Question 1

If there is not enough gross tax liability to use the foreign tax credit, __________.

Accepted Answer

A)   it expires unused
B)   it is carried back 2 years or forward 20 years
C)   it is carried back 3 years or forward 5 years
D)   it is carried back 1 year or forward 10 yearsE) All of the above
F) B) and D)

Question 2

Jack paid $5,000 in daycare expenses for his five-year-old daughter so he could work. His AGI for the year was $37,500 (all earned income). What is the amount of his child and dependent care credit?

Accepted Answer

The answer of Jack paid $5,000 in daycare expenses for...

Question 3

Due to the alternative minimum tax rate structure, timing tax planning strategies are not effective under the alternative minimum tax system.

Accepted Answer

A) True 
 B)False

Question 4

The Olympians have three children. The kiddie tax applies to unearned income received by which of the following children?

Accepted Answer

A)   Poseidon is a 20-year-old full-time student who does not support himself
B)   Demeter, a 23-year-old full-time student who supports herself with a job at a grocery store
C)   Zeus is 20 years old and not a student
D)   Two of these.
E)   None of these.F) B) and C)
G) B) and E)

Question 5

Which of the following is not a barrier to income shifting among family members?

Accepted Answer

A)   The assignment of income doctrine
B)   Net unearned income for children 18 and younger taxed at parents' marginal tax rates
C)   Elimination of preferential tax rates (on dividends and long-term capital gains)  for dependents
D)   Two of theseE) B) and D)
F) B) and C)

Question 6

Harmony was self-employed for the first half of 2014, earning $18,000 of Schedule C (business) net income. During the second half of the year, she began working as an employee and earned $38,000 in salary. What amount of self-employment taxes is Harmony required to pay?

Accepted Answer

The answer of Harmony was self-employed for the first half...

Question 7

All else equal, taxpayers are more likely to be classified as employees rather than independent contractors if they are allowed to determine their own working hours and work without frequent oversight.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements regarding the AMT exemption amounts is not true?

Accepted Answer

A)   The amount of the exemption depends on the taxpayer's filing status.
B)   The exemption amount is completely phased-out for high income taxpayers.
C)   Taxpayers must choose whether they will claim the exemption or itemize deductions.
D)   None of these statements is false (All of these statements are true) .E) B) and C)
F) A) and C)

Question 9

What happens if the taxpayer owes an underpayment penalty, but does not compute it on Form 2210?

Accepted Answer

A)   Nothing, unless the taxpayer is audited
B)   The taxpayer is immediately sent to the Tax Court
C)   The IRS will compute and assess the penalty
D)   The penalty is increased by five percentage pointsE) None of the above
F) B) and D)

Question 10

Alton reported net income from his sole proprietorship of $90,000. To determine his self employment tax, he would multiply $90,000 by the self-employment tax rate.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements regarding the self-employment tax is most accurate?

Accepted Answer

A)   The self-employment tax base is generally the taxpayer's net income from self-employment (usually net income from Schedule 
C)  .
B)   Taxpayers who report less than $600 of net income from self-employment (usually net income from Schedule 
C)   are not required to pay self employment taxes.
C)   The self-employment tax base is net earnings from self employment which is less than net income from self-employment.
D)   The Social Security tax limit does not apply to self-employment taxes.E) A) and D)
F) All of the above

Question 12

Jackson earned a salary of $254,000 in 2014. What amount of FICA taxes should Jackson's employer withhold from his paycheck?

Accepted Answer

The answer of Jackson earned a salary of $254,000 in...

Question 13

Which of the following is not a taxpayer filing status for purposes of determining the appropriate tax rate schedule?

Accepted Answer

A)   Head of Household
B)   Qualifying Widow or Widower
C)   Married Filing Separately
D)   Single
E)   All of these are taxpayer filing statusesF) A) and B)
G) A) and C)

Question 14

Akiko and Hitachi (married filing jointly for 2014) are both educators. They attended a conference to further their job-related skills. Tuition for the conference was $2,000 for each person. Their AGI was $114,000. How much lifetime learning credit can they claim?

Accepted Answer

The answer of Akiko and Hitachi (married filing jointly for...

Question 15

Which of the following statements best describes the deductions independent contractors may claim for valid business expenses?

Accepted Answer

A)   for AGI deductions
B)   from AGI deductions not subject to the two percent of AGI floor
C)   from AGI deductions subject to a two percent of AGI floor
D)   for AGI deductions limited to income from the business activitiesE) None of the above
F) B) and C)

Question 16

Paul and Melissa plan on filing jointly in 2014. For the year, the couple reported taxable income of $130,000. What is their gross tax liability?

Accepted Answer

$24,213, c...

Question 17

Jocelyn, a single taxpayer, had $742,000 of taxable income in 2014. All of the income is ordinary. What is her tax liability for the year?

Accepted Answer

$250,878, computed u...

Question 18

Atlas earned $17,300 from his sole proprietorship in 2014. This was his only source of income. How much in self-employment taxes will Atlas be able to deduct?

Accepted Answer

The answer of Atlas earned $17,300 from his sole proprietorship...

Question 19

Allen Green is a single taxpayer with an AGI (and modified AGI)  of $210,000, which includes $170,000 of salary, $25,000 of interest income, $10,000 of dividends, and $5,000 of long-term capital gains. What is Allen's Net Investment Income tax liability this year, rounded to the nearest whole dollar amount?

Accepted Answer

A)   $2,465
B)   $1,520
C)   $570
D)   $380E) C) and D)
F) B) and C)

Question 20

The lifetime learning credit can be used toward the cost of any course of instruction to acquire or improve a taxpayer's job skills, no matter the age of the taxpayer.

Accepted Answer

A) True 
 B)False

Exam 7: Individual Income Tax Computation and Tax Credits

Harmony was self-employed for the first half of 2014, earning $18,000 of Schedule C (business) net income. During the second half of the year, she began working as an employee and earned $38,000 in salary. What amount of self-employment taxes is Harmony required to pay?

Correct Answer
verified

Jack paid $5,000 in daycare expenses for his five-year-old daughter so he could work. His AGI for the year was $37,500 (all earned income). What is the amount of his child and dependent care credit?

Correct Answer
verified

Jackson earned a salary of $254,000 in 2014. What amount of FICA taxes should Jackson's employer withhold from his paycheck?

Correct Answer
verified

What happens if the taxpayer owes an underpayment penalty, but does not compute it on Form 2210?

Correct Answer
verified

Due to the alternative minimum tax rate structure, timing tax planning strategies are not effective under the alternative minimum tax system.

Correct Answer
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The Olympians have three children. The kiddie tax applies to unearned income received by which of the following children?

Correct Answer
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Which of the following is not a barrier to income shifting among family members?

Correct Answer
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Akiko and Hitachi (married filing jointly for 2014) are both educators. They attended a conference to further their job-related skills. Tuition for the conference was $2,000 for each person. Their AGI was $114,000. How much lifetime learning credit can they claim?

Correct Answer
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Which of the following statements regarding the self-employment tax is most accurate?

Correct Answer
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If there is not enough gross tax liability to use the foreign tax credit, __________.

Correct Answer
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Correct Answer
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Which of the following is not a taxpayer filing status for purposes of determining the appropriate tax rate schedule?

Correct Answer
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Which of the following statements best describes the deductions independent contractors may claim for valid business expenses?

Correct Answer
verified

Alton reported net income from his sole proprietorship of $90,000. To determine his self employment tax, he would multiply $90,000 by the self-employment tax rate.

Correct Answer
verified

The lifetime learning credit can be used toward the cost of any course of instruction to acquire or improve a taxpayer's job skills, no matter the age of the taxpayer.

Correct Answer
verified

Jocelyn, a single taxpayer, had $742,000 of taxable income in 2014. All of the income is ordinary. What is her tax liability for the year?

Correct Answer
verified
$250,878, computed u...
View Answer

Paul and Melissa plan on filing jointly in 2014. For the year, the couple reported taxable income of $130,000. What is their gross tax liability?

Correct Answer
verified
$24,213, c...
View Answer

Atlas earned $17,300 from his sole proprietorship in 2014. This was his only source of income. How much in self-employment taxes will Atlas be able to deduct?

Correct Answer
verified

Which of the following statements regarding the AMT exemption amounts is not true?

Correct Answer
verified

All else equal, taxpayers are more likely to be classified as employees rather than independent contractors if they are allowed to determine their own working hours and work without frequent oversight.

Correct Answer
verified

Exam 7: Individual Income Tax Computation and Tax Credits

Harmony was self-employed for the first half of 2014, earning $18,000 of Schedule C (business) net income. During the second half of the year, she began working as an employee and earned $38,000 in salary. What amount of self-employment taxes is Harmony required to pay?

Correct AnswerverifiedShow Answer

Jack paid $5,000 in daycare expenses for his five-year-old daughter so he could work. His AGI for the year was $37,500 (all earned income). What is the amount of his child and dependent care credit?

Correct AnswerverifiedShow Answer

Jackson earned a salary of $254,000 in 2014. What amount of FICA taxes should Jackson's employer withhold from his paycheck?

Correct AnswerverifiedShow Answer

What happens if the taxpayer owes an underpayment penalty, but does not compute it on Form 2210?

Correct AnswerverifiedShow Answer

Due to the alternative minimum tax rate structure, timing tax planning strategies are not effective under the alternative minimum tax system.

Correct AnswerverifiedShow Answer

The Olympians have three children. The kiddie tax applies to unearned income received by which of the following children?

Correct AnswerverifiedShow Answer

Which of the following is not a barrier to income shifting among family members?

Correct AnswerverifiedShow Answer

Akiko and Hitachi (married filing jointly for 2014) are both educators. They attended a conference to further their job-related skills. Tuition for the conference was $2,000 for each person. Their AGI was $114,000. How much lifetime learning credit can they claim?

Correct AnswerverifiedShow Answer

Which of the following statements regarding the self-employment tax is most accurate?

Correct AnswerverifiedShow Answer

If there is not enough gross tax liability to use the foreign tax credit, __________.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not a taxpayer filing status for purposes of determining the appropriate tax rate schedule?

Correct AnswerverifiedShow Answer

Which of the following statements best describes the deductions independent contractors may claim for valid business expenses?

Correct AnswerverifiedShow Answer

Alton reported net income from his sole proprietorship of $90,000. To determine his self employment tax, he would multiply $90,000 by the self-employment tax rate.

Correct AnswerverifiedShow Answer

The lifetime learning credit can be used toward the cost of any course of instruction to acquire or improve a taxpayer's job skills, no matter the age of the taxpayer.

Correct AnswerverifiedShow Answer

Jocelyn, a single taxpayer, had $742,000 of taxable income in 2014. All of the income is ordinary. What is her tax liability for the year?

Correct Answerverified$250,878, computed u...View AnswerShow Answer

Paul and Melissa plan on filing jointly in 2014. For the year, the couple reported taxable income of $130,000. What is their gross tax liability?

Correct Answerverified$24,213, c...View AnswerShow Answer

Atlas earned $17,300 from his sole proprietorship in 2014. This was his only source of income. How much in self-employment taxes will Atlas be able to deduct?

Correct AnswerverifiedShow Answer

Which of the following statements regarding the AMT exemption amounts is not true?

Correct AnswerverifiedShow Answer

All else equal, taxpayers are more likely to be classified as employees rather than independent contractors if they are allowed to determine their own working hours and work without frequent oversight.

Correct AnswerverifiedShow Answer

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$250,878, computed u...
View Answer

Correct Answer
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$24,213, c...
View Answer

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