Exam 2 - Individual Income Tax Spring 2013 Exam 2...

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South-Western Federal Taxation 2020: Corporations, Partnerships, Estates and Trusts
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Chapter 18 / Exercise 6
South-Western Federal Taxation 2020: Corporations, Partnerships, Estates and Trusts
Raabe/Young/Nellen/Hoffman
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Individual Income Tax, Spring 2013, Exam 2 True/False – Mark and “A” for TRUE and a “B” for FALSE on the Scantron Sheet. 1. Tara has $4,000 of investment interest expense and no investment expenses. She has interest income of $2,000, qualified dividend income of $1,000 and long-term capital gains of $2,000. Tara will not be able to deduct all of her investment interest expense unless she makes an election to forgo the preferential tax rates on the dividends and long-term capital gains.
2. John and Mary Simpson are married and file a joint return. Their taxable income is $140,000. They do not itemize. They have one child, a 10 year old son, and incur after-school day care expenses for the child in the amount of $3,800. John’s employer provides a plan where John can get reimbursed for expenses (up to a maximum of $5,000) and his reported salary is reduced by the amounts he contributes to the employer plan ($3,800 in this case). John and Mary should elect to participate in the employer plan rather than taking the dependent care credit.
3. Bill has foreign income of $7,000 on which he has paid $1,400 of foreign taxes. His total taxable income from all sources is $70,000 and his total computed US tax before foreign tax credit is $8,000. John’s foreign tax credit will be the $1,400 of foreign taxes paid.
4. Sally is a single mother who computes a tentative earned income credit of $1,500. Sally’s actual tax liability for the year after considering the child credit is only $800. Sally’s earned income credit is limited to the $800 amount because the earned income credit cannot exceed the taxpayer’s tax liability for the year.
5. Julie is a single mother who maintains a household for herself and a 9 year old dependent daughter. Julie has earned income of $24,000 and $5,000 of interest income from inherited property. Julie is not entitled to the earned income credit. TRUE; SHE HAS TOO MUCH INVESTMENT INCOME, income limit is like 3150
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The document you are viewing contains questions related to this textbook.
South-Western Federal Taxation 2020: Corporations, Partnerships, Estates and Trusts
The document you are viewing contains questions related to this textbook.
Chapter 18 / Exercise 6
South-Western Federal Taxation 2020: Corporations, Partnerships, Estates and Trusts
Raabe/Young/Nellen/Hoffman
Expert Verified
6. Unlike the traditional Hope and Lifetime Learning Credits, the American Opportunity Credit may be partially refundable for qualifying taxpayers.

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