Question 1

Perry is in the 33% tax bracket.During 2016,he had the following capital asset transactions:
Gain from the sale of a stamp collection (held for 10 years)
$30,000
Gain from the sale of an investment in land (held for 4 years)
10,000
Gain from the sale of stock investment (held for 8 months)
4,000
Perry's tax consequences from these gains are as follows:

Accepted Answer

The gains from the sale of the stamp collection and land are long-term capital gains since they were held for more than one year. Therefore, they are subject to a maximum tax rate of 20%.

15% × $10,000 = $1,500 (tax on gain from sale of land)

28% × $30,000 = $8,400 (tax on gain from sale of stamp collection)

The gain from the sale of the stock investment is short-term since it was held for less than one year. Therefore, it is subject to Perry's ordinary income tax rate of 33%.

33% × $4,000 = $1,320 (tax on gain from sale of stock investment)

Adding the three amounts together gives us:

$1,500 + $8,400 + $1,320 = $11,220

Therefore, the best choice is B.

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

Regarding the Tax Tables applicable to the Federal income tax,which of the following statements is correct?

Accepted Answer

Tax Tables are issued by the IRS after the Tax Rate Schedules for each year. The Tax Tables provide the amount of tax owed based on a taxpayer's income, filing status, and deductions, while the Tax Rate Schedules provide the tax rate applicable to different income levels.

Question 4

Edgar had the following transactions for 2016:
Salary
$ 80,000
Alimony paid
(4,000)
Recovery from car accident-
Personal injury damages
$40,000
Punitive damages
70,000
110,000
Gift from parents
20,000
Property sales-
Loss on sale of boat (used for pleasure and owned 4 years)
($4,000)
Gain on sale of ADM stock (held for 10 months as an investment)
4,000
(-0-)
What is Edgar's AGI for 2016?

Accepted Answer

The answer of Edgar had the following transactions for 2016:
Salary
$...

Question 5

Heloise,age 74 and a widow,is claimed as a dependent by her daughter.For 2016,she had income as follows: $2,500 interest on municipal bonds;$3,200 Social Security benefits;$3,000 income from a part-time job;and $2,800 dividends on stock investments.What is Heloise's taxable income for 2016?

Accepted Answer

The answer of Heloise,age 74 and a widow,is claimed as...

Question 6

Taylor had the following transactions for 2016:
Salary
$ 85,000
Moving expenses incurred to change jobs
(12,000)
Inheritance received from deceased uncle
300,000
Life insurance proceeds from policy on uncle's life (Taylor was named the beneficiary)
200,000
Cash prize from church raffle
3,000
Payment of church pledge
(4,500)
What is Taylor's AGI for 2016?

Accepted Answer

The answer of Taylor had the following transactions for 2016:
Salary
$...

Question 7

During 2016,Trevor has the following capital transactions:
LTCG
$ 6,000
Long-term collectible gain
2,000
STCG
4,000
STCL
10,000
After the netting process,the following results:

Accepted Answer

The answer of During 2016,Trevor has the following capital transactions:
LTCG
$...

Question 8

In 2016,Ashley earns a salary of $55,000,has capital gains of $3,000,and receives interest income of $5,000.Her husband died in 2015.Ashley has a dependent son,Tyrone,who is age 8.Her itemized deductions are $9,000.
a.What is her filing status?
b.Calculate Ashley's taxable income for 2016.

Accepted Answer

The answer of In 2016,Ashley earns a salary of $55,000,has...

Question 9

During the year,Irv had the following transactions:
Long-term loss on the sale of business use equipment
$7,000
Long-term loss on the sale of personal use camper
6,000
Long-term gain on the sale of personal use boat
3,000
Short-term loss on the sale of stock investment
4,000
Long-term loss on the sale of land investment
5,000
How are these transactions handled for income tax purposes?

Accepted Answer

The answer of During the year,Irv had the following transactions:
Long-term...

Question 10

Emily had the following transactions during 2016:
Salary
$90,000
Interest income on bonds-
Issued by City of Nashville
$4,000
Issued by Chevron Corporation
5,000
9,000
Alimony received
5,000
Child support received
20,000
City and state income taxes paid
(5,000)
Bank loan obtained to pay for car purchase
15,000
What is Emily's AGI for 2016?

Accepted Answer

The answer of Emily had the following transactions during 2016:
Salary
$90,000
Interest...

Question 11

Warren,age 17,is claimed as a dependent by his father.In 2016,Warren has dividend income of $1,500 and earns $400 from a part-time job.
a.What is Warren's taxable income for 2016?
b.Suppose Warren earned $1,200 (not $400)from the part-time job.What is Warren's taxable income for 2016?

Accepted Answer

The answer of Warren,age 17,is claimed as a dependent by...

Question 12

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?

Accepted Answer

The answer of During the year,Kim sold the following assets:...

Question 13

Meg,age 23,is a full-time law student and is claimed by her parents as a dependent.During 2016,she received $1,400 interest income from a bank savings account and $6,100 from a part-time job.What is Meg's taxable income for 2016?

Accepted Answer

The answer of Meg,age 23,is a full-time law student and...

Question 14

Ellen,age 39 and single,furnishes more than 50% of the support of her parents,who do not live with her;their only source of income are Social Security benefits.Ellen practices as a self-employed interior decorator and has gross income in 2016 of $120,000.Her deductions are as follows: $30,000 business and $8,100 itemized.
a.Can Ellen qualify for head of household filing status? Explain.
b.What is Ellen's taxable income for 2016?

Accepted Answer

The answer of Ellen,age 39 and single,furnishes more than 50%...

Question 15

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.In 2016,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 2016.

Accepted Answer

The answer of Homer (age 68)and his wife Jean (age...

Question 16

Pedro is married to Consuela,who lives with him.Both are U.S.citizens and residents of Nebraska.Pedro furnishes all of the support of his parents,who are citizens and residents of Mexico.He also furnishes all of the support of Consuela's parents,who are citizens and residents of El Salvador.Consuela has no gross income for the year.If Pedro files as a married person filing separately,how many personal and dependency exemptions can he claim on his return?

Accepted Answer

The answer of Pedro is married to Consuela,who lives with...

Question 17

For the current year,David has wages of $80,000 and the following property transactions:
Stock investment sales-
Long-term capital gain
$ 9,000
Short-term capital loss
(12,000)
Loss on sale of camper (purchased 4 years ago and used for family vacations)
(2,000)
What is David's AGI for the current year?

Accepted Answer

The answer of For the current year,David has wages of...

Question 18

In 2016,Tom is single and has AGI of $50,000.He is age 70,has no dependents,and has itemized deductions (i.e. ,from AGI)of $7,000.Determine Tom's taxable income for 2016.

Accepted Answer

The answer of In 2016,Tom is single and has AGI...

Question 19

Which,if any,of the following is a correct statement relating to the kiddie tax?

Accepted Answer

The answer of Which,if any,of the following is a correct...

Question 20

Kirby is in the 15% tax bracket and had the following capital asset transactions during 2016:
Long-term gain from the sale of a coin collection
$11,000
Long-term gain from the sale of a land investment
10,000
Short-term gain from the sale of a stock investment
2,000
Kirby's tax consequences from these gains are as follows:

Accepted Answer

The answer of Kirby is in the 15% tax bracket...

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