Question 1

To help retain its talented workforce,Zapper Corporation opens a child care facility in the building next to its offices.It spends $200,000 on rent,salaries and supplies.With respect to the $200,000 expenditure,Zapper will be entitled to a tax credit and a tax deduction of

Accepted Answer

The answer of To help retain its talented workforce,Zapper Corporation...

Question 2

Sam and Megan are married with two dependent children.Both Sam and Megan work,earning $50,000 and $55,000,respectively.Their AGI totals $110,000.They incur $6,500 of qualifying child care expenses of which $2,500 is reimbursed by Megan's dependent care program at work.
What is the amount of their child and dependent care credit?

Accepted Answer

The answer of Sam and Megan are married with two...

Question 3

Dwayne has general business credits totaling $30,000 before limitation.His regular tax liability is $83,000 and his tentative minimum tax is $79,000.What amount of general business credit can Dwayne take this year?

Accepted Answer

The answer of Dwayne has general business credits totaling $30,000...

Question 4

ChocoHealth Inc.is developing new chocolate products providing abundant health benefits at low calorie counts.For the past three years,it spent an average of $500,000 per year on research.ChocoHealth has spent $900,000 on research.The company has elected the simplified credit.For the current year,it will earn a research credit of

Accepted Answer

D)[$900,000 - (50% × $500,000)× .14]= $91,000.

Question 5

A taxpayer will be ineligible for the earned income credit if he or she has disqualified investment income of more than $3,400 in 2016.Disqualified income includes all the following except

Accepted Answer

Disqualified investment income includes net rental income, net capital gains, and tax-exempt interest. Self-employment income is not considered investment income and therefore is not included in the $3,400 limit for the earned income credit.

Question 6

Tom and Anita are married,file a joint return with an AGI of $165,000,and have one dependent child,Tim,who is a first-time freshman in college.The following expenses are incurred and paid in 2016:
  What is the maximum education credit allowed to Tom and Anita?

Accepted Answer

The answer of Tom and Anita are married,file a joint...

Question 7

Individuals without children are eligible for the earned income credit if they meet all the following conditions except

Accepted Answer

To be eligible for the earned income credit, an individual without children can file as single, head of household, or qualifying widow(er) with a dependent child. They must also meet the conditions of choices B, C, and D. Filing married filing separately disqualifies the individual from claiming the earned income credit.

Question 8

Layla earned $20,000 of general business credits from her sole proprietorship.Her regular tax liability is $45,000,and her tentative minimum tax is $49,000.During the current year Layla will apply general business credits of

Accepted Answer

The answer of Layla earned $20,000 of general business credits...

Question 9

Which of the following expenditures will qualify as a research expenditure for purposes of the research credit?

Accepted Answer

Only choice A qualifies as a research expenditure for the research credit because it involves the development of a new technology or process to improve an existing product. Choices B and C involve advertising and marketing expenses that do not qualify as research expenditures for the research credit.

Question 10

Runway Corporation has $2 million of gross receipts in the preceding year.For purposes of the disabled access credit,what is the maximum number of full-time employees the corporation can have in the preceding year?

Accepted Answer

The answer of Runway Corporation has $2 million of gross...

Question 11

Tyler and Molly,who are married filing jointly with $210,000 of AGI in 2016,incurred the following expenses in their efforts to adopt a child:
  The adoption was finalized in 2016 What is the amount of the allowable adoption credit in 2016?

Accepted Answer

The answer of Tyler and Molly,who are married filing jointly...

Question 12

Kors Corporation has 30 employees and $5 million of gross receipts.Kors spends $15,000 for qualified structural improvements for access for the disabled.The disabled access credit is

Accepted Answer

The answer of Kors Corporation has 30 employees and $5...

Question 13

Tyne is single and has AGI of $25,000 in 2016.During the year,she contributes $3,000 to her Roth IRA.What is the amount of Tyne's qualified retirement savings contributions credit?

Accepted Answer

The answer of Tyne is single and has AGI of...

Question 14

Doggie Rx Inc.is a new company developing a tasty chewable pill for dogs that will protect them from all types of fleas,ticks and intestinal parasites.This is its first year of business,and it has spent $500,000 on qualifying research expenditures.Doggie Rx will earned a simplified research credit of

Accepted Answer

The simplified research credit equals 14% of the qualified research expenditures that exceed 50% of the average qualified research expenditures for the previous three years. Since Doggie Rx Inc. is a new company, it has no average qualified research expenditures for the previous three years. Therefore, the qualified research expenditures for this year will be compared to zero, resulting in a simplified research credit of 14% of the qualifying research expenditures, which is $70,000 x 14% = $9,800. However, the maximum simplified research credit for a new company is $250,000, and since Doggie Rx Inc. spent only $500,000 on qualifying research expenditures, it cannot exceed this maximum limit. Therefore, the simplified research credit for Doggie Rx Inc. is $30,000, which is the minimum of $9,800 and $250,000.

Question 15

Bonjour Corp.is a U.S.-based corporation with operations in France.The operations in France generated $200,000 of taxable income whereas worldwide operations generated total taxable income of $2,000,000.Its U.S.tax liability before credits is $680,000.Determine the allowable foreign tax credit assuming taxes paid to France as follows:
a.$40,000.
b.$80,000.

Accepted Answer

The answer of Bonjour Corp.is a U.S.-based corporation with operations...

Question 16

Nick and Nicole are both 68 years old and file a joint return.They have AGI of $15,000 and receive nontaxable Social Security payments of $4,200 during the current year.What is the amount of the tax credit for the elderly?

Accepted Answer

The answer of Nick and Nicole are both 68 years...

Question 17

In 2016 Rita is divorced with one child.She has AGI of $20,000 resulting in a federal income tax liability of $260 and an earned income credit of $3,137.She has had $550 of federal income taxes withheld from her pay.Rita will receive a federal income refund of

Accepted Answer

Rita's earned income credit of $3,137 exceeds her federal income tax liability of $260, resulting in a net refundable credit of $2,877 ($3,137 - $260). Since $550 was already withheld from her pay, her total refund will be $3,427 ($2,877 + $550).

Question 18

Burton and Kay are married,file a joint return with an AGI of $115,000,and have one dependent child,Tyler,who is a full-time student in a Master of Accountancy program.The following expenses relate to his costs of attendance in 2016:
  The tuition noted above is the gross amount charged before reduction for his $5,000 tuition scholarship.What is the maximum education credit allowed to Burton and Kay?

Accepted Answer

The answer of Burton and Kay are married,file a joint...

Question 19

Which one of the following is a refundable credit?

Accepted Answer

The earned income credit is refundable, which means that if the credit exceeds the taxpayer's tax liability, the excess will be refunded to the taxpayer. The other options listed are non-refundable credits, which means they can only reduce the taxpayer's tax liability to zero and any excess credit cannot be refunded.

Question 20

The general business credit may not exceed the net income tax minus the greater of the tentative minimum tax or

Accepted Answer

The answer of The general business credit may not exceed...

Quiz 14: Special Tax Computation Methods, tax Credits, and Payment of Tax