Question 1

Susan is 17 and is claimed as a dependent by her parents.In 2017,she earns $1,000 from a summer job and receives $2,400 of interest from a savings account.How much of Susan's income is taxable at her parents' marginal rate?

Accepted Answer

The answer of Susan is 17 and is claimed as...

Question 2

Hugh donates investment real estate to Habitat for Humanity.The property cost him $10,000 six years ago.The fair market value of the property at the date of the contribution is $18,000.Hugh's AGI is $80,000.What is the maximum amount Hugh can deduct as a charitable contribution?

Accepted Answer

Hugh can deduct the fair market value of the property, which is $18,000, since he held the property for more than one year and Habitat for Humanity is a qualified charitable organization. However, he is subject to the 30% AGI limitation. 30% of his AGI is $24,000, which is greater than the $18,000 fair market value of the property. Therefore, he can deduct the full $18,000 as a charitable contribution.

Question 3

Moran pays the following expenses during the current year:
​

If Moran itemizes his deductions and his adjusted gross income is $35,000,what is his allowable deduction for the above expenses?

Accepted Answer

The answer of Moran pays the following expenses during the...

Question 4

Smokey purchases undeveloped land in 1999 for $20,000.In the current year he contributes the property to the Camp Fire Girls of America to use as their summer camp.The fair market value of the land at the date of the contribution is $25,000.If Smokey's AGI is $100,000,what is his maximum deductible charitable contribution?

Accepted Answer

The maximum deductible charitable contribution for Smokey would be equal to the fair market value of the property at the time of the contribution, which is $25,000. This is because Smokey has held the property for more than one year and it is considered a long-term capital asset. His charitable contribution deduction is also limited to 30% of his AGI, which in this case would be $30,000 (30% of $100,000). However, since the fair market value of the property is less than $30,000, his deduction will be limited to the property's fair market value, which is $25,000. Therefore, the correct answer is C) $25,000.

Question 5

Children under 18 and full time students under 24 are taxed differently than other taxpayers if
I.Their unearned income exceeds $2,100.
II.Their parents' marginal tax rate exceeds 15%.
​

Accepted Answer

Statement I is correct because children under 18 and full-time students under 24 are subject to the "kiddie tax" rules if their unearned income exceeds $2,100. Statement II is incorrect because the parents' marginal tax rate is relevant to how the "kiddie tax" is calculated, but it does not determine if the child is taxed differently; the key factor is the child's unearned income level.

Question 6

Shannon is 16 years old and is a qualified dependent of her mother.Shannon earns $1,500 as a counselor at a church summer camp and receives $2,500 of interest on a savings account established by her grandparents.Shannon's 2016 taxable income is:

Accepted Answer

Even though Shannon earned $4,000 ($1,500 from her job + $2,500 in interest), she can still be claimed as a dependent on her mother's tax return. As a qualified dependent, Shannon's standard deduction is $1,050, which reduces her taxable income to $2,950 ($4,000 - $1,050). However, the first $1,050 of her interest income is tax-free, leaving $1,450 ($2,500 - $1,050) of taxable interest income. Therefore, Shannon's taxable income is $1,500 (from her job) + $1,450 (taxable interest income) = $2,950.

Question 7

Dorchester purchased investment realty in 2001 for $25,000.During the current year he contributes it to the American Heart Association to use as the site for its new local headquarters.The realty has a value of $52,000 on the contribution date,and Dorchester's AGI is $100,000.Dorchester's maximum current year contribution deduction is

Accepted Answer

The answer of Dorchester purchased investment realty in 2001 for...

Question 8

Erin is 67,single and has an adjusted gross income of $14,300.She has no dependents and her itemized deductions are $6,000.What is her 2017taxable income?

Accepted Answer

Erin's taxable income is $14,300 - $6,000 = $8,300. The standard deduction for a single person in 2017 is $6,350. Since Erin's itemized deductions are greater than the standard deduction, her taxable income is $8,300 - $6,350 = $2,350.

Question 9

In 2005,Victor acquires an Andy Warhol painting for $32,000.During the current year he donates the painting to the city museum.Its fair market value at the date of the contribution is $38,000.If Victor's adjusted gross income is $66,000 and he elects to reduce the contribution to its basis,his deductible contribution is

Accepted Answer

Since Victor elects to reduce the contribution to its basis, his deductible contribution is equal to the basis of the painting, which is $32,000 (the amount he acquired it for). Therefore, choice C is the correct answer. The fair market value of the painting is irrelevant in this situation, as Victor chose to use the basis method.

Question 10

Sophia,single,is a employee of JWH Consulting Company.She incurs $5,000 of valid entertaining expenses for which she receives no reimbursement.How much would she benefit from being reimbursed by JWH rather than deducting the expenses on her tax return? Her annual salary is $100,000,and she has other itemized deductions of $7,000.

Accepted Answer

The answer of Sophia,single,is a employee of JWH Consulting Company.She...

Question 11

Cecelia is a loan officer for The Hibernia Street Bank.Her adjusted gross income for the current year is $85,000.Cecelia incurs the following unreimbursed expenses during the current year:
​

What is Cecelia's allowable miscellaneous itemized deduction?

Accepted Answer

The answer of Cecelia is a loan officer for The...

Question 12

Velma is 16.Her income consists of municipal bond interest of $400 and interest credited to her savings account of $2,340.If her parent's taxable income is $88,000,what is Velma's 2017 tax liability?

Accepted Answer

Velma's total income is $2,740 ($400 + $2,340). As she is a dependent of her parents and her unearned income is above $2,100, she is subject to the kiddie tax. The kiddie tax is calculated based on her parents' tax rate. Therefore, her parent's taxable income of $88,000 will determine her tax liability. According to the 2017 tax rates, her parent's tax rate is 25%.

Velma's taxable income is $640 ($2,740 - $2,100). Her tax liability is calculated as $640 * 0.25 = $160. However, she is allowed to claim a standard deduction of $350 in 2017. Therefore, her final tax liability is $160 - $350 = $-190. As her tax liability is negative, she will not owe any taxes and may even receive a refund of $190.

However, the negative tax liability may be different if her parents have other deductions or credits that may reduce their tax liability. Therefore, the best answer is B as it is the closest to the correct answer of $0.

Question 13

During 2017,Stephanie earns $2,700 from a summer job.She also has interest income of $400.Stephanie,age 19,is a full-time student at Omega College.Her parents claim her as a dependent.What is the amount of Stephanie's taxable income for 2017?

Accepted Answer

The answer of During 2017,Stephanie earns $2,700 from a summer...

Question 14

Patricia contributes artwork to the art museum at Tech University.Her AGI is $50,000.She paid $10,000 for the artwork in 1987,but its fair market value at the contribution date is $30,000.What is Patricia's maximum current year charitable deduction?

Accepted Answer

The answer of Patricia contributes artwork to the art museum...

Question 15

Orrill is single and has custody of his 8-year-old son Jack.Orrill has gross income of $46,000,deductions for adjusted gross income of $2,200 and itemized deductions of $6,000.What is his tax liability for 2017?

Accepted Answer

Orrill's adjusted gross income is $43,800 ($46,000 - $2,200). The standard deduction for a head of household in 2017 is $9,350, which is more beneficial than itemizing. The taxable income is $34,450 ($43,800 - $9,350). Using the 2017 tax brackets for head of household, the tax liability is calculated as follows: 10% on the first $13,350 ($1,335) and 15% on the remaining $21,100 ($3,165), totaling $4,500. Subtract the child tax credit of $1,000 for Jack, resulting in a tax liability of $3,500. However, the closest option is $3,285, which suggests a possible error in the provided options or calculations.

Question 16

Toby,a single taxpayer with no dependents,is an employee of a large consulting firm.During the year he incurs the following business expenses that are not reimbursed by his employer:
​

Toby's AGI is $100,000 and is in the 28% marginal tax rate.In addition to the expenditures described above,his only other qualified itemized deductions are home mortgage interest of $6,000 and property taxes of $2,000.What is the after-tax cost to Toby of his unreimbursed employee business expenses?

Accepted Answer

The answer of Toby,a single taxpayer with no dependents,is an...

Question 17

Barney's sailboat is destroyed in an unusual accident.The sailboat,which he used for personal purposes,caught fire forcing him and his friends to jump ship and swim for shore.The boat exploded and sank.Barney purchased the boat in 1998 for $75,000.At the time that it is destroyed,the boat has a value of $45,000.Barney's insurance company pays him $25,000 in full settlement of this loss.Barney's adjusted gross income is $60,000.If this is his only casualty loss during the year,what amount can he deduct as a casualty loss?

Accepted Answer

The deductible casualty loss is calculated as follows: The loss is the lesser of the decrease in value ($45,000) or the adjusted basis ($75,000). The insurance reimbursement is $25,000, so the loss is $45,000 - $25,000 = $20,000. The deductible amount is $20,000 - $100 (per incident reduction) = $19,900. However, since the loss is subject to a 10% of AGI floor, $60,000 * 10% = $6,000. Therefore, the deductible casualty loss is $19,900 - $6,000 = $13,900.

Question 18

Robbie is 18,and a dependent on his parent's return.His income consists of interest of $1,300,and $2,500 from being a lifeguard.If his parent's taxable income is $75,000,what is Robbie's 2017 tax liability?

Accepted Answer

Robbie's total income is $3,800 ($1,300 interest + $2,500 wages). As a dependent, he must file a return if his unearned income is over $1,050 or his earned income is over $6,350. His standard deduction is the greater of $1,050 or his earned income plus $350, which is $2,850 ($2,500 + $350). Taxable income is $950 ($3,800 - $2,850). Using the 2017 tax rate for single filers, the tax on $950 is 10%, which is $95.

Question 19

Julius is an employee of a large consulting firm.During the year he incurs the following expenses in his job,none of which are reimbursed by his employer.Julius's adjusted gross income is $100,000 before considering these expenses.
What is Julius's miscellaneous itemized deduction?

Accepted Answer

The answer of Julius is an employee of a large...

Question 20

During 2017,Marla earns $2,700 from a summer job.She also has interest income of $2,400.Marla,age 19,is a full-time student at Western College.Her parents claim her as a dependent.Their taxable income is $100,000.What is Marla's tax liability for 2017?

Accepted Answer

The answer of During 2017,Marla earns $2,700 from a summer...

Quiz 8: Taxation of Individuals

Susan is 17 and is claimed as a dependent by her parents.In 2017,she earns $1,000 from a summer job and receives $2,400 of interest from a savings account.How much of Susan's income is taxable at her parents' marginal rate?

Hugh donates investment real estate to Habitat for Humanity.The property cost him $10,000 six years ago.The fair market value of the property at the date of the contribution is $18,000.Hugh's AGI is $80,000.What is the maximum amount Hugh can deduct as a charitable contribution?

Moran pays the following expenses during the current year: If Moran itemizes his deductions and his adjusted gross income is $35,000,what is his allowable deduction for the above expenses?

Children under 18 and full time students under 24 are taxed differently than other taxpayers if I.Their unearned income exceeds $2,100. II.Their parents' marginal tax rate exceeds 15%.

Shannon is 16 years old and is a qualified dependent of her mother.Shannon earns $1,500 as a counselor at a church summer camp and receives $2,500 of interest on a savings account established by her grandparents.Shannon's 2016 taxable income is:

Erin is 67,single and has an adjusted gross income of $14,300.She has no dependents and her itemized deductions are $6,000.What is her 2017taxable income?

Cecelia is a loan officer for The Hibernia Street Bank.Her adjusted gross income for the current year is $85,000.Cecelia incurs the following unreimbursed expenses during the current year: What is Cecelia's allowable miscellaneous itemized deduction?

Velma is 16.Her income consists of municipal bond interest of $400 and interest credited to her savings account of $2,340.If her parent's taxable income is $88,000,what is Velma's 2017 tax liability?

During 2017,Stephanie earns $2,700 from a summer job.She also has interest income of $400.Stephanie,age 19,is a full-time student at Omega College.Her parents claim her as a dependent.What is the amount of Stephanie's taxable income for 2017?

Patricia contributes artwork to the art museum at Tech University.Her AGI is $50,000.She paid $10,000 for the artwork in 1987,but its fair market value at the contribution date is $30,000.What is Patricia's maximum current year charitable deduction?

Orrill is single and has custody of his 8-year-old son Jack.Orrill has gross income of $46,000,deductions for adjusted gross income of $2,200 and itemized deductions of $6,000.What is his tax liability for 2017?

Robbie is 18,and a dependent on his parent's return.His income consists of interest of $1,300,and $2,500 from being a lifeguard.If his parent's taxable income is $75,000,what is Robbie's 2017 tax liability?

Julius is an employee of a large consulting firm.During the year he incurs the following expenses in his job,none of which are reimbursed by his employer.Julius's adjusted gross income is $100,000 before considering these expenses. What is Julius's miscellaneous itemized deduction?

During 2017,Marla earns $2,700 from a summer job.She also has interest income of $2,400.Marla,age 19,is a full-time student at Western College.Her parents claim her as a dependent.Their taxable income is $100,000.What is Marla's tax liability for 2017?

Quiz 8: Taxation of Individuals

Susan is 17 and is claimed as a dependent by her parents.In 2017,she earns $1,000 from a summer job and receives $2,400 of interest from a savings account.How much of Susan's income is taxable at her parents' marginal rate?

Hugh donates investment real estate to Habitat for Humanity.The property cost him $10,000 six years ago.The fair market value of the property at the date of the contribution is $18,000.Hugh's AGI is $80,000.What is the maximum amount Hugh can deduct as a charitable contribution?

Moran pays the following expenses during the current year: ​ If Moran itemizes his deductions and his adjusted gross income is $35,000,what is his allowable deduction for the above expenses?

Children under 18 and full time students under 24 are taxed differently than other taxpayers if I.Their unearned income exceeds $2,100. II.Their parents' marginal tax rate exceeds 15%. ​

Shannon is 16 years old and is a qualified dependent of her mother.Shannon earns $1,500 as a counselor at a church summer camp and receives $2,500 of interest on a savings account established by her grandparents.Shannon's 2016 taxable income is:

Erin is 67,single and has an adjusted gross income of $14,300.She has no dependents and her itemized deductions are $6,000.What is her 2017taxable income?

Cecelia is a loan officer for The Hibernia Street Bank.Her adjusted gross income for the current year is $85,000.Cecelia incurs the following unreimbursed expenses during the current year: ​ What is Cecelia's allowable miscellaneous itemized deduction?

Velma is 16.Her income consists of municipal bond interest of $400 and interest credited to her savings account of $2,340.If her parent's taxable income is $88,000,what is Velma's 2017 tax liability?

During 2017,Stephanie earns $2,700 from a summer job.She also has interest income of $400.Stephanie,age 19,is a full-time student at Omega College.Her parents claim her as a dependent.What is the amount of Stephanie's taxable income for 2017?

Patricia contributes artwork to the art museum at Tech University.Her AGI is $50,000.She paid $10,000 for the artwork in 1987,but its fair market value at the contribution date is $30,000.What is Patricia's maximum current year charitable deduction?

Orrill is single and has custody of his 8-year-old son Jack.Orrill has gross income of $46,000,deductions for adjusted gross income of $2,200 and itemized deductions of $6,000.What is his tax liability for 2017?

Robbie is 18,and a dependent on his parent's return.His income consists of interest of $1,300,and $2,500 from being a lifeguard.If his parent's taxable income is $75,000,what is Robbie's 2017 tax liability?

Julius is an employee of a large consulting firm.During the year he incurs the following expenses in his job,none of which are reimbursed by his employer.Julius's adjusted gross income is $100,000 before considering these expenses. What is Julius's miscellaneous itemized deduction?

During 2017,Marla earns $2,700 from a summer job.She also has interest income of $2,400.Marla,age 19,is a full-time student at Western College.Her parents claim her as a dependent.Their taxable income is $100,000.What is Marla's tax liability for 2017?

Moran pays the following expenses during the current year: If Moran itemizes his deductions and his adjusted gross income is $35,000,what is his allowable deduction for the above expenses?

Children under 18 and full time students under 24 are taxed differently than other taxpayers if I.Their unearned income exceeds $2,100. II.Their parents' marginal tax rate exceeds 15%.

Cecelia is a loan officer for The Hibernia Street Bank.Her adjusted gross income for the current year is $85,000.Cecelia incurs the following unreimbursed expenses during the current year: What is Cecelia's allowable miscellaneous itemized deduction?