Question 1

Mel is not quite sure whether an expenditure he made is a deduction for AGI or a deduction from AGI. Since he plans to choose the standard deduction option for the year, does the distinction matter? Explain.

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Question 2

Adjusted gross income (AGI) sets the ceiling or the floor for certain deductions.Explain and illustrate what this statement means.

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Question 3

When married persons file a joint return, joint and several liability results.What does this mean?

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Question 4

Under what circumstances, if any, may an ex-spouse be claimed as a dependent?

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Question 5

During 2012, Madison had salary income of $80,000 and the following capital transactions:
  How are these transactions handled for income tax purposes?

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Question 6

When can a taxpayer not use Form 1040EZ? Form 1040A?

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Question 7

Jayden and Chloe Harper are husband and wife and use the calendar year for tax purposes.

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Question 8

In applying the gross income test in the case of dependents that are married, could the application of community property laws have any effect? Explain.

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Question 9

In satisfying the support test and the gross income test for claiming a dependency exemption, a scholarship received by the person being claimed is handled the same way for each test.Do you agree or disagree with this statement? Why?

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Question 10

The Dargers have itemized deductions that exceed the standard deduction.However, when they file their joint return, they choose the standard deduction option.

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Question 11

When filing their Federal income tax returns, the Youngs always claimed the standard deduction.After they purchased a home, however, they started to itemize their deductions from AGI.

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Question 12

In resolving qualified child status for dependency exemption purposes, why are tiebreaker rules necessary? Can these rules be waived?

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Question 13

Contrast the tax consequences resulting from the following filing status situations:

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Question 14

During the current year, Doris received a large gift from her parents and a sizeable inheritance from an uncle. She also paid premiums on an insurance policy on her life. Doris is confused because she cannot find any place on Form 1040 to report these items. Explain.

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Question 15

Lena is 66 years of age, single, and blind and is not claimed as a dependent.How much gross income must she have before she is required to file a Federal income tax return for 2012?

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Question 16

Deductions for AGI are often referred to as "above-the-line" or "page 1" deductions.Explain.

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Question 17

The Deweys are expecting to save on their taxes for 2012.Not only have both incurred large medical expenses, but both reached age 65.During the year, they also recognized a $30,000 loss on some land they sold which was purchased as an investment several years ago.Are the Deweys under a mistaken understanding regarding their tax position? Explain.

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Question 18

In meeting the criteria of a qualifying child for dependency exemption purposes, when if ever, might the child's income become relevant?

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Question 19

Mr.Lee is a citizen and resident of Hong Kong, while Mr.Anderson is a citizen and resident of the U.S.In the taxation of income, Hong Kong uses a territorial approach, while the U.S.follows the global system.In terms of effect, explain what this means to Mr.Lee and Mr.Anderson.

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Question 20

In order to claim a dependency exemption for other than a qualifying child, a taxpayer must meet the support test.Generally, this is done by furnishing more than 50% of a dependent's support.What exceptions exist, if any, where the support furnished need not be more than 50%?

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Quiz 3: Computing the Tax