Ruth and Steve will file a joint return. During the year, they received dividends

from a mutual fund investment, and they

received a 2020 Form 1099-DIV reporting a distribution of $1,000 in total ordinary

dividends, shown in box 1, and

qualified dividends of $1,000, shown in box 2. Their only other income was from

wages. Their taxable income for the

year was $86,500. How much tax will they pay on their dividend income?

$150

$200

$220

$300

Question 23

A taxpayer is NOT eligible to claim the Earned Income Tax Credit (EITC) if they had

investment income in 2020 totaling

more than:

$3,000

$3,350

$3,450

$3,600

Question 24

All of these scenarios describe a person who may be the qualifying child of a

taxpayer claiming the Earned Income Tax

Credit (EITC) EXCEPT:

Emerald (16), a full-time high school student. The taxpayer is her 22-year-old

sister.

Layla (23), a full-time student. The taxpayer is her 68-year-old grandmother.

Maeve (24), a full-time student. The taxpayer is her 22-year-old sister.

Riley (33), who is totally and permanently disabled. The taxpayer is her 29-year-old

brother.

Question 25

Which of the following is NOT a requirement for a taxpayer to be eligible to claim

the Earned Income Tax Credit (EITC)?

The taxpayer must:

Be a U.S. citizen.

Have earned income.

Have a valid SSN for employment in the U.S.

Have investment income of $3,600 or less.