{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

ch 1 solutions

# ch 1 solutions - Solutions for Questions and Problems...

This preview shows pages 1–5. Sign up to view the full content.

Solutions for Questions and Problems – Chapter 1 25 SOLUTIONS FOR QUESTIONS AND PROBLEMS

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
26 Chapter 1 – The Individual Income Tax Return
Solutions for Questions and Problems – Chapter 1 27 CHAPTER 1 THE INDIVIDUAL INCOME TAX RETURN Group 1 - Multiple Choice Questions 1. D (Section 1.1) 8. C (Section 1.6) 2. A (Section 1.3) 9. C (Section 1.6) 3. C (Section 1.3) 10. D (Section 1.8) 4. C (Section 1.4) 11. E (Section 1.9) 5. C (Section 1.5) 12. A (Section 1.9) 6. E (Section 1.6) 13. E (Section 1.9) 7. B (Section 1.7) 14. C (Section 1.9) Group 2 - Problems 1. a. Economic. This provision is designed to encourage development of new technology. b. Social. This provision is designed to promote child welfare. c. Economic. This provision is designed to encourage small businesses to invest in capital assets. c. Social. This provision is designed to reduce the financial hardship of illnesses. 2. a. \$36,500 = \$41,000 + 500 – 5,000. b. \$10,300 , the greater of itemized deductions or the standard deduction of \$10,300. c. \$19,600 = \$36,500 – 10,300 – (2 x \$3,300). (Section 1.3) 3. a. \$23,000. b. \$5,150 , the greater of total itemized deductions or the standard deduction amount. c. \$14,550 = \$23,000 – 5,150 – 3,300. (Section 1.3) 4. a. No. Income is less than the sum of the \$3,300 exemption plus the \$5,150 standard deduction. b. Yes. Interest income is more than \$300 and interest plus earned income exceeds \$850. c. No. They are under \$17,900, the total of personal exemptions and the standard deduction. d. No. Taxable income less than \$16,900, the total of personal exemptions and the standard deduction. e. Yes. His earnings exceeded the \$400 limit for self-employed persons. (Section 1.4) 5. Yes. Since Geri owes social security taxes on the unreported tips, she must file an income tax return. (Section 1.4) 6. a. \$48,079 = \$46,479 + 3,500 – 1,900. b. \$10,300 . c. \$31,179 = \$48,079 – 10,300 – (2 x 3,300). d. \$3,921 (Tax Table) (Sections 1.3 and 1.5) 7. a. D b. D c. A d. A e. B or C (Section 1.5) 27

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
28 Chapter 1 – The Individual Income Tax Return 8. Allen \$2,776. Boyd \$3,301. Caldwell \$4,611. Dell \$3,584. Evans \$7,814. (Section 1.5) 9. a. 2. One personal and one dependency. b. 2. Two personal. c. 2. One personal and one dependency. d. 2. One personal and one dependency. (Section 1.6). e. 2. Two personal. 10. Adjusted gross income \$17,400 Less: Itemized deductions –2,250 One exemption –3,300 Taxable income \$11,850 Ulysses’ tax liability from the Tax Table is \$1,404 . (Sections 1.3 and 1.5) 11. Adjusted gross income (\$5,500 + 1,400) \$6,900 Less: Standard deduction –5,150 Taxable income \$1,750 Alicia’s tax from the Tax Table is \$176. (Sections 1.3 and 1.5) 12. a. \$158,000 = \$140,000 + 10,000 + 5,000 + 3,000. b. \$154,800 = \$158,000 – 3,200. c. \$11,914 = \$12,000 – 86. The reduction in itemized deductions due to adjusted gross income in excess of \$150,500 is equal to the lesser of: \$86 = (\$154,800 – 150,500) x 2 percent, or \$6,000 = \$7,500 (itemized deductions other than investment interest expense x 80 percent). d. 5. Two personal and three dependency exemptions. e. \$126,386 = \$154,800 – 11,914 – 16,500. f. \$24,792 = \$24,040 + 28%(126,386 – 123,700). (Sections 1.3, 1.5, 1.6 and 1.8) 13. a. \$230,000 = \$190,000 + 40,000. b. \$6,424 = \$6,600 – 176. The reduction in personal exemptions due to adjusted gross income in excess of the threshold amounts is determined as follows: [(\$230,000 – 225,750)/\$2,500] (rounded up to 2) x 2 percent x 2/3 x 6,600 \$176 = \$6,600 (\$3,300 x 2 exemptions) – 176 = \$6,424.
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 12

ch 1 solutions - Solutions for Questions and Problems...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online