Question 1

In January 2015,Tammy acquired an office building in downtown Syracuse,New York for $400,000.The building was originally constructed in 1932.Of the $400,000 cost,$40,000 was allocated to the land.Tammy immediately placed the building into service,but quickly realized that substantial renovation would be required to keep and attract new tenants.The renovations,costing $600,000,were of the type that qualifies for the rehabilitation credit.The improvements were completed in October 2015.
a.Compute Tammy's rehabilitation tax credit for the year of acquisition.
b.Determine the cost recovery deduction for 2015.
c.What is the basis in the property at the end of its first year of use by Tammy?

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Question 2

Explain the purpose of the tax credit for rehabilitation expenditures and describe the general characteristics of its computation.

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Question 3

Julia is 30 years old,unmarried with a 9 year-old daughter,and has earnings during 2015 of $19,700.Does she qualify for the earned income credit? If so,calculate the amount of credit that is available to her.

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Question 4

Phil and Audrey,husband and wife,are both employed by Laurel Corporation.Phil earns $125,000 in salary in 2015,and Audrey earns $70,000.How much FICA tax must they pay for 2015?

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Question 5

In May 2015,Blue Corporation hired Camilla,Jolene,and Tyrone,all of whom are certified as long-term family assistance recipients.Each employee is paid $12,000 during 2015.Camilla and Tyrone continued to work for Blue Corporation in 2016,earning $14,000 each.Blue hired no additional employees during 2016.
a.Compute Blue Corporation's work opportunity tax credits for 2015 and 2016.
b.Assume Blue Corporation pays total wages of $500,000 to its employees during 2015 and $560,000 during 2016.How much may Blue Corporation claim as a wage deduction for 2015 and 2016 if the work opportunity tax credit is claimed in both years?

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The answer of In May 2015,Blue Corporation hired Camilla,Jolene,and Tyrone,all...

Question 6

Jack and Jill are married,have three children,and have earnings during 2015 of $28,500.Do they qualify for the earned income credit? If so,calculate the amount of credit that is available to them.

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Question 7

Golden Corporation is an eligible small business for purposes of the disabled access credit.During the year,Golden makes the following expenditures on a structure originally placed in service in 1988. Removal of architectural barriers $ 8,500 Acquired equipment for disabled persons 6,250 $14,750 ​ In addition,$8,000 was expended by Golden on a building originally placed in service in the current year to ensure easy accessibility by disabled individuals.Calculate the amount of the disabled access credit available to Golden Corporation.

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Question 8

Dabney and Nancy are married,both gainfully employed,and have two children who are 3 and 6 years old.Dabney's salary is $35,000 while Nancy's salary is $40,000.During the year,they spend $7,000 for child care expenses that are required so both of them can work outside of the home.Calculate the credit for child and dependent care expenses.

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Question 9

Steve records a tentative general business credit of $110,000 for the current year.His net regular tax liability before the general business credit is $125,000,and his tentative minimum tax is $100,000.Compute Steve's allowable general business credit for the year.

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Question 10

How does the FICA tax compare to the self-employment tax? How are these two taxes similar and how do they differ?

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Question 11

Henry,age 68,and Wilma,age 69,are married retirees who received the following income and retirement benefits during the year. Fully taxable pension from Henry's former employer $8,800 Taxable interest 4,500 Social Security benefits 2,400 ​ Assume Henry and Wilma file a joint return,have no deductions for AGI,and do not itemize their deductions.Are they eligible for the tax credit for the elderly? If so,calculate the amount of the credit,assuming the credit is not limited by their income tax liability.

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Question 12

Rick spends $750,000 to build a qualified low-income housing project,which is placed in service on January 1,2015.He financed the project using his personal funds.What is the amount of the low-income housing credit that Rick may claim in 2015 (assuming a rate of 7.40%)? What is the total amount of the credit that Rick may claim as a result of the $750,000 expenditure?

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Question 13

Explain the purpose of the disabled access credit and describe the general characteristics of its computation.

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Question 14

Discuss the treatment of unused general business credits.

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Question 15

Susan generated $55,000 of net earnings from the conduct of a tax preparation business that she operated during the tax-filing season.She also received wages of $68,300 from her full-time job.Compute the self-employment taxes due for 2015.

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The answer of Susan generated $55,000 of net earnings from...

Question 16

Bradley has two college-age children,Clint,a freshman at State University,and Abigail,a junior at Northwest University.Both Clint and Abigail are full-time students.Clint's expenses during the 2015 fall semester are as follows: $2,400 tuition,$250 books and course materials,and $1,600 room and board.Abigail's expenses for the 2015 calendar year are as follows: $10,200 tuition,$1,200 books and course materials,and $3,600 room and board.Tuition and the applicable room and board costs are paid at the beginning of each semester. ​ Bradley is married,files a joint tax return,claims both children as dependents,and reports a combined AGI with his wife Allie of $114,000 for 2015.Determine Bradley's available education tax credit for 2015.

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Question 17

Summer Corporation's business is international in scope and is subject to income taxes in several countries.Summer's earnings and income taxes paid in the relevant foreign countries are: Country Income Taxes A $1,000,000 $500,000 B 300,000 30,000 C 400,000 120,000 Total $1,700,000 $650,000 ​ If Summer Corporation's worldwide income subject to taxation in the United States is $2,400,000 and the U.S.income tax due prior to the foreign tax credit is $816,000,compute the allowable foreign tax credit.If,instead,the total foreign income taxes paid were $550,000,compute the allowable foreign tax credit.

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Question 18

In May 2011,Cindy incurred qualifying rehabilitation expenditures of $500,000 on a certified historic structure and properly claimed the tax credit for rehabilitation expenditures.In March 2015,she sold the building at a loss.Calculate the rehabilitation expenditures credit recapture that she must report in 2015.

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The answer of In May 2011,Cindy incurred qualifying rehabilitation expenditures...

Quiz 12: Tax Credits and Payments