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Exam 3: Tax Determination: Personal and Dependency Exemptions: an Overview of Property Transactions

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Question 61

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List several categories of persons that cannot be a qualified child but can be a qualified relative for dependency exemption purposes.

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Lineal ascendants (e.g.,parent...

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Question 62

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Once a child reaches age 19,the kiddie tax no longer applies.

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B) False

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Question 63

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Katelyn is divorced and maintains a household in which she and her daughter,Crissa,live.Crissa,age 22,earns $11,000 during 2011 as a model.Katelyn does qualify for head of household filing status.

For the past few years,Corey's filing status has been as follows: 2007 (married/joint); 2008 (married/separate); 2009 (surviving spouse); 2010 (surviving spouse); and 2011 (head of household).Explain what probably has happened.

Because they appear on page 1 of Form 1040,itemized deductions are also referred to as "page 1 deductions."

In which,if any,of the following situations will the kiddie tax not apply?

For 2011,Stuart has a short-term capital loss,a collectible long-term capital gain,and a long-term capital gain from land held as investment.The short-term loss is first applied to the collectible capital gain.

The filing status of a taxpayer (e.g.,single,head of household)must be identified before taxable income is determined.

Jim is single and for 2011 has AGI of $50,000.He is age 75 and has no dependents.For 2011,he has itemized deductions from AGI of $7,000.Determine Jim's taxable income for 2011.

An individual taxpayer uses a fiscal year February 1-January 31.The due date of this taxpayer's Federal income tax return is May 15 of each tax year.

In 2011,Justin had the following transactions: Justin's AGI is:

Currently,the top income tax rate in effect is the highest it has ever been.

Jason and Peg are married and file a joint return.Both are over 65 years of age and Jason is blind.Their standard deduction for 2011 is $15,050 ($11,600 + $1,150 + $1,150 + $1,150).

All exclusions from gross income are reported on Form 1040.

Merle is a widow,age 80 and blind,who is claimed as a dependent by her son.During 2011,she received $4,800 in Social Security benefits,$2,200 in bank interest,and $1,800 in cash dividends from stocks.Merle's taxable income is:

During the year,Kim sold the following assets: business auto for a $1,000 loss,stock investment for a $1,000 loss,and pleasure yacht for a $1,000 loss.Presuming adequate income,how much of these losses may Kim claim?

Homer (age 68)and his wife Jean (age 70)file a joint return.They furnish all of the support of Luther (Homer's 90-year old father),who lives with them.For 2011,they received $6,000 of interest income on city of Chicago bonds and interest income on corporate bonds of $48,000.Compute Homer and Jean's taxable income for 2011.

The Hutters filed a joint return for 2011.They provide more than 50% of the support of Carla,Melvin,and Aaron.Carla (age 20) is a cousin and earns $3,000 from a part-time job.Melvin (age 25) is their son and is a full-time law student.He received from the university a $3,800 scholarship for tuition.Aaron is a brother who is a citizen of Israel but resides in France.Carla and Melvin live with the Hutters.How many personal and dependency exemptions can the Hutters claim on their Federal income tax return?

Tony,age 15,is claimed as a dependent by his grandmother.During 2011,Tony had interest income from Boeing Corporation bonds of $1,000 and earnings from a part-time job of $700.Tony's taxable income is:

Darren,age 20 and not disabled,earns $3,500 during 2011.Darren's parents cannot claim him as a dependent unless he is a full-time student.