Question 1

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

A)The general business credit may not exceed the smaller of (1)net income tax - tentative minimum tax ($83,000 - $79,000 = $4,000)or (2)(net income tax - 0.25 net regular tax - $25,000)[0.25 ($83,000 - $25,000)= $14,500].

Question 2

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 3

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 2017:
  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 4

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

A)Layla cannot use any of the general business credits this year.Her tentative minimum tax exceeds her regular tax.

Question 5

In 2017,Rita is divorced with one child.She has AGI of $20,000 resulting in a federal income tax liability of $255 and an earned income credit of $3,135.She has had $550 of federal income taxes withheld from her pay.Rita will receive a federal income refund of

Accepted Answer

D)$3,135 EIC + $550 income tax withholding - $255 income tax liability = $3,430.

Question 6

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

Accepted Answer

D)The general business credit may not exceed the net income tax minus the greater of the tentative minimum tax or 25% of the net regular tax liability above $25,000.

Question 7

A taxpayer will be ineligible for the earned income credit if he or she has disqualified investment income of more than $3,450 in 2017.Disqualified income includes all the following except

Accepted Answer

D)Self-employment income is classified as earned income rather than investment income.

Question 8

Tyler and Molly,who are married filing jointly with $210,000 of AGI in 2017,incurred the following expenses in their efforts to adopt a child:
  The adoption was finalized in 2017.What is the amount of the allowable adoption credit in 2017?

Accepted Answer

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

Question 9

Burton and Kay are married,file a joint return with an AGI of $116,000,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 2017:
  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 10

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 11

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

Accepted Answer

A)Married individuals must file jointly to be eligible.

Question 12

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

Accepted Answer

A)Only the new type of packaging that prevents melting qualifies as a development or improvement of a product or component.

Question 13

Indie Corporation purchases a building for use in its business at a cost of $100,000.The building was built in 1900 and is a certified historic structure.Indie spends $150,000 on qualifying renovations certified as consistent with the buildings character.Indie will earn a rehabilitation (historic)tax credit of

Accepted Answer

B)The $150,000 expenditure qualifies as it exceeds $5,000 and the cost of the building.Because the building is a certified historic structure and the rehabilitation expenditures are certified as consistent with the character,the credit rate is 20%.

Question 14

Tyne is single and has AGI of $25,000 in 2017.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 15

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

D)An eligible small business is any business that either (1)had gross receipts of $1 million or less in the preceding year or, (2)in the case of a business failing the first test,had no more than 30 full-time employees in the preceding year and makes a timely election to claim the credit.

Question 16

Which one of the following is a refundable credit?

Accepted Answer

A)The earned income credit is refundable.

Question 17

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

D)A 25% employer-provided child care credit is allowed for these qualifying expenses,but the tax deduction must be offset by the dollar amount of the credit.

Question 18

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

A)($10,250 - $250)× .50 =$5,000; the corporation is at the 30 employee maximum for credit eligibility.

Question 19

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

A)Since the company has no qualified research expenses in the three preceding years,its credit will be 6% of the current year expenditure.$500,000 × .06 = $30,000.

Question 20

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.

Quiz 30: Special Tax Computation Methods, tax Credits, and Payment of Tax