Question 1

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 2

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 2016?

Accepted Answer

Orrill's taxable income is calculated as follows: Gross income ($46,000) - deductions for AGI ($2,200) - standard deduction for head of household ($9,300 in 2016) - personal exemptions ($4,050 each for Orrill and Jack in 2016) = $26,400. Using the 2016 tax rates for head of household, the tax liability is $3,298.

Question 3

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 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 is equal to the fair market value of the donated property, which in this case is $25,000. Since Smokey's AGI is $100,000, he can deduct up to 30% of his AGI for the year, which is $30,000. However, he cannot deduct more than the amount of the charitable contribution, which is $25,000 in this case. Therefore, the maximum deductible charitable contribution for Smokey is $25,000.

Question 5

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 2016 tax liability?

Accepted Answer

Velma's total income for tax purposes is $2,740 ($400 + $2,340). Since she is a dependent of her parents, her standard deduction is $1,050 and her taxable income is $1,690. Using the tax brackets for a dependent individual, her tax liability is $165.

Question 6

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

The maximum amount Hugh can deduct as a charitable contribution is the fair market value of the property, which is $18,000. However, the deduction cannot exceed 30% of his AGI, which is $24,000 ($80,000 x 30%). Since $18,000 is less than $24,000, Hugh can deduct the full amount of $18,000 as a charitable contribution.

Question 7

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 8

Susan is 17 and is claimed as a dependent by her parents.In 2016,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

Since Susan is claimed as a dependent by her parents, she cannot claim her personal exemption of $4,050. Therefore, her taxable income is calculated as follows:
Total income = $1,000 + $2,400 = $3,400
Less: Standard deduction for a dependent = $1,050
Taxable income = $2,350
Susan's taxable income of $2,350 falls in the 10% tax bracket. Therefore, the amount of her income taxable at her parents' marginal rate is $300, which is the difference between her total income and her taxable income at the 10% tax bracket.

Question 9

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 answer of Barney's sailboat is destroyed in an unusual...

Question 10

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 11

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 12

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 2016 tax liability?

Accepted Answer

Robbie's total income is $3,800 ($1,300 interest + $2,500 wages). As a dependent, he can claim a standard deduction of $2,850 (earned income + $350). His taxable income is $950 ($3,800 - $2,850). The tax on $950 at 10% is $95.

Question 13

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 14

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

Since Shannon is a qualified dependent of her mother, she is subject to the "kiddie tax" rule. This means that her unearned income (such as the interest on her savings account) over $2,100 is taxed at her mother's tax rate. 
Shannon's earned income from her summer job is below the standard deduction amount for 2016, so it is not taxable. 
Therefore, her taxable income for 2016 is $2,150 ($2,500 - $2,100).

Question 15

During 2016,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 2016?

Accepted Answer

The answer of During 2016,Stephanie earns $2,700 from a summer...

Question 16

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 17

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 2016 taxable income?

Accepted Answer

Erin's taxable income is $14,300 - $6,000 = $8,300. The standard deduction for a single person in 2016 is $6,300, so Erin's taxable income is $8,300 - $6,300 = $2,000. However, Erin is also entitled to a personal exemption of $4,050, so her taxable income is $2,000 - $4,050 = $2,400.

Question 18

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 19

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 20

During 2016,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 2016?

Accepted Answer

The answer of During 2016,Marla earns $2,700 from a summer...

Quiz 8: Taxation of Individuals

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?

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 2016?

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 2016 tax liability?

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?

Susan is 17 and is claimed as a dependent by her parents.In 2016,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?

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%.

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 2016 tax liability?

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:

During 2016,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 2016?

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?

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 2016 taxable income?

During 2016,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 2016?

Quiz 8: Taxation of Individuals

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?

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 2016?

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 2016 tax liability?

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?

Susan is 17 and is claimed as a dependent by her parents.In 2016,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?

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%. ​

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 2016 tax liability?

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:

During 2016,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 2016?

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?

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 2016 taxable income?

During 2016,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 2016?

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?

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%.