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40. Which of the following individuals must file a tax return in 2011?a. Carolyn is single and age 66. She receives $2,000 of interest income, $3,000 ofdividend income, and $6,000 in Social Security benefits.b. Tim is single, age 18, and a full time student. He is claimed as a dependent on hisparent’s tax return. Tim earned $2,000 from a part-time job and $400 in interest income.c. Justin is single, age 25, and a full-time graduate student. He earned $8,750 from apart-time jobThe general rule is a taxpayer who has a sufficient income, must file a tax return. Butthere are some exceptions to this general rule:If a taxpayer’s gross income is less than the sum of basic standard deduction and the personalexemption, no tax liability is due not necessary to file a return even if there are other deductions.Carolyn is not necessary to file a return, because her total AGI of $6450 ($2000+$3000+$1450) is less than her standard deduction limit as single filer which is $9500 ($5800+$3700)If the gross income for this type of taxpayer is greater of $950 or their earned incomeplus $300, the child must file a return. Therefore, his AGI is $2700 ($2000+$400+$300)so he needs to file.His standard deduction plus his personal exemption totals up to $9500 $9500 ($5800+$3700) so, based on his earning -below the threshold- he is not necessary to file a return.
43. Kelly is single, her dependent child, Barbara, lives with her. After her divorce, Kelly wasawarded permanent custody of Barbara and has not agreed to waive her right to claimBarbara as a dependent. Kelly has the following items of income and expense:Income:Salary$60,000Cash dividends$3,000Interest income on City of NY bonds$5,000Interest income on U.S. Treasury bills$4,000Net rental income$3,500Alimony received from ex-husband$2,500Child support received from ex-husband$3,500Sales of Capital Assets:Stock held for 3 month (basis is $12,000) sold for$18,000Investment land held 5 years (basis is $30,000) sold for$14,000Life insurance proceeds received on the death of her mother$100,000Expenses:Home mortgage interest$6,000Property taxes on home$2,000Charitable contributions