Question 1

In 2017,Athena reported $38,950 of taxable income.Of this,$33,950 came from her work at the local library and the remaining $5,000 was from capital gains to be taxed at preferential rates.Compute her tax liability for 2017 as a single taxpayer.Use tax rate schedule in the text.)

Accepted Answer

The answer of In 2017,Athena reported $38,950 of taxable income.Of...

Question 2

Apollo is single and his AMT base is $100,250.This amount includes $500 of qualified dividends (the dividends were taxed at 15% in determining the regular tax liability).What is Apollo's tentative minimum tax?

Accepted Answer

The answer of Apollo is single and his AMT base...

Question 3

Which of the following statements regarding late filing penalties and/or late payment penalties is true?

Accepted Answer

If a taxpayer has not paid the full tax liability by the original due date of the return and the taxpayer has not filed a tax return by the due date of the return, the maximum late filing and late payment penalty will be no greater than the late filing penalty by itself. This is because the late payment penalty is calculated based on the amount of tax owed, while the late filing penalty is calculated based on the time period after the due date that the return is filed. Therefore, if the return is filed late but all taxes owed are paid by the due date, only the late filing penalty will be assessed. However, an extension of time to file the tax return does not protect a taxpayer from late payment penalties unless the tax is paid by the original due date of the return. The penalty rate for late filing penalties is actually higher than the penalty rate for late payment penalties.

Question 4

Looking at the following partial calendar for April,when will individual tax returns be due?

Accepted Answer

The answer of Looking at the following partial calendar for...

Question 5

Costa is a single taxpayer.His regular tax liability was $38,000.For 2017,he reported $190,000 of alternative minimum taxable income.What is his alternative minimum tax?

Accepted Answer

The answer of Costa is a single taxpayer.His regular tax...

Question 6

Maria and Tony are married.They are preparing to file their 2017 tax return.If they were to file as single taxpayers,Maria and Tony would report $40,000 and $60,000 of taxable income,respectively.On their joint tax return,their taxable income is $100,000.How much of a marriage penalty or benefit will Maria and Tony experience in 2017? (Use tax rate schedule in the text.)

Accepted Answer

The answer of Maria and Tony are married.They are preparing...

Question 7

Which of the following statements regarding late filing penalties is true?

Accepted Answer

Taxpayers who owe no tax as of the due date of their tax returns are not subject to late filing penalties even if they file late. Option A is incorrect because the late filing penalty is capped at 25% of the taxpayer's unpaid tax liability, and does not continue to grow indefinitely. Option B is incorrect because the late filing penalty for fraudulent failure to file is higher than for non-fraudulent failure to file.

Question 8

Paul and Melissa plan on filing jointly in 2017.For the year,the couple reported taxable income of $130,000.What is their gross tax liability? (Use tax rate schedule in the text.)

Accepted Answer

The answer of Paul and Melissa plan on filing jointly...

Question 9

Max is a 14-year-old dependent of his parents.During 2017,Max earned $1,800 working part time jobs and he received $1,500 of interest income from corporate bonds that were given to him last year.What is Max's 2017 taxable income?

Accepted Answer

The answer of Max is a 14-year-old dependent of his...

Question 10

Candace is claimed as a dependent on her parent's tax return.Her parents' ordinary income marginal tax rate is 33%.In 2017,Candace received $5,000 of interest income from corporate bonds she obtained several years ago.This is her only source of income.She is 15 years old at year-end.What is her gross tax liability?

Accepted Answer

The answer of Candace is claimed as a dependent on...

Question 11

Jocelyn,a single taxpayer,had $742,000 of taxable income in 2017.All of the income is ordinary.What is her tax liability for the year? (Use tax rate schedule in the text.)

Accepted Answer

The answer of Jocelyn,a single taxpayer,had $742,000 of taxable income...

Question 12

Selene made $54,300 in 2017 working at the local burger joint,Moon Café.How much should her employer withhold from her paycheck for FICA taxes if the calculation is made correctly?

Accepted Answer

The answer of Selene made $54,300 in 2017 working at...

Question 13

Which of the following taxpayers (all age 40)are required to file a return? $$\begin{array} { l l c l } 
\text { Taxpayer } & \text { Filing Status } & \text { Nurnber of exemptions } & \text { Income } \
\text { Jerryy and Jirn } & \text { Married Filing Jointly } & 2 & \$ 21,700 \
\text { Allen } & \text { Single } & 1 & \$ 2,300 \
\text { Tirrryy } & \text { Head of Household } & 2 & \$ 11,000
\end{array}$$

Accepted Answer

For 2023, the standard deduction for married filing jointly is $27,700, for single is $13,850, and for head of household is $20,800. Jenny and Jim's income exceeds the standard deduction for married filing jointly, so they are required to file. Allen and Timmy's incomes do not exceed their respective standard deductions, so they are not required to file.

Question 14

Which of the following is not true of the extension to file an individual tax return?

Accepted Answer

Extensions to file an individual tax return extend the due date for filing the return, not the due date for any tax payments due. Tax payments are still due by the original due date of the return, even if an extension to file is granted.

Question 15

Pyrrha,a 12-year-old dependent of Epimetheus and Pandora,received $2,200 of interest income in 2017.Her parents' marginal tax rate is 35%.What is Pyrrha's gross tax liability for the year?

Accepted Answer

The answer of Pyrrha,a 12-year-old dependent of Epimetheus and Pandora,received...

Question 16

Jerusha is married and she files a separate tax return in 2017.She claims two exemptions (2 × 4,050 = $8,100).She claimed the standard deduction for regular tax purposes ($6,350).She had no other adjustments.Her regular taxable income was $67,800.What is Jerusha's AMTI?

Accepted Answer

The answer of Jerusha is married and she files a...

Question 17

What is the underpayment penalty rate that taxpayers pay when they underpay their estimated taxes?

Accepted Answer

The underpayment penalty rate is calculated as the federal short-term interest rate plus three percentage points.

Question 18

Maria and Tony are married.They are preparing to file their 2017 tax return.If they were to file as single taxpayers,Maria and Tony would report $10,000 and $70,000 of taxable income,respectively.On their joint tax return,their taxable income is $80,000.How much of a marriage penalty or benefit will Maria and Tony experience in 2017? (Use tax rate schedule in the text.)

Accepted Answer

The answer of Maria and Tony are married.They are preparing...

Question 19

Henry and Janice are married and file jointly.They have an AGI (and modified AGI)of $290,000,which includes $90,000 of salary,$170,000 of active business income,$10,000 of interest income,$15,000 of dividends,and $5,000 of long-term capital gains.What are Henry and Janice's net investment income tax liability this year,rounded to the nearest whole dollar amount?

Accepted Answer

The answer of Henry and Janice are married and file...

Question 20

Hera wants to reduce her income tax liability by shifting some of her income to her 10-year-old daughter (a dependent),Athena.Last year,Hera gifted corporate bonds to Athena.This year,Athena received $1,550 in interest income from the bonds.What amount of tax will Athena pay on the interest income?

Accepted Answer

The answer of Hera wants to reduce her income tax...

Quiz 8: Individual Income Tax Computation and Tax Credits

In 2017,Athena reported $38,950 of taxable income.Of this,$33,950 came from her work at the local library and the remaining $5,000 was from capital gains to be taxed at preferential rates.Compute her tax liability for 2017 as a single taxpayer.Use tax rate schedule in the text.)

Apollo is single and his AMT base is $100,250.This amount includes $500 of qualified dividends (the dividends were taxed at 15% in determining the regular tax liability).What is Apollo's tentative minimum tax?

Which of the following statements regarding late filing penalties and/or late payment penalties is true?

Looking at the following partial calendar for April,when will individual tax returns be due?

Costa is a single taxpayer.His regular tax liability was $38,000.For 2017,he reported $190,000 of alternative minimum taxable income.What is his alternative minimum tax?

Which of the following statements regarding late filing penalties is true?

Paul and Melissa plan on filing jointly in 2017.For the year,the couple reported taxable income of $130,000.What is their gross tax liability? (Use tax rate schedule in the text.)

Max is a 14-year-old dependent of his parents.During 2017,Max earned $1,800 working part time jobs and he received $1,500 of interest income from corporate bonds that were given to him last year.What is Max's 2017 taxable income?

Jocelyn,a single taxpayer,had $742,000 of taxable income in 2017.All of the income is ordinary.What is her tax liability for the year? (Use tax rate schedule in the text.)

Selene made $54,300 in 2017 working at the local burger joint,Moon Café.How much should her employer withhold from her paycheck for FICA taxes if the calculation is made correctly?

Which of the following is not true of the extension to file an individual tax return?

Pyrrha,a 12-year-old dependent of Epimetheus and Pandora,received $2,200 of interest income in 2017.Her parents' marginal tax rate is 35%.What is Pyrrha's gross tax liability for the year?

Jerusha is married and she files a separate tax return in 2017.She claims two exemptions (2 × 4,050 = $8,100).She claimed the standard deduction for regular tax purposes ($6,350).She had no other adjustments.Her regular taxable income was $67,800.What is Jerusha's AMTI?

What is the underpayment penalty rate that taxpayers pay when they underpay their estimated taxes?

Hera wants to reduce her income tax liability by shifting some of her income to her 10-year-old daughter (a dependent),Athena.Last year,Hera gifted corporate bonds to Athena.This year,Athena received $1,550 in interest income from the bonds.What amount of tax will Athena pay on the interest income?