0324660529_131861 - South-Western Federal Taxation, 2009...

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South-Western Federal Taxation, 2009 Edition Comprehensive Volume ISBN: 0324660529 Chapter 3 Tax Determination; Personal and Dependency Exemptions; An Overview of Property Transactions Abandoned spouse. The abandoned spouse provision enables a married taxpayer with a dependent child whose spouse did not live in the taxpayer’s home during the last six months of the tax year to file as a head of household rather than as married filing separately. Child tax credit. A tax credit based solely on the number of qualifying children under age 17. The maximum credit available is $1,000 per child through 2010. A qualifying child must be claimed as a dependent on a parent’s tax return in order to qualify for the credit. Taxpayers who qualify for the child tax credit may also qualify for a supplemental credit. The supplemental credit is treated as a component of the earned income credit and is therefore refundable. The credit is phased out for higher-income taxpayers. § 24. Collectibles. A special type of capital asset, the gain from which is taxed at a maximum rate of 28 percent if the holding period is more than one year. Examples include art, rugs, antiques, gems, metals, stamps, some coins and bullion, and alcoholic beverages held for investment. Dependency exemption. The tax law provides an exemption for each individual taxpayer and an additional exemption for the taxpayer’s spouse if a joint return is filed. An individual may also claim a dependency exemption for each dependent, provided certain tests are met. The amount of the personal and dependency exemptions is $3,400 in 2007 ($3,300 in 2006). The exemption is subject to phase-out once adjusted gross income exceeds certain statutory threshold amounts. This phaseout provision is subject to partial phaseout beginning in 2006.
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This note was uploaded on 11/17/2011 for the course ACCY 312 taught by Professor Vare during the Fall '11 term at University of Illinois at Urbana–Champaign.

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0324660529_131861 - South-Western Federal Taxation, 2009...

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