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Exam 3: Tax Formula and Tax Determination an Overview of Property Transactions

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Question 71

Multiple Choice

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Regarding the Tax Tables related to the Federal income tax, which of the following statements is correct?

A) For any one year, the Tax Tables are issued by the IRS after the Tax Rate Schedules.
B) The Tax Tables will always yield the same amount of tax as the Tax Rate Schedules.
C) Taxpayers can elect as to whether the use the Tax Tables or the Tax Rate Schedules.
D) The Tax Tables can be used by an estate but not by a trust.
E) No correct answer is given.

F) A) and E)
G) B) and C)

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Question 72

Multiple Choice

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Match the statements that relate to each other.Note: Choice k.may be used more than once. -Kiddie tax may be imposed

A) Available to a 70-year-old father claimed as a dependent by his son.
B) Equal to tax liability divided by taxable income.
C) The highest income tax rate applicable to a taxpayer.
D) Not eligible for the standard deduction.
E) No one qualified taxpayer meets the support test.
F) Taxpayer's ex-husband does not qualify.
G) A dependent child (age 18) who has only unearned income.
H) Highest applicable rate is 37%.
I) Applicable rate could be as low as 0%.
J) Maximum rate is 28%.
K) No correct match provided.

L) C) and E)
M) D) and E)

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Question 73

True/False

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All exclusions from gross income are reported on Form 1040.

For the year a spouse dies, the surviving spouse is considered married for the entire year for income tax purposes.

During 2019, Sandeep had the following transactions: $\begin{array} { l r } \text { Salary } & \$ 80,000 \\\text { Interest income on City of Baltimore bonds } & 1,000 \\\text { Damages for personal injury (car accident) } & 100,000 \\\text { Punitive damages (same car accident) } & 200,000 \\\text { Cash dividends from Chevron Corporation stock } & 7,000\end{array}$ Sandeep's AGI is:

Natalie is married to Chad, who abandoned her in early June of 2019.She has not seen or communicated with him since then.She maintains a household in which she and her two dependent children live.Which of the following statements about Natalie's filing status in 2019 is correct?

Once they reach age 65, many taxpayers will switch from itemizing their deductions from AGI and start claiming the standard deduction.

A taxpayer who itemizes uses Schedule A (Form 1040).

Surviving spouse filing status begins in the year in which the deceased spouse died.

Frank sold his personal use automobile for a loss of $9,000.He also sold a personal coin collection for a gain of $10,000.As a result of these sales, $10,000 is subject to income tax.

Monique is a resident of the United States and a citizen of France.If she files a U.S.income tax return, Monique cannot claim the standard deduction.

Kirby, a single taxpayer, has taxable income of $30,000 and is in the 12% tax bracket.During 2019, she had the following capital asset transactions: $\begin{array}{llcc} \text {Long-term gain from the sale of a coin collection } &\$11,000\\ \text { Long-term gain from the sale of a land investment } &10,000\\ \text { Short-term gain from the sale of a stock investment} &2,000\\\end{array}$ Kirby's tax consequences from these gains are as follows:

Once a child reaches age 19, the kiddie tax no longer applies.

Darren, age 20 and not disabled, earns $4,300 during 2019.Darren's parents cannot claim him as a dependent unless he is a full-time student.

Matching Regarding classification as a dependent, classify each statement in one of the four categories: -An uncle who lives with taxpayer.

Match the statements that relate to each other.Note: Some choices may be used more than once. -Scholarship funds for tuition

Match the statements that relate to each other.Note: Some choices may be used more than once. -Basic standard deduction

In 2019, Nai-Yu had the following transactions: $\begin{array} { l r } \text { Salary } & \$ 90,000 \\\text { Short-term capital gain from a stock investment } & 4,000 \\\text { Moving expense to change jobs } & ( 11,000 ) \\\text { Receipt of repayment of } \$ 20,000 \text { loan she made to her sister in 2014 (includes no interest) } & 20,000 \\\text { State income taxes } & ( 5,000 ) \end{array}$ Nai-Yu's AGI is: