Question 1

Emily,whose husband died in December 2012,maintains a household in which her dependent mother lives.Which (if any)of the following is her filing status for the tax year 2013? (Note: Emily is the executor of her husband's estate.)

Accepted Answer

Emily can file as head of household since she maintained a household for her dependent mother for more than half the year and her husband passed away during the tax year. She cannot file as married filing jointly or surviving spouse since her husband passed away before the end of the tax year. She also cannot file as single or married filing separately since she has a dependent who lived with her for over half the year.

Question 2

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

Accepted Answer

The answer of In which,if any,of the following situations will...

Question 3

Which of the following characteristics correctly describes the procedure for the phaseout of exemptions?

Accepted Answer

All of the given characteristics correctly describe the procedure for the phaseout of exemptions. The threshold amounts are different for each filing status and are indexed for inflation each year. The phaseout procedure is sometimes referred to as a "stealth tax," as it reduces the benefit of exemptions without overtly raising tax rates. Additionally, for the phaseout procedure to apply, a taxpayer's AGI must exceed the threshold amount.

Question 4

A qualifying child cannot include:

Accepted Answer

The answer of A qualifying child cannot include:
...

Question 5

Millie,age 80,is supported during the current year as follows:  During the year,Millie lives in an assisted living facility.Under a multiple support agreement,indicate which parties can qualify to claim Millie as a dependent.

Accepted Answer

The answer of Millie,age 80,is supported during the current year...

Question 6

Travis and Andrea were divorced.Their only marital property consisted of a personal residence (fair market value of $400,000,cost of $200,000),and publicly-traded stocks (fair market value of $800,000,cost basis of $500,000).Under the terms of the divorce agreement,Andrea received the personal residence and Travis received the stocks.In addition,Andrea was to receive $50,000 for eight years.

Accepted Answer

The answer of Travis and Andrea were divorced.Their only marital...

Question 7

Tony,age 15,is claimed as a dependent by his grandmother.During 2013,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:

Accepted Answer

Tony's taxable income is calculated as follows:
Total income = $1,000 (interest income) + $700 (earnings from part-time job) = $1,700
However, Tony can only claim the standard deduction for someone who can be claimed as a dependent, which is $1,050 for 2013.
Taxable income = Total income - Standard deduction = $1,700 - $1,050 = $650.

Question 8

Kyle and Liza are married and under 65 years of age.During 2013,they furnish more than half of the support of their 19-year old daughter,May,who lives with them.She graduated from high school in May 2012.May earns $15,000 from a part-time job,most of which she sets aside for future college expenses.Kyle and Liza also provide more than half of the support of Kyle's cousin who lives with them.Liza's father,who died on January 3,2013,at age 90,has for many years qualified as their dependent.How many personal and dependency exemptions should Kyle and Liza claim?

Accepted Answer

Kyle and Liza can claim two personal exemptions for themselves. They can also claim May as a dependent since they provide more than half of her support and she is under 19 years old (or under 24 and a full-time student). This is the third exemption. Kyle's cousin is also a dependent since they provide more than half of his support. This is the fourth exemption. Liza's father cannot be claimed as a dependent since he died in 2013. Therefore, the total number of exemptions they can claim is four.

Question 9

Ellen,age 12,lives in the same household with her father,grandfather,and uncle.The cost of maintaining the household is provided by her grandfather (40%)and her uncle (60%).Disregarding tie-breaker rules,Ellen is a qualifying child as to:

Accepted Answer

Ellen is a qualifying child for all parties involved since she lives with her father, grandfather, and uncle, and the household expenses are provided by both her grandfather and uncle.

Question 10

Wilma,age 70 and single,is claimed as a dependent on her daughter's tax return.During 2013,she had interest income of $2,500 and $800 of earned income from baby sitting.Wilma's taxable income is:

Accepted Answer

The answer of Wilma,age 70 and single,is claimed as a...

Question 11

Arnold is married to Sybil,who abandoned him in 2012.He has not seen or communicated with her since April of that year.He maintains a household in which their son,Evans,lives.Evans is age 25 and earns over $6,000 each year.For tax year 2013,Arnold's filing status is:

Accepted Answer

Arnold is still legally married to Sybil, so he cannot file as single or head of household. Since they are not living together and he has not communicated with her, he cannot file jointly. Therefore, the appropriate status is "Married, filing separately."

Question 12

During 2013,Lisa (age 66)furnished more than 50% of the support of the following persons:  Presuming all other dependency tests are met,on a separate return how many personal and dependency exemptions may Lisa claim?

Accepted Answer

The answer of During 2013,Lisa (age 66)furnished more than 50%...

Question 13

Tim and Janet were divorced.Their only marital property was a personal residence with a value of $120,000 and cost of $50,000.Under the terms of the divorce agreement,Janet would receive the house and Janet would pay Tim $15,000 each year for 5 years,or until Tim's death,whichever should occur first.Tim and Janet lived apart when the payments were made to Tim.The divorce agreement did not contain the word "alimony."

Accepted Answer

The answer of Tim and Janet were divorced.Their only marital...

Question 14

Merle is a widow,age 80 and blind,who is claimed as a dependent by her son.During 2013,she received $4,800 in Social Security benefits,$2,350 in bank interest,and $1,800 in cash dividends from stocks.Merle's taxable income is:

Accepted Answer

Merle's taxable income is $4,150 - $1,000 - $3,000 = $150. Social Security benefits are not taxable for individuals with incomes below certain levels. Bank interest and cash dividends are taxable.

Question 15

Sylvia,age 17,is claimed by her parents as a dependent.During 2013,she had interest income from a bank savings account of $2,000 and income from a part-time job of $4,200.Sylvia's taxable income is:

Accepted Answer

In 2013, the standard deduction for a dependent was $1,000 and the exemption amount for a dependent was $3,900. Therefore, Sylvia's taxable income is calculated as follows:
Interest Income: $2,000
Part-time Job Income: $4,200
Total Income: $6,200
Standard Deduction + Exemption: $1,000 + $3,900 = $4,550
Taxable Income: $6,200 - $4,550 = $1,650. Choice C is the correct answer.

Question 16

Evan and Eileen Carter are husband and wife and file a joint return for 2013.Both are under 65 years of age.They provide more than half of the support of their daughter,Pamela (age 25),who is a full-time medical student.Pamela receives a $5,000 scholarship covering her tuition at college.They furnish all of the support of Belinda (Evan's grandmother),who is age 80 and lives in a nursing home.They also support Peggy (age 66),who is a friend of the family and lives with them.How many dependency exemptions may the Carters claim?

Accepted Answer

The Carters may claim three dependency exemptions: one for Pamela, one for Belinda, and one for Peggy. Pamela is a qualifying child because she is under 24 years old, a full-time student, and the Carters provide more than half of her support. Belinda is a qualifying relative because she is over 65 years old and the Carters provide more than half of her support. Peggy is also a qualifying relative because she lived with the Carters for the entire year and they provided more than half of her support. The $5,000 scholarship does not affect Pamela's status as a dependent because it only covers tuition and not her overall support.

Question 17

The Hutters filed a joint return for 2013.They provide more than 50% of the support of Carla,Melvin,and Aaron.Carla (age 18)is a cousin and earns $2,800 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?

Accepted Answer

The Hutters can claim one personal exemption for themselves and one for their dependent son Melvin. They can also claim two dependency exemptions for Carla and Aaron, as both meet the dependency requirements (Carla is a qualifying child as she is under 19 and lives with them, and Aaron is a qualifying relative as he is a family member and they provide more than half of his support). Therefore, the Hutters can claim four personal and dependency exemptions on their Federal income tax return.

Question 18

Nelda is married to Chad,who abandoned her in early June of 2013.She has not seen or communicated with him since then.She maintains a household in which she and her two dependent children live.Which of the following statements about Nelda's filing status in 2013 is correct?

Accepted Answer

Nelda can file as a head of household if she maintained a household for her dependent children for more than half of the year, and if her spouse did not live with her for the last six months of the year. Since Chad abandoned Nelda in June and did not live with her for the last six months of the year, she can file as head of household. Option A is incorrect because she cannot file using the rates for single taxpayers since she has dependents. Option B is incorrect because Chad did not live with her for more than half of the year. Option C is incorrect because she is not a surviving spouse.

Question 19

In 2013,Cindy had the following transactions:  Cindy's AGI is:

Accepted Answer

The answer of In 2013,Cindy had the following transactions: ...

Question 20

In which,if any,of the following situations may the individual not be claimed as a dependent of the taxpayer?

Accepted Answer

The answer of In which,if any,of the following situations may...

Quiz 16: Introduction to the Taxation of Individuals

Emily,whose husband died in December 2012,maintains a household in which her dependent mother lives.Which (if any) of the following is her filing status for the tax year 2013? (Note: Emily is the executor of her husband's estate.)