1. Max owns a pet dog named Lucy. Max buys a bag of dog food for Lucy. The bag of dog food is considered a capital asset to Max.

   True

   False

2. Carrie is a 22-year-old full-time college student (she plans on returning home at the end of the school year). Her total support for the year was $34,000 (including $8,000 of tuition). Carrie covered $12,000 of her support costs out of her own pocket (from savings, she did not work) and she received an $8,000 scholarship that covered all of her tuition costs. Which of the following statements regarding who is allowed to claim Carrie as an exemption is true?

   Even if Carrie's grandparents provided the remaining $14,000 of support for Carrie ($34,000 minus $12,000 minus $8,000), they would not be able to claim her as a dependent.

   Even if Carrie's parents provided the remaining $14,000 of support for Carrie ($34,000 minus $12,000 minus $8,000), they would not be able to claim her as a dependent.

   Because she provided more than half her own support, Carrie would not qualify as her parents' dependent.

   None of these statements are true.

   3.Sam earns $400,000 as an employee of a large financial consulting firm. Social security taxes, as applied to Sam, are:

   		Progressive.
   		It depends on whether Sam has any dependents.
   		Regressive.
   		Proportional.