Deck 9: Individuals As the Taxpayer

Question 1

After Ellie moves out of the apartment she had rented as her personal residence, she recovers her damage deposit of $1,000.The $1,000 is not income to Ellie.

Answer 1

True

Question 2

The additional standard deduction for age and blindness is greater for married taxpayers than for single taxpayers.

Answer 2

False

Question 3

A decrease in a taxpayer's AGI could increase the amount of medical expenses that can be deducted.

Answer 3

True

Question 4

In 2018, Ed is 66 and single.If he has itemized deductions of $12,700, he should not claim the standard deduction alternative.

Question 5

Many taxpayers who previously itemized will start claiming the standard deduction when they purchase a home.

Question 6

Under the income tax formula, a taxpayer must choose between deductions for AGI and the standard deduction.

Question 7

The basic and additional standard deductions both are subject to an annual adjustment for inflation.

Question 8

An "above the line" deduction refers to a deduction for AGI.

Question 9

Under the Federal income tax formula for individuals, a choice must be made between claiming deductions for AGI and itemized deductions.

Question 10

All exclusions from gross income are reported on Form 1040.

Question 11

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

Question 12

The filing status of a taxpayer e.g., single, head of household) must be identified before the applicable standard deduction is determined.

Question 13

As opposed to itemizing deductions from AGI, the majority of individual taxpayers choose the standard deduction.

Question 14

Howard, age 82, dies on January 2, 2018.On Howard's final income tax return, the full amount of the basic and additional standard deductions will be allowed even though Howard lived for only 2 days during the year.

Question 15

Once they reach age 65, many taxpayers will switch from itemizing their deductions from AGI and start claiming the standard deduction.

Question 16

Adjusted gross income AGI) appears at the bottom of page 1 and at the top of page 2 of Form 1040.

Question 17

Lee, a citizen of Korea, is a resident of the U.S.Any rent income Lee receives from land he owns in Korea is not
subject to the U.S.income tax.

Question 18

Claude's deductions from AGI exceed the standard deduction allowed for the current year.Under these circumstances, Claude cannot claim the standard deduction.

Question 19

Under the Federal income tax formula for individuals, the determination of adjusted gross income AGI) precedes that of taxable income TI).

Question 20

An increase in a taxpayer's AGI could decrease the amount of charitable contribution that can be claimed.

Question 21

Benjamin, age 16, is claimed as a dependent by his parents.During 2018, he earned $850 at a car wash.Benjamin's standard deduction is $1,400 $1,050 + $350).

Question 22

Using borrowed funds from a mortgage on her home, Leah provides 52% of her own support, while her sons furnished the rest.Leah can be claimed as a dependent under a multiple support agreement.

Question 23

Buddy and Hazel are ages 72 and 71 and file a joint return.If they have itemized deductions of $25,100 for 2018, they should not claim the standard deduction.

Question 24

Roy and Linda were divorced in 2017.The divorce decree awards custody of their children under age 17) to Linda but is silent as to who is entitled to treat them as dependents for purposes of claiming the child credit.If Roy furnished more than half of their support, he can claim the child tax credit for them in 2018.

Question 25

Derek, age 46, is a surviving spouse.If he has itemized deductions of $26,250 for 2018, Derek should not claim the standard deduction.

Question 26

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 2018 is $27,900 $24,000 + $1,300 + $1,300 + $1,300).

Question 27

Katrina, age 16, is claimed as a dependent by her parents.During 2018, she earned $5,600 as a checker at a grocery store.Her standard deduction is $5,950 $5,600 earned income + $350).

Question 28

If an individual does not spend funds that have been received from another source e.g., interest on municipal bonds), the unexpended amounts are not considered for purposes of the support test.

Question 29

Clara, age 68, claims head of household filing status.If she has itemized deductions of $18,900 for 2018, she should
claim the standard deduction.

Question 30

When separate income tax returns are filed by married taxpayers, one spouse cannot claim the other spouse as an exemption.

Question 31

In 2018, Hal furnishes more than half of the support of his ex-wife and her father, both of whom live with him.The divorce occurred in 2017.Hal may claim the father-in-law and the ex-wife as dependents.

Question 32

Albert buys his mother a TV.For purposes of meeting the support test, Albert cannot include the cost of the TV.

Question 33

Butch and Minerva are divorced in December of 2018.Since they were married for more than one-half of the year, they are considered as married for 2018.

Question 34

Monique is a resident of the U.S.and a citizen of France.If she files a U.S.income tax return, Monique cannot
claim the standard deduction.

Question 35

For the year a spouse dies, the surviving spouse is considered married for the entire year for income tax purposes.

Question 36

In determining whether the gross income test is met for determining dependency status, only the taxable portion of a scholarship is considered.

Question 37

After her divorce, Hope continues to support her ex-husband's sister, Cindy, who does not live with her.Hope can
claim Cindy as a dependent.

Question 38

The deduction for personal and dependency exemptions has been suspended from 2018 through 2025.

Question 39

Dan and Donna are husband and wife and file separate returns for the year.If Dan itemizes his deductions from
AGI, Donna cannot claim the standard deduction.

Question 40

Debby, age 18, is claimed as a dependent by her mother.During 2018, she earned $1,100 in interest income on a savings account.Debby's standard deduction is $1,450 $1,100 + $350).

Question 41

Married taxpayers who file a joint return cannot later i.e., after the filing due date) switch to separate returns for that year.

Question 42

Kim, a resident of Oregon, supports his parents who are residents of Canada but citizens of Korea.Kim can claim a dependent tax credit for his parents.

Question 43

For tax purposes, married persons filing separate returns are treated the same as single taxpayers.

Question 44

Ed is divorced and maintains a home in which he and a dependent friend live.Ed does not qualify for head of household filing status.

Question 45

Currently, the top income tax rate in effect is not the highest it has ever been.

Question 46

Surviving spouse filing status begins in the year in which the deceased spouse died.

Question 47

In determining the filing requirement based on gross income received, both additional standard deductions i.e., age and blindness) are taken into account.

Question 48

In terms of timing as to any one year, the Tax Tables are available before the Tax Rate Schedules.

Question 49

In January 2018, Jake's wife dies and he does not remarry.For tax year 2018, Jake may not be able to use the filing status available to married persons filing joint returns.

Question 50

An individual taxpayer uses a fiscal year of March 1 to February 28.The due date of this taxpayer's Federal income tax return is May 15 of each tax year.

Question 51

The kiddie tax does not apply to a child whose earned income is more than one-half of his or her support.

Question 52

Lucas, age 17 and single, earns $6,000 during 2018.Lucas's parents cannot claim him as a dependent if he does not live with them.

Question 53

Katelyn is divorced and maintains a household in which she and her daughter, Crissa, live.Crissa, age 22, earns
$11,000 during 2018 as a model.Katelyn does not qualify for head of household filing status.

Question 54

For dependents who have income, special filing requirements apply.

Question 55

Married taxpayers who file separately cannot later i.e., after the due date for filing) change to a joint return.

Question 56

Since an abandoned spouse is treated as not married and has one or more dependent children, he or she qualifies for the standard deduction available to head of household.

Question 57

Darren, age 20 and not disabled, earns $4,300 during 2018.Darren's parents cannot claim him as a dependent unless he is a full-time student.

Question 58

Sarah furnishes more than 50% of the support of her son and daughter-in-law who live with her.If the son and daughter-in-law file a joint return, Sarah cannot claim them as dependents.

Question 59

A taxpayer who itemizes must use Form 1040, and cannot use Form 1040EZ or Form 1040A.

Question 60

In terms of income tax consequences, abandoned spouses are treated the same way as married persons filing separate returns.

Question 61

The additional Medicare taxes assessed on high-income individuals carry differing tax rates depending on the tax base.

Question 62

After personal property is fully depreciated for both regular income tax purposes and AMT purposes, no AMT adjustment will be required as a result of the sale of the property.

Question 63

When the kiddie tax applies, the child need not file an income tax return because the child's income will be reported on the parents' return.

Question 64

In 2018, a child who has unearned income of $2,100 or less cannot be subject to the kiddie tax.

Question 65

Certain high-income individuals are subject to three additional Medicare taxes-on wages, unearned income, and tax credits claimed.

Question 66

The phaseout of the AMT exemption amount for a taxpayer filing as a head of household both begins and ends at a higher income level than it does for a single taxpayer.

Question 67

If the AMT base is greater than $191,100, the AMT rate for an individual taxpayer is the same as the AMT rate for married taxpayer, filing jointly.

Question 68

In terms of the tax formula applicable to individual taxpayers, which, if any, of the following statements is correct?

A)In arriving at AGI, a taxpayer must elect between claiming deductions for AGI and deductions from AGI.
B)In arriving at taxable income, a taxpayer must elect between claiming deductions for AGI and deductions from AGI.
C)If a taxpayer has deductions for AGI, the standard deduction is not available.
D)In arriving at taxable income, a taxpayer must elect between deductions for AGI and the standard deduction.
E)None of these.

Question 69

Assuming no phaseout, the AMT exemption amount for a married taxpayer filing separately for 2018 is the same as the AMT exemption amount for married taxpayer filing jointly filing status.

Question 70

The net capital gain included in an individual taxpayer's AMT base is eligible for the lower tax rate on net capital gain.This favorable alternative rate applies both in calculating the regular income tax and the AMT.

Question 71

Joel placed real property in service in 2018 that cost $900,000 and used MACRS depreciation for regular income tax purposes.He is required to make a positive adjustment for AMT purposes in 2018 for the excess of depreciation calculated for regular income tax purposes over the depreciation calculated for AMT purposes.

Question 72

In deciding whether to enact the alternative minimum tax, Congress was concerned about the inequity that resulted when taxpayers with substantial economic incomes could avoid paying regular income tax.

Question 73

In terms of the tax formula applicable to individual taxpayers, which, if any, of the following statements is correct?

A)In arriving at taxable income, a taxpayer must choose between the standard deduction and itemized deductions.
B)In arriving at AGI, personal and dependency exemptions are subtracted from gross income.
C)In arriving at taxable income, a taxpayer must choose between the standard deduction and the deduction for qualified business income.
D)The tax formula does not apply if a taxpayer elects to claim the standard deduction.
E)None of these.

Question 74

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

Question 75

Regarding the tax formula and its relationship to Form 1040, which, if any, of the following statements is correct?

A)Most exclusions from gross income are reported on page 2 of Form 1040.
B)An "above the line deduction" refers to a deduction from AGI.
C)A "page 1 deduction" refers to a deduction for AGI.
D)The taxable income TI) amount appears both at the bottom of page 1 and at the top of page 2 of Form 1040.
E)None of these.

Question 76

The standard deduction is allowed for regular income tax purposes, but is disallowed for AMT purposes.This results in a positive AMT adjustment.

Question 77

A child who is married cannot be subject to the kiddie tax.

Question 78

If Abby's alternative minimum taxable income exceeds her regular taxable income, she will incur an alternative minimum tax.

Question 79

Madge's tentative minimum tax TMT) is $112,000.Her regular income tax liability is $99,000.Madge's AMT is
$13,000.

Question 80

AMT adjustments can be positive or negative, whereas AMT preferences always are positive.