Question $4($Chapter $3)$

Jack is single and $40$ years old. He and his siblings support their mom, Allison, who lives in a nursing home. The support they provide for Allison is as follows: Jack $9\%,$ Jack's sister $31\%,$ Jack's other sister $25\%,$ and Jack's brother $35\%.$ Jack fully supports his cousin, Sylas, who does not live with him. Sylas was injured several years ago in a skiing accident and has not been able to work. Penelope, Jack's $25-$year$-$old daughter, does not live with Jack. She works part$-$time at Starbucks and has $$4,000$ gross income. Jack fully supports Penelope. Kevin is Jack's $15-$yearold nephew, who lives with Jack. Kevin is the son of Jack's brother, but he lives with Jack to be closer to where he trains as an Olympic gymnast. Jack's brother fully supports Kevin. Please indicate whether each individual could be a Qualifying Child, Qualifying Relative, Both or Neither as to Jack. Circle the appropriate answer.

$($a$)$ Allison

Qualifying Child Only

$($b$)$ Sylas

Qualifying Relative Only

Both

Neither

$($c$)$ Penelope

Qualifying Child Only

Qualifying Relative Only

Both

Neither

$2$

$($d$)$ Kevin

Qualifying Child Only Qualifying Relative Only Both Neither

Question $5($Chapter $3)$

Ethan, age $15,$ has $$3,000$ income from babysitting and $$17,000$ interest income. Ethan's parents are married filing jointly and have taxable income of $$370,000.$ What is Ethan's tax liability?

Question $6($Chapter $4)$

Use the imputed interest on below market loan rules to determine whether the lender must report interest on the following loans. Please circle the correct answer.

$($a$)$ Corporation makes a $$9,000$ interest$-$free loan to shareholder for one year. Shareholder has $$200,000$ net investment income. The federal rate is $6\%.$

No Interest

Interest Limited to the

Amount of Borrower's Net Investment Income

Both

Neither

PLEASE SHOW WORK