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Exam 8: Individual Income Tax Computation and Tax Credits

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Question 41

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Why would a taxpayer file a tax return if not required to do so?

A) to remain in favor with the IRS.
B) to claim a refund of taxes paid.
C) all taxpayers are required to file returns.
D) in order to claim the standard deduction.

E) B) and D)
F) A) and B)

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Question 42

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The alternative minimum tax system requires taxpayers to apply an alternative tax rate on the regular income tax base to determine the amount of the alternative minimum tax.

A) True
B) False

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Question 43

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Apollo is single and his AMT base is $100,250.This amount includes $500 of qualified dividends (the dividends were taxed at 15% in determining the regular tax liability).What is Apollo's tentative minimum tax?

Maria and Tony are married.They are preparing to file their 2017 tax return.If they were to file as single taxpayers,Maria and Tony would report $10,000 and $70,000 of taxable income,respectively.On their joint tax return,their taxable income is $80,000.How much of a marriage penalty or benefit will Maria and Tony experience in 2017? (Use tax rate schedule in the text.)

Linda is a qualifying widow in 2017.In 2017,she reports $80,000 of taxable income (all ordinary) .What is her gross tax liability using the tax rate schedules? (tax rate schedule in the text)

Which of the following statements about estimated tax payments and underpayment penalties is true for individual taxpayers?

The American opportunity credit is available only for those students who are in their first or second year of postsecondary education.

Costa is a single taxpayer.His regular tax liability was $38,000.For 2017,he reported $190,000 of alternative minimum taxable income.What is his alternative minimum tax?

Demeter is a single taxpayer.Her AGI in 2017 is $81,200.Demeter may claim a child tax credit for her daughter Persephone.What amount of child tax credit is Demeter entitled to claim after any applicable phase-out?

Hera wants to reduce her income tax liability by shifting some of her income to her 10-year-old daughter (a dependent),Athena.Last year,Hera gifted corporate bonds to Athena.This year,Athena received $1,550 in interest income from the bonds.What amount of tax will Athena pay on the interest income?

Stephanie and Mitch are married and they file a joint tax return.Mitch received a slightly higher salary than Stephanie did during the year.Which of the following statements is true?

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

During all of 2017,Mr.and Mrs.Clay lived with their four children (all are under the age of 17).They provided over one-half of the support for each child.Mr.and Mrs.Clay file jointly for 2017.Neither is blind,and both are under age 65.They reported the following tax-related information for the year: (use the tax rate schedules in the text) A.What is the Clays' taxes payable or (refund due)(Ignore the alternative minimum tax)? B.What is the Clays' tentative minimum tax and alternative minimum tax?

Candace is claimed as a dependent on her parent's tax return.Her parents' ordinary income marginal tax rate is 33%.In 2017,Candace received $5,000 of interest income from corporate bonds she obtained several years ago.This is her only source of income.She is 15 years old at year-end.What is her gross tax liability?

Taxpayers are not required to file a tax return unless their gross income passes a certain threshold.This threshold is generally the ________.

Generally,income from an active trade or business is subject to the 3.8% net investment income tax.

Taxpayers are generally allowed to carry back and/or carry forward unused business credits.

The tax rate schedules are set up to tax lower levels of income at higher tax rates than higher levels of income.

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

Tamra and Jacob are married and they file a joint tax return.Tamra received nearly five times the salary that Jacob received.Which of the following statements is true?