Question 1

Which of the following statements regarding the child tax credit is false?

Accepted Answer

A)   The child for whom the credit is claimed must be under the age of 15 at the end of the year.
B)   The credit is subject to phase-out based on the taxpayer's AGI.
C)   The full credit for a child who qualifies is $1,000.
D)   The child for whom the credit is claimed must meet the definition of a qualifying child.E) A) and B)
F) A) and C)

Question 2

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) B) and D)
F) B) and C)

Question 3

The amount of expenditures eligible for the child and dependent care credit is the least of three amounts.Which of the following is not one of those amounts?

Accepted Answer

A)   The total amount of child and dependent care expenditures for the year.
B)   $3,000 for one qualifying person or $6,000 for two or more qualifying persons.
C)   The dependent's earned income for the year.
D)   The taxpayer's earned income for the year.E) B) and D)
F) All of the above

Question 4

Depending on the year,the original (unextended)due date for an individual's tax return may be after April 15.

Accepted Answer

A) True 
 B)False

Question 5

The earned income credit is sometimes referred to as a negative income tax.

Accepted Answer

A) True 
 B)False

Question 6

The late payment penalty is based on the amount of tax owed and the number of days that the tax is not paid.The maximum amount of the penalty is unlimited.

Accepted Answer

A) True 
 B)False

Question 7

Regular taxable income is the starting point for determining the alternative minimum tax.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not typical of taxpayers who are most likely affected by the AMT?

Accepted Answer

A)   Have many dependents.
B)   Pay high state income tax.
C)   Pay high property taxes.
D)   Have relatively low capital gains.E) B) and C)
F) All of the above

Question 9

Rhianna and Jay are married filing jointly in 2017.They have six children for whom they may claim the child tax credit.Their AGI was $123,440.What amount of child tax credit may they claim on their 2017 tax return?

Accepted Answer

A)   $5,300
B)   $6,000
C)   $12,000
D)   $4,000E) A) and D)
F) B) and D)

Question 10

Which of the following statements regarding the child and dependent care credit is true?

Accepted Answer

A)   A married couple must file jointly to claim the credit.
B)   A taxpayer may claim a credit for dependent care expenses for a dependent who is 14 years old or older but only if the dependent lives in the taxpayer's home for the entire year.
C)   All else equal, a taxpayer making qualifying expenditures for three children may claim more dependent care credit than a taxpayer making (the same amount of)  qualifying expenditures for two children.
D)   None of these statements is true.E) All of the above
F) C) and D)

Question 11

Carolyn has an AGI of $38,000 (all from earned income) ,two qualifying children,and is filing as a head of household.What amount of earned income credit is she entitled to? (Exhibit 8-10 in the text)

Accepted Answer

A)   $0
B)   $1,476
C)   $3,400
D)   $4,140
E)   $5,616F) A) and B)
G) A) and C)

Question 12

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 the choices.E) B) and C)
F) A) and B)

Question 13

Jackson earned a salary of $254,000 in 2017.What amount of FICA taxes should Jackson's employer withhold from his paycheck?

Accepted Answer

$12,055
An...

Question 14

How could an individual obtain a business tax credit?

Accepted Answer

A)   Through self-employment activities.
B)   Through flow-through from a partnership or S corporation.
C)   By working overseas and obtaining a foreign tax credit.
D)   All of the choices are correct.E) B) and C)
F) All of the above

Question 15

Long-term capital gains,dividends,and taxable interest income are all taxed at preferential rates.

Accepted Answer

A) True 
 B)False

Question 16

Akiko and Hitachi (married filing jointly for 2017)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 $118,000.How much lifetime learning credit can they claim?

Accepted Answer

$560
Answe...

Question 17

Quantitatively,what is the relationship between the AGI phase-out thresholds for the child tax credit?

Accepted Answer

A)   Head of household/Single = Married Filing Separately = Married Filing Jointly.
B)   Head of household/Single 
C)   Head of household/Single = Married Filing Separately > Married Filing Jointly.
D)   Head of household/Single > Married Filing Separately < Married Filing Jointly.E) B) and C)
F) A) and D)

Question 18

Persephone has a regular tax liability of $12,475 and a tentative minimum tax of $11,500.Given just this information,what is her alternative minimum tax liability for the year?

Accepted Answer

A)   $0
B)   $11,500
C)   $975
D)   $12,475E) A) and B)
F) A) and C)

Question 19

Which of the following suggests that a working taxpayer is an independent contractor rather than an employee?

Accepted Answer

A)   Works for more than one firm.
B)   May realize a loss from business activities.
C)   Sets own working hours.
D)   Works somewhere other than on employer premises.
E)   All of the these choices suggest independent contractor status.F) A) and B)
G) C) and D)

Question 20

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

Accepted Answer

A)   If a taxpayer fails to file a tax return, the late filing penalty will continue to grow until the taxpayer files the tax return.
B)   The amount of the late filing penalty is the same for both fraudulent failure to file and non-fraudulent failure to file.
C)   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.
D)   None of the choices are correct.E) A) and C)
F) B) and C)

Exam 8: Individual Income Tax Computation and Tax Credits

Akiko and Hitachi (married filing jointly for 2017)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 $118,000.How much lifetime learning credit can they claim?

Correct Answerverified$560Answe...View AnswerShow Answer

Regular taxable income is the starting point for determining the alternative minimum tax.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following suggests that a working taxpayer is an independent contractor rather than an employee?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Rhianna and Jay are married filing jointly in 2017.They have six children for whom they may claim the child tax credit.Their AGI was $123,440.What amount of child tax credit may they claim on their 2017 tax return?

Correct AnswerverifiedShow Answer

Which of the following statements regarding the child and dependent care credit is true?

Correct AnswerverifiedShow Answer

Quantitatively,what is the relationship between the AGI phase-out thresholds for the child tax credit?

Correct AnswerverifiedShow Answer

The late payment penalty is based on the amount of tax owed and the number of days that the tax is not paid.The maximum amount of the penalty is unlimited.

Correct AnswerverifiedShow Answer

The earned income credit is sometimes referred to as a negative income tax.

Correct AnswerverifiedShow Answer

Long-term capital gains,dividends,and taxable interest income are all taxed at preferential rates.

Correct AnswerverifiedShow Answer

The amount of expenditures eligible for the child and dependent care credit is the least of three amounts.Which of the following is not one of those amounts?

Correct AnswerverifiedShow Answer

Depending on the year,the original (unextended)due date for an individual's tax return may be after April 15.

Correct AnswerverifiedShow Answer

Which of the following statements regarding the child tax credit is false?

Correct AnswerverifiedShow Answer

Persephone has a regular tax liability of $12,475 and a tentative minimum tax of $11,500.Given just this information,what is her alternative minimum tax liability for the year?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Carolyn has an AGI of $38,000 (all from earned income) ,two qualifying children,and is filing as a head of household.What amount of earned income credit is she entitled to? (Exhibit 8-10 in the text)

Correct AnswerverifiedShow Answer

Jackson earned a salary of $254,000 in 2017.What amount of FICA taxes should Jackson's employer withhold from his paycheck?

Correct Answerverified$12,055An...View AnswerShow Answer

Which of the following is not typical of taxpayers who are most likely affected by the AMT?

Correct AnswerverifiedShow Answer

How could an individual obtain a business tax credit?

Correct AnswerverifiedShow Answer

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$560
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$12,055
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