Assignment

Question 1
A parent may elect to include a child's income in the parent's return if:

a. All of the above must be met for a parent to elect to include a child's income in the parent's return.
b. The child's gross income is more than $950 and less than $9,500
c. The child is under age 18
d. The child's income is only from interest and dividend distributions

Question 2
A tax credit is allowed for qualified adoption expenses paid by taxpayers

a. And an income exclusion is allowed for qualified adoption expenses paid for by taxpayers' employers
b. And an additional credit is allowed for qualified adoption expenses paid for by taxpayers' employers
c. And is available each year qualifying expenses are incurred
d. And is not subject to a phase-out based on adjusted gross income

Question 3
Assume Karen is 12 years old and her only income is $2,500 of interest income from a bank account with money her parents have given her to save for college. What are the options Karen has for filing her tax return?

a. Karen can file a separate tax return or her parents can elect to include her in their tax return, paying tax on $600 of her interest income at their rate of tax.
b. Karen must file a separate tax return and report all of her interest income at her separate rate of tax.
c. Karen can file a separate return or her parents can elect to include her in their tax return, paying tax on the full $2,500 of her interest income at their rate of tax.
d. Karen must file a separate tax return and report all of her interest income at her parents' rate of tax.

Question 4
Bob and Carol file their tax returns using the married filing jointly status. Their AGI is $131,000. They have two children, ages 11 and 7. How much child tax credit can Bob and Carol claim for their two children?

a. $1,000
b. $2,000
c. $950
d. $1,050
e. None of the above is correct.

Question 5
Carla and Bob finalized an adoption in 2012. Their adoption fees totaled $9,500. They have AGI of $205,000 for 2012. What is their adoption credit?

a. $12,650
b. $7,402
c. $9,500
d. $5,869

Question 6
Choose the correct statement:

a. A taxpayer may receive a 30 percent credit for the purchase of a plug-in electric vehicle.
b. A taxpayer may receive a 30 percent credit for installing a solar water-heating panel for his swimming pool.
c. A taxpayer may receive a 30 percent credit for installing a windmill at his vacation home.
d. A taxayer may receive a 30 percent credit for installing energy-efficient window shades..

Question 7
Clark, a widower, maintains a household for himself and his two dependent preschool children. For the year ended December 31, 2012, Clark earned a salary of $36,000. He paid $3,500 to a housekeeper to care for his children in his home, and also paid $1,500 to a kiddie play camp for child care. He had no other income or expenses during 2012. How much can Clark claim as a child care credit in 2012?

a. $1,440
b. $1,200
c. None of the above
d. $840
e. $360

Question 8
Curly and Rita are married, file a joint return, and have two dependent children, ages 11 and 13. Their combined income is $116,000. By how much is their child credit reduced in 2012?

a. $600
b. $300
c. $900
d. $-0-
e. $1,200

Question 9
Denice is divorced and files a single tax return claiming her two children, ages 7 and 9, as dependents. Her adjusted gross income for 2012 is $79,500. Denice's Child Credit for 2012 is:

a. $750
b. $1,750
c. $1,000
d. $250
e. $2,000

Question 10
For 2012, which of the following is a tax adjustment or tax preference item for the individual alternative minimum tax computation?

a. Deduction of charitable contribution of tangible personal property
b. IRA contribution deduction
c. Miscellaneous itemized deductions
d. None of the above
e. Moving expense deduction

Question 11
For the 2012 tax year, Sally, who is divorced, reported the following items of income:

Interest income
$ 600
Wages
4,000
Earnings from self-employment
3,000

She maintains a household for herself and her 1-year-old son who qualifies as her dependent. What is the earned income credit available to her for 2012, using the tables?

a. $2,593
b. $1,369
c. $1,029
d. $2,389
e. None of the above

Question 12
Glen and Mary have two children, Chad (12-years-old) and Linda (8-years-old). For 2012, Chad has $4,000 in net unearned income and Linda has net unearned income of $1,000. If the total parental tax for 2012 is $1,400, how would the tax be allocated between Chad and Linda?

a. $1,120 to Chad and $280 to Linda
b. $933 to Chad and $467 to Linda
c. None of the above
d. $700 to Chad and $700 to Linda
e. $1,400 to Chad and $0 to Linda

Question 13
H and W are married taxpayers living in Louisiana. H earns wages of $40,000 and has $5,000 of dividend income from separate property. H and W have interest income from community property of $10,000. If H and W file separate income tax returns, what amount of income must be included on H's separate tax return?

a. $50,000
b. None of the above
c. $27,500
d. $25,000
e. $30,000

Question 14
Hal is enrolled for one class at a local community college; tuition cost him $250. Hal's AGI is $20,000. Hal can take a lifetime learning credit of:

a. $150
b. $100
c. $-0-
d. $250
e. $50

Question 15
In 2012, Alex has income from wages of $16,000, adjusted gross income of $18,000, and tax liability of $300 before the earned income credit. What is the amount of Alex's earned income credit for 2012, assuming his 5-year old dependent son lived with him for the full year?

a. $0
b. None of the above
c. $3,019
d. $3,169
e. $300

Question 16
In 2012, the child tax credit available to married taxpayers filing jointly is phased out, beginning at:

a. $95,000
b. $110,000
c. $75,000
d. $55,000

Question 17
In 2012, which of the following children would have income taxed at their parents' rates?

a. A non-student child with net unearned income of $12,000 (age 19)
b. A child with net unearned income of $2,000 (age 12)
c. All of the above
d. A child with salary income of $1,000 (age 9)
e. A child with salary income of $12,000 (age 13)

Question 18
In the case of the adoption of a child who is not a U.S. citizen or resident of the U.S., the credit for qualified adoption expenses is available:

a. Each year expenses are paid
b. In the year the adoption becomes final
c. In the first year the expenses are paid
d. In the last year expenses are paid

Question 19
Jessica and Robert have two young children. They have $7,000 of qualified child care expenses and an AGI of $24,000 in 2012. What is their allowable child care credit?

a. $6,000
b. $7,000
c. $900
d. $1,800
e. $2,100

Question 20
Jim has foreign income. He earns $25,000 from Country A which taxes the income at a 20 percent rate. He also has income from Country B of $15,000. Country B taxes the $15,000 at a 10 percent rate. His U.S. taxable income is $90,000, which includes the foreign income. His U.S. income tax on all sources of income before credits is $19,000. What is his foreign tax credit?

a. $12,346
b. Jim does not qualify for a foreign tax credit.
c. $8,444
d. $6,500
e. $5,846

Question 21
Keith has a 2012 tax liability of $2,250 before taking into account his American Opportunity credit. He paid $2,700 in qualifying expenses, was a full-time student, was not claimed as a dependent on his parents' return, and his American Opportunity credit was not subject to phase out. What is the amount of his American Opportunity credit allowed?

a. $2,175
b. $1,350
c. $1,500
d. $2,700
e. $-0-

Question 22
Molly and Steve are married and live in Texas. Molly earns a salary of $50,000 and Steve owns a rental property that gives him $35,000 of income. If they filed separate tax returns, what amount of income would Steve report?

a. None of the above.
b. $85,000
c. $35,000
d. $60,000
e. $42,500

Question 23
Robert and Mary file a joint tax return for 2012, with adjusted gross income of $33,000. Robert and Mary earned income of $20,000 and $12,000 respectively, during 2012. In order for Mary to be gainfully employed, they pay the following child care expenses for their 4-year-old son, John:

Union Day Care Center
$1,500
Wilma, baby sitter (Robert's mother)
1,000

What is the amount of the child and dependent care credit they should report on their tax return for 2012?

a. $650
b. $260
c. None of the above
d. $625
e. $390

Question 24
Steve goes to Tri-State University and pays $40,000 in tuition. Steve works a part-time job to pay for his schooling and has an AGI of $17,000. How much is his American Opportunity Credit?

a. $2,000
b. He does not qualify for the American Opportunity Credit.
c. $1,000
d. $2,500
e. $4,000

Question 25
Taxpayer Q has net taxable income of $30,000 from Country Y which imposes a 40 percent income tax. In addition to the income from Country Y, taxpayer Q has net taxable income from U.S. sources of $120,000, and U.S. tax liability, before the foreign tax credit, of $41,750. What is the amount of Q's foreign tax credit?

a. $2,400
b. $30,000
c. None of the above
d. $12,000
e. $8,350

Question 26
Taxpayers are allowed two tax breaks for adoption expenses. They are allowed:

Qualified Expenses
Paid personallyPaid by employer

a. Exclusion Exclusion
b. Credit Credit
c. Credit Exclusion
d. Exclusion Credit

Question 27
The American Opportunity credit

a. Is available for qualifying expenses paid on behalf of the taxpayer and his or her spouse, in addition to those paid for dependents
b. Is 50 percent of the first $1,200 of tuition and fees paid and 100 percent of the next $1,200
c. Is available for 2 years of post-secondary education
d. Is fully refundable even if the credit exceeds the tax liability

Question 28
The child and dependent care provisions:

a. Are available only to single parents
b. Are available for spouses incapable of self-care
c. Are allowed only for taxpayers earning less than $43,000
d. Apply only to children under age 15

Question 29
The earned income credit:

a. Is available to married taxpayers who file separate returns
b. Must be calculated on adjusted gross income as well as earned income in some cases
c. Can not exceed the amount of the tax liability
d. Is available only if the taxpayer has qualifying children

Question 30
Which of the common deductions below are allowed for both regular tax purposes and for Alternative Minimum Tax (AMT) purposes?

a. Personal and dependency exemptions
b. Mortgage interest from the acquisition of a residence costing less than $1 million
c. Miscellaneous itemized deductions taken on Schedule A
d. The standard deduction
e. State income taxes, property taxes, and all other taxes deducted on Schedule A

Question 31
Which of the common deductions below are allowed for regular tax purposes but not for Alternative Minimum Tax (AMT) purposes?

a. Moving expenses
b. Cash charitable contributions
c. The interest deduction for up to $100,000 of home equity debt which is not used to purchase or improve part of a principal residence
d. IRAs

Question 32
Which of the following is not a true statement regarding community property law?

a. For a married couple living in Texas, income derived from separate property produces community income
b. In all community property states, the salary of married spouses is allocated one-half to each spouse
c. Colorado, Ohio, and Florida are community property states
d. Property acquired before marriage in a community property state continues to be separate property
e. For a married couple living in California, income derived from separate property is taxable to the owner of the property

Question 33
Which of the following is not an adjustment or tax preference item for 2012 for purposes of the individual alternative minimum tax?

a. All of the above are adjustment or tax preference items for AMT
b. State income tax refunds
c. Cash charitable contributions
d. Certain passive losses
e. Miscellaneous itemized deductions

Question 34
Which of the following is true of the alternative minimum tax?

a. None of the above are true
b. For 2012, the alternative minimum tax rates are 20 percent and 30 percent, depending on the taxpayer's income
c. The amount of a taxpayer's state income tax may not be deducted for the purpose of computing the alternative minimum tax
d. The alternative minimum tax is designed to ensure that high income taxpayers do not pay excessive amounts of income tax
e. All tax-exempt interest is a tax preference item for the alternative minimum tax

Question 35
Which of the following itemized deductions may not be deducted in computing the individual alternative minimum tax?

a. Medical expenses (limited to 10 percent of AGI)
b. Qualified home mortgage interest
c. Charitable deductions
d. All of the above
e. State income taxes

Question 36
Which of the following tax credits is not available for the 2012 tax year?

a. Child and dependent care credit
b. Earned income credit
c. Foreign tax credits
d. Adoption credit
e. All of the above are available credits

Question 37
Which of the following types of income is not subject to the "kiddie tax?"

a. Interest income
b. Salary income
c. Dividend income
d. All of the above are subject to the "kiddie tax"
e. Capital gains on stock sales

Question 38
Which one of the following conditions must be satisfied in order for a married taxpayer to be taxed on only his income if he resides in a community property state?

a. The husband and wife must live apart for more than half the year.
b. The husband and wife must live apart for the entire year.
c. None of the above.
d. Only one of the spouses can be working and earning an income.
e. The husband and wife must be in the process of filing for a divorce.

Question 39
Which one of the following taxpayers qualify for the earned income credit?

a. A couple who have a combined AGI of $17,000 and three children but file separately.
b. An 18-year-old college student who earns $8,000 at a part-time job.
c. None of the above qualifies for the earned income credit.
d. A 70-year-old doctor whose practice had a net loss and who has an AGI of $5,000 in 2012
e. A 31-year-old construction worker with $22,000 of AGI and two children.

Question 40
William and Irma have two children, Tom (age 13) and Sara (age 8). For 2012, Tom and Sara have a total parental tax of $5,600. Tom's net unearned income is $15,000, while Sara's net unearned income is $5,000. How much of the parental tax would be allocated to Sara on her 2012 tax return?

a. $0
b. $2,800
c. $1,866
d. None of the above
e. $1,400