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Exam 3: Tax Determination: Personal and Dependency Exemptions: an Overview of Property Transactions

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Question 41

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In January 2011,Jake's wife dies and he does not remarry.For tax year 2011,Jake may not be able to use the filing status available to married persons filing joint returns.

A) True
B) False

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Question 42

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List at least three exceptions to the application of the kiddie tax.

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· Unearned income of $1,900 or less.
· A...

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Question 43

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The kiddie tax does not apply as to a child whose earned income is more than one-half of his or her support.

Maude's parents live in another state and she cannot claim them as her dependents.If Maude pays their medical expenses,can she derive any tax benefit from doing so? Explain.

As used in the income tax formula,gross income would not include the receipt of a loan the taxpayer obtained from a bank.

The basic and additional standard deductions are not subject to an annual adjustment for inflation.

For the qualifying relative rule (for dependency exemption purposes) :

Which,if any,of the following is a correct statement relating to the kiddie tax?

Perry is in the 33% tax bracket.During 2011,he had the following capital asset transactions: Perry's tax consequences from these gains are as follows:

Evan and Eileen Carter are husband and wife and file a joint return for 2011.Both are under 65 years of age.They provide more than half of the support of their daughter,Pamela (age 25) ,who is a full-time medical student.Pamela receives a $5,000 scholarship covering her tuition at college.They furnish all of the support of Belinda (Evan's grandmother) ,who is age 80 and lives in a nursing home.They also support Peggy (age 66) ,who is a friend of the family and lives with them.How many personal and dependency exemptions may the Carters claim?

After paying down the mortgage on their personal residence,the Hills have found that their itemized deductions for each year are always slightly less than the standard deduction option.

It is possible for an individual taxpayer to claim more than one type of standard deduction.

In early 2011,Ben sold a yacht,held for 9 months and for pleasure,for a $5,000 gain.Concerned about offsetting the gain before year-end,Ben is considering selling one of the following-each of which would yield a $5,000 loss: · Houseboat used for recreation. · Truck used in business. · Stock investment held for 13 months. Evaluate each choice.

Which,if any,of the statements regarding the standard deduction is correct?

Which of the following taxpayers may file as a head of household in 2011? Ron provides all the support for his mother,Betty,who lives by herself in an apartment in Fort Lauderdale.Ron pays the rent and other expenses for the apartment and properly claims his mother as a dependent. Tammy provides over one-half the support for her 18-year old brother,Dan.Dan earned $4,200 in 2011 working at a fast food restaurant and is saving his money to attend college in 2012.Dan lives in Tammy's home. Joe's wife left him late in December of 2010.No legal action was taken and Joe has not heard from her in 2011.Joe supported his 6-year-old son,who lived with him throughout 2011.

Which,if any,of the following is a deduction for AGI?

Buddy and Hazel are ages 72 and 71 and file a joint return.If they have itemized deductions of $13,500 for 2011,they should not claim the standard deduction.

Meg,age 23,is a full-time law student and is claimed by her parents as a dependent.During 2011,she received $1,400 interest income from a bank savings account and $5,600 from a part-time job.What is Meg's taxable income for 2011?

DeWayne is a U.S.citizen and resident.He spends much of each year in the United Kingdom on business.He is married to Petula,a U.K.citizen and resident of London.DeWayne has heard that it is possible that he can file a joint income tax return for U.S.purposes.If this is so,what are the constraints he should consider in making any such decision?

Warren,age 17,is claimed as a dependent by his father.In 2011,Warren has dividend income of $1,500 and earns $400 from a part-time job.