Question 1

Match the statements that relate to each other.Note: Some choices may be used more than once.
-Additional standard deduction

Accepted Answer

The answer of Match the statements that relate to each...

Question 2

Match the statements that relate to each other.Note: Some choices may be used more than once.
-Surviving spouse

Accepted Answer

Surviving spouses are allowed to use the same tax rates as married persons filing jointly, providing a significant tax benefit.

Question 3

Perry, a single taxpayer, has taxable income of $178,000 and is in the 32% tax bracket.During 2019, he had the following capital asset transactions: $\begin{array}{lr}
\text { Gain from the sale of a stamp collection (held for } 10 \text { years) } & \$ 30,000 \
\text { Gain from the sale of an investment in land (held for } 4 \text { years) } & 10,000 \
\text { Gain from the sale of stock investment (held for } 8 \text { months) } & 4,000
\end{array}$ Perry's tax consequences from these gains are as follows:

Accepted Answer

The taxable gains from the capital asset transactions are as follows:

- Long-term gain from sale of stock: $10,000
- Short-term gain from sale of stock: $20,000
- Long-term gain from sale of rental property: $10,000
- Short-term gain from sale of rental property: $4,000

The gains are first classified as either long-term or short-term based on the holding period of the asset. Long-term gains are taxed at a lower rate than short-term gains.

Next, the gains are netted against any capital losses incurred during the year. In this case, there are no capital losses, so the entire gain is taxable.

Finally, the taxable gain is added to Perry's other taxable income to determine his tax bracket. Since Perry has taxable income of $178,000, he is in the 32% tax bracket.

Using this information, we can calculate Perry's tax consequences from the gains as follows:

- Long-term gain from sale of stock: (15% × $10,000) = $1,500
- Short-term gain from sale of stock: (28% × $20,000) = $5,600
- Long-term gain from sale of rental property: (15% × $10,000) = $1,500
- Short-term gain from sale of rental property: (32% × $4,000) = $1,280

Total tax consequences: $1,500 + $5,600 + $1,500 + $1,280 = $9,880

Therefore, the best choice is B, which matches the calculated tax consequences.

Question 4

Matching 
Regarding classification as a dependent, classify each statement in one of the four categories:
-A daughter-in-law who lives with taxpayer.

Accepted Answer

A daughter-in-law who lives with the taxpayer cannot be a qualifying child because the IRS's definition of a qualifying child does not include in-laws. However, she could potentially be a qualifying relative if she meets the other requirements set forth by the IRS, such as not having a gross income above a certain threshold and being supported by the taxpayer for more than half of her living expenses.

Question 5

Matching 
Regarding classification as a dependent, classify each statement in one of the four categories:
-A stepdaughter who does not live with taxpayer.

Accepted Answer

For a stepdaughter to be considered a dependent under the qualifying relative category, she does not need to live with the taxpayer. The key requirements include the relationship test, gross income test, and support test, none of which mandate residency with the taxpayer for the entire year, unlike the qualifying child criteria.

Question 6

Matching 
Regarding classification as a dependent, classify each statement in one of the four categories:
-A cousin who does not live with taxpayer.

Accepted Answer

A cousin who does not live with the taxpayer cannot be a qualifying child because one of the requirements is that the child must live with the taxpayer for more than half of the year. Cousins also do not meet the specific relationship tests to be considered a qualifying relative under IRS rules.

Question 7

Matching 
Regarding classification as a dependent, classify each statement in one of the four categories:
-An uncle who lives with taxpayer.

Accepted Answer

An uncle cannot be a qualifying child since there is no parent-child relationship. However, if the uncle meets the other requirements of a qualifying relative (such as living with the taxpayer the entire year, having gross income below $4,300, and receiving less than half of their support from the taxpayer), they could be considered a qualifying relative.

Question 8

Matching 
Regarding classification as a dependent, classify each statement in one of the four categories:
-An ex-husband (divorce occurred last year) who lives with taxpayer.

Accepted Answer

An ex-husband cannot be a qualifying child because he is not a biological or adopted child of the taxpayer, nor does he meet the age or residency requirements. However, he could be a qualifying relative if he meets the four tests: not a qualifying child, lives with the taxpayer for the entire year, gross income is less than $4,200, and the taxpayer provides more than half of his support.

Question 9

Matching 
Regarding classification as a dependent, classify each statement in one of the four categories:
-A niece who lives with taxpayer, is 20 years old, earns $5,000, and is a full-time student.

Accepted Answer

This niece meets the criteria for a qualifying child because she is a full-time student under the age of 24, lives with the taxpayer, and does not provide more than half of her own support.

Question 10

Kirby, a single taxpayer, has taxable income of $30,000 and is in the 12% tax bracket.During 2019, she had the following capital asset transactions: $\begin{array}{llcc}
  \text {Long-term gain from the sale of a coin collection  } &\$11,000\
 \text { Long-term gain from the sale of a land investment } &10,000\
 \text {  Short-term gain from the sale of a stock investment} &2,000\
\end{array}$
 Kirby's tax consequences from these gains are as follows:

Accepted Answer

Kirby's long-term capital gains of $10,000 are taxed at 0% because she is in the 12% or lower tax bracket. Her short-term capital gains of $13,000 are taxed at her ordinary income tax rate of 12%. Therefore, Kirby's tax consequences are ($0 + 0.12*$10,000) + (0.12*$13,000) = $1,560, which corresponds to option C.

Question 11

Matching 
Regarding classification as a dependent, classify each statement in one of the four categories:
-A son lives with taxpayer and earns $3,000.

Accepted Answer

The statement implies that the son is living with the taxpayer, which meets the residency requirement for both qualifying child and qualifying relative. However, the income of $3,000 exceeds the gross income test for qualifying children but not for qualifying relatives. Therefore, the son could be either a qualifying child or a qualifying relative depending on other factors such as age, relationship to the taxpayer, and support provided.

Question 12

Match the statements that relate to each other.Note: Some choices may be used more than once.
-Scholarship funds for tuition

Accepted Answer

Scholarship funds for tuition are not considered in applying the gross income test for dependency exemption purposes.

Question 13

Matching 
Regarding classification as a dependent, classify each statement in one of the four categories:
-A half-brother who lives with taxpayer.

Accepted Answer

A half-brother who lives with taxpayer could be either a qualifying child or a qualifying relative depending on their age, relationship to the taxpayer, and other factors.

Question 14

Matching 
Regarding classification as a dependent, classify each statement in one of the four categories:
-A granddaughter, who lives with taxpayer, is 19 years old, earns $5,000, and is not a full-time student.

Accepted Answer

The granddaughter does not qualify as a qualifying child because she is over 18 and not a full-time student. She also does not qualify as a qualifying relative because her income exceeds the IRS limit for a qualifying relative.

Question 15

For the current year, David has wages of $80,000 and the following property transactions:

Stock investment sales- 
Long-term capital gain ..........$9000
 Short-term capital loss .........(12000)
Loss on sale of camper (purchased four years ago and used for family vacations ) ...................(2000)

What is David's AGI for the current year?

Accepted Answer

To calculate AGI, we need to add up all of David's income and then subtract any adjustments (such as contributions to a traditional IRA) to arrive at his AGI.

David's wages of $80,000 are his gross income. We don't have any information to suggest that he has made any adjustments to his income, so his AGI will equal his gross income.

Therefore, David's AGI for the current year is $80,000.

The correct answer choice is B, as $80,000 is not one of the answer options. The closest option is $77,000, which is therefore the best choice.

Question 16

During 2019, Trevor has the following capital transactions: $$\begin{array} { l r } 
\text { LTCG } & \$ 6,000 \
\text { Long-term collectible gain } & 2,000 \
\text { STCG } & 4,000 \
\text { STCL } & 10,000
\end{array}$$ After the netting process, the following results:

Accepted Answer

The answer of During 2019, Trevor has the following capital...

Question 17

Match the statements that relate to each other.Note: Some choices may be used more than once.
-Scholarship funds for room and board

Accepted Answer

The answer of Match the statements that relate to each...

Question 18

Matching 
Regarding classification as a dependent, classify each statement in one of the four categories:
-A nephew who lives with taxpayer.

Accepted Answer

Without further information it is possible that the nephew could meet the requirements to be classified as either a qualifying child or a qualifying relative, depending on factors such as age, support provided by the taxpayer, and relationship to the taxpayer.

Question 19

Matching 
Regarding classification as a dependent, classify each statement in one of the four categories:
-A daughter who does not live with taxpayer.

Accepted Answer

A daughter who does not live with the taxpayer could still be considered a qualifying relative if she meets the other requirements for this classification, such as not having a gross income above a certain threshold and the taxpayer providing over half of her support for the year. The residency requirement is stricter for qualifying children, generally requiring them to live with the taxpayer for more than half of the year, which is not met in this scenario.

Question 20

Matching 
Regarding classification as a dependent, classify each statement in one of the four categories:
-A family friend who is supported by and lives with the taxpayer.

Accepted Answer

A family friend who is supported by and lives with the taxpayer could be considered a qualifying relative if they meet the other IRS requirements for this classification, such as not being a qualifying child of another taxpayer and meeting income and support tests. They cannot be a qualifying child because the IRS requires a qualifying child to have a specific relationship to the taxpayer, such as being a son, daughter, or foster child, which does not include family friends.

Quiz 3: Tax Formula and Tax Determination an Overview of Property Transactions

Match the statements that relate to each other.Note: Some choices may be used more than once. -Additional standard deduction

Match the statements that relate to each other.Note: Some choices may be used more than once. -Surviving spouse

Matching Regarding classification as a dependent, classify each statement in one of the four categories: -A daughter-in-law who lives with taxpayer.

Matching Regarding classification as a dependent, classify each statement in one of the four categories: -A stepdaughter who does not live with taxpayer.

Matching Regarding classification as a dependent, classify each statement in one of the four categories: -A cousin who does not live with taxpayer.

Matching Regarding classification as a dependent, classify each statement in one of the four categories: -An uncle who lives with taxpayer.

Matching Regarding classification as a dependent, classify each statement in one of the four categories: -An ex-husband (divorce occurred last year) who lives with taxpayer.

Matching Regarding classification as a dependent, classify each statement in one of the four categories: -A niece who lives with taxpayer, is 20 years old, earns $5,000, and is a full-time student.

Matching Regarding classification as a dependent, classify each statement in one of the four categories: -A son lives with taxpayer and earns $3,000.

Match the statements that relate to each other.Note: Some choices may be used more than once. -Scholarship funds for tuition

Matching Regarding classification as a dependent, classify each statement in one of the four categories: -A half-brother who lives with taxpayer.

Matching Regarding classification as a dependent, classify each statement in one of the four categories: -A granddaughter, who lives with taxpayer, is 19 years old, earns $5,000, and is not a full-time student.

During 2019, Trevor has the following capital transactions: $\begin{array} { l r } \text { LTCG } & \$ 6,000 \\\text { Long-term collectible gain } & 2,000 \\\text { STCG } & 4,000 \\\text { STCL } & 10,000\end{array}$ After the netting process, the following results:

Match the statements that relate to each other.Note: Some choices may be used more than once. -Scholarship funds for room and board

Matching Regarding classification as a dependent, classify each statement in one of the four categories: -A nephew who lives with taxpayer.

Matching Regarding classification as a dependent, classify each statement in one of the four categories: -A daughter who does not live with taxpayer.

Matching Regarding classification as a dependent, classify each statement in one of the four categories: -A family friend who is supported by and lives with the taxpayer.