Chapter 04 - CHAPTER 4-PERSONAL AND DEPENDENCY EXEMPTIONS;...

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CHAPTER 4—PERSONAL AND DEPENDENCY EXEMPTIONS; FILING STATUS; DETERMINATION OF TAX FOR AN INDIVIDUAL; FILING RE- QUIREMENTS TRUE/FALSE 1. A person who is claimed as a dependent on another person’s return claims a personal exemption of zero on his or her own return. ANS: T The personal exemption is disallowed for any taxpayer who is claimed as a dependent on another tax- payer’s return. PTS: 1 REF: p. 4-3 2. When support is provided in a form other than a current cash expenditure, it is the cost of the support item that is considered in determining whether the support test is met. ANS: F It is the value of the item that is considered, for example, it is the fair rental value of housing that is in- cluded in support. PTS: 1 REF: p. 4-5 3. Social Security benefits spent on food and lodging are not included in support for an individual. ANS: F Support is determined by the amount spent toward the support of an individual rather than the source of the funds. Social Security benefits are deemed to be provided by the recipient individual. Only in- come amounts such as scholarships are ignored. PTS: 1 REF: Examples 5 and 6, p. 4-5, and Reg. § 1.152-1 (a)(2)(ii) 4. A person who receives more than one-half of his or her support in welfare payments from the state cannot qualify as a dependent of another individual. ANS: T Such payments are treated as provided toward support. Therefore, no welfare beneficiary can be con- sidered a dependent when he or she receives more than one-half of his or her support from the state. PTS: 1 REF: p. 4-5 5. Under a multiple support agreement, A, who provided 55 percent of the support of his mother, may as- sign the exemption to his sister, L, who provided 25 percent of the support. ANS: F A multiple support agreement is not valid if any party provided more than 50 percent of the depend- ent’s support. PTS: 1 REF: p. 4-7 and § 152(c)
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6. A multiple support agreement allows a group of individuals to divide the exemption amount so that each member of the group has a proportional share of the total exemption deduction for the common dependent. ANS: F The multiple support agreement allows the group to assign the whole exemption to a member of the group. PTS: 1 REF: p. 4-7 7. The general rule for children of divorced or separated parents who together provide over one-half the support and together have custody more than one-half the year is that the exemption goes to the parent providing the greater amount of support. ANS: F Generally, under the rules for a qualifying child the exemption is claimed by the parent with custody the greater period of time. There is an exception to this rule. The exemption goes to the noncustodial parent if there is a decree of separation agreement providing so or if the custodial parent signs a writ- ten consent. PTS:
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This note was uploaded on 04/06/2011 for the course ECON 3332 taught by Professor Craig during the Spring '11 term at Rensselaer Polytechnic Institute.

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Chapter 04 - CHAPTER 4-PERSONAL AND DEPENDENCY EXEMPTIONS;...

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