Question 1

If an individual is liable for self-employment tax,a portion of the self-employment tax is

Accepted Answer

A)One-half of the self-employment tax is a for AGI deduction.

Question 2

Lavonne has a regular tax liability of $13,239 on taxable income of $70,000.She also has tax preferences of $25,000 and positive adjustments attributable to limitations on itemized deductions of $15,000.Lavonne is single and takes a $4,050 personal exemption for herself only.Lavonne's alternative minimum tax for 2017 is

Accepted Answer

B)
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Question 3

A self-employed individual has earnings from his business of $300,000 in 2017.For the earnings in excess of $127,200,he will only have to pay the 2.9% Medicare Tax.

Accepted Answer

Because his earned income exceeds $200,000 ($250,000 if married filing a joint return),earned income in excess of the threshold will also be subject to the .9% Additional Medicare Tax.

Question 4

In computing AMTI,all of the following must be added back except

Accepted Answer

A)The home mortgage interest on the mortgage related to the home's acquisition will be "qualified housing interest" and will be allowed for AMT purposes.

Question 5

Rex has the following AMT adjustment factors: -Depreciation of real property acquired in 1996 using MACRS is $22,000 while depreciation for AMT purposes is $15,000.
-R&E expenditures amounting to $60,000 are expensed.
The net adjustment is

Accepted Answer

C)$7,000 depreciation difference + $54,000 R&E adjustment (60,000 - 60,000/10)= $61,000.The R&E expenditures for AMT purposes are amortized over 10 years.

Question 6

George and Meredith who are married,have a regular tax liability of $22,728 based on regular taxable income of $125,000.This year they generated tax preferences of $25,000,and positive adjustments attributable to limitations on itemized deductions of $18,700.In determining regular taxable income,they had claimed $12,150 of personal and dependency exemptions for themselves and their 20-year-old dependent daughter.What is George and Meredith's alternative minimum tax for 2017?

Accepted Answer

The answer of George and Meredith who are married,have a...

Question 7

If an individual is classified as an employee,the employer is required to withhold the employee's share of the FICA tax and to provide a matching amount.

Accepted Answer

Determination of employee versus independent contractor status is important because of the employer's requirement to pay and withhold the FICA tax.

Question 8

When a husband and wife file a joint return and both have self-employment income,the self-employment tax must be computed separately.

Accepted Answer

Self-employment tax,just like FICA,is determined on an individual,not joint,basis.

Question 9

In calculating a taxpayer's AMT,adjustments for timing differences will be made for all of the following assets except for

Accepted Answer

B)Only real property placed in service after 1986 and before 1999 require adjustment.

Question 10

If an individual is an employee and also has self-employment income,the maximum tax base for computing self-employment tax is reduced by the wages that are subject to the FICA tax.

Accepted Answer

The Social Security maximum wage base will apply to the total of an individual's wages and self-employment income.

Question 11

Suzanne,a single taxpayer,has the following tax information for the current year. • Charitable contribution of real property with a FMV of $25,000 (adjusted basis $20,000)for which a $25,000 deduction was taken for regular tax.
• Research and experimental expenses of $40,000 deducted in full for regular tax.
Suzanne's total tax preferences and adjustments equals

Accepted Answer

B)$36,000 (the difference between expensing R&E and amortizing the expenditure over a 10-year period).

Question 12

Hong earns $127,300 in her job as a physician's assistant.She also has her own business selling cosmetics.This business generated $10,000 of earnings.What is Hong's self-employment tax for 2017?

Accepted Answer

A)10,000 × .9235 = 9,235 × .029 = $268 Medicare tax
(127,200 - 127,300)× .124 = 0 Social Security tax
$268
The Social Security tax does not apply to the self-employment income because her salary from her job already exceeds the annual ceiling.

Question 13

John has $55,000 of self-employment earnings from a sole proprietorship.John is also employed part-time by a major corporation and is paid $25,000.John's self-employment tax for 2017 is

Accepted Answer

C)
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Question 14

All of the following are allowable deductions under the alternative minimum tax except

Accepted Answer

D)Charitable contributions,qualified housing interest,and gambling losses are all itemized deductions that are allowed for AMT purposes.State income taxes are not.

Question 15

One-half of the self-employment tax imposed is allowed as a for AGI deduction.

Accepted Answer

The tax law allows a self-employed individual to deduct one-half of the self-employment tax as a for AGI deduction.

Question 16

Jorge has $150,000 of self-employment earnings from a sole proprietorship.Jorge's self-employment tax (rounded)for 2017 is

Accepted Answer

A)
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Question 17

Self-employed individuals are subject to the self-employment tax if their net earnings are more than the personal exemption amount.

Accepted Answer

Individuals are subject to self-employment tax if their net earnings are more than $400.

Question 18

A wage cap does not exist for which of the following self-employment taxes?

Accepted Answer

D)There is a ceiling on the Social Security portion but not on the HI portion.

Question 19

Annie has taxable income of $100,000,a regular tax liability of $20,982,a positive AMT adjustment due to limitations on itemized deductions of $20,000,and tax preferences of $25,000 in 2016.Annie is single and takes a $4,050 personal exemption for herself only.What is Annie's AMT for 2016?

Accepted Answer

The answer of Annie has taxable income of $100,000,a regular...

Question 20

Self-employment taxes include components for

Accepted Answer

D)The SE tax rate replaces the employer and employee portions of the Social Security (also known as old-age,survivors,and disability insurance (OASDI))and Medicare hospital insurance.

Quiz 30: Special Tax Computation Methods, tax Credits, and Payment of Tax