Federal Income Taxation

Chapter 2

Answer the following questions below. Please provide support for your answers (does not have to be IRC citations) as partial credit may apply. In all situations below, assume that any tests not mentioned have been met.

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Ben Affleck and Jennifer Garner married on June 29, 2005. In June 2015, they released a statement announcing that after much thought and careful consideration, [they] have made the difficult decision to divorce." The divorce was not quick and as of December 31, 2015, their legal separation and divorce had not been finalized.

Ben and Jennifer have three children together: Violet (born in 2005), Seraphina (born 2009), and Samuel (born 2012). All three children lived with Ben and Jennifer in their Pacific Palisades home until Ben moved out October. The children continued to live with Jennifer for the rest of the year. The children did not provide any of their own support; Ben and Jennifer provided 100% of their support. Jennifer paid the household expenses post-October.

Violet earned $3,000 in wages from a cameo appearance in one of her fathers movies. She also earned $400 interest from a bank account.

Ben earned $20M from Gone Girl in 2015 while Jennifer earned $4M from various projects and endorsements.

Jennifers parents, Bill and Patricia, were both born in 1946 and despite their opposing political views, they were happily married for 48 years. In 2015, Bill earned $25,000. Sadly, Patricia passed away suddenly in November 2015. Though Bill needs bifocals, he is not legally blind.

Bens mother, Chris, was born in 1948. She worked as a public elementary school teacher for 30 years and in 2015, earned $3,000 from a taxable pension. Though she does not live with Ben, Ben and his brother Casey provide 40% and 30% of her support, respectively.

Are Ben and Jennifer eligible file a joint return for 2015?

What other filing status option(s) is/are available for Jennifer for 2015?

Does your answer to #2 change if Ben moved out in March instead?

Can Violet be claimed as a dependent?

Does your answer to #4 change if Violet earned $7,000 from her cameo appearance?

Can Chris be claimed as a dependent?

Is Chris required to file a tax return in 2015?

Does your answer to #6 change if Chris received $8,000 of a taxable pension?

Is Violet required to file a separate tax return in 2015?

What is Violets standard deduction?

Is Violet entitled to a personal exemption?

Assume Ben and Jennifer agree to file a joint return in 2015. What is their total personal and dependency exemption (use original facts in the problem and ignore any phase out rules for high income taxpayers)?

Assume Ben and Jennifer agree to file a joint return in 2015. What is their total standard deduction?

Assume Ben and Jennifer agree to file a joint return in 2015. What amount of the child tax credit can they include in their tax return?

What is Bills filing status in 2015?

Is a personal exemption available for Patricia in 2015?

Assume Bill has not remarried, what is filing status in 2016?

Assume Bill has not remarried, what is filing status in 2017?

If Ben and Jennifers divorce is finalized in 2015, what is Jennifers filing status?

Use the facts in #19. Assume Jennifer, the custodial parent, would receive the dependency exemption. Is it possible for Ben to claim the children as dependents? If so, how?