1. [LO 1] What is a tax bracket? What is the relationship between filing status and the width of the
tax brackets in the tax rate schedule?
A tax bracket is a range of taxable income that is taxed at a specified tax rate. B
Chapter 6 - Individual Deductions
Joe and Jessie are married and have one dependent child, Lizzie. Lizzie is currently in college at State
University. Joe works as a design engineer for a manufacturing firm while Jessie runs a craft
business from their ho
[LO 1] This year Jack intends to file a married-joint return with two dependents. Jack received $157,500
of salary, and paid $5,000 of interest on loans used to pay qualified tuition costs for his dependent
daughter, Deb. This year Jack has also paid qual
[LO 4] Explain why there is such a large number and variety of tax credits.
The proliferation of credits is partly because credits provide a dollar-for-dollar reduction in
taxes. That is, credits do not provide a disproportionate incentive for taxpayers
[LO 2] Zack is employed as a full-time airport security guard. This year Zacks employer transferred
him from Dallas to Houston. At year-end, Zack discovered a number of unreimbursed expenses
related to his employment in Dallas prior to his move to Houst
Chapter 7 - Individual Income Tax Computation and Tax Credits
[LO 4] This year Luke has calculated his gross tax liability at $1,800. Luke is entitled to a
$2,400 nonrefundable personal tax credit, a $1,500 business tax credit, and a $600 refundable
Shauna Coleman is single. She works as an architectural designer for Streamline Design (SD). Shauna
wanted to determine her taxable income. She correctly calculated her AGI. However, she wasnt
sure how to compute the rest of her taxable income. She provid
[LO 3] Explain how the standard deduction is rationalized and why the standard deduction might be
viewed as a floor limit on itemized deductions.
From the governments standpoint, the standard deduction serves two purposes. First, to help
taxpayers with lo
. [LO 2] In 2012, Nadia has $100,000 of regular taxable income. She itemizes her deductions as
follows: real property taxes of $1,500, state income taxes of $2,000, and mortgage interest
expense of $10,000 (not a home equity loan). In addition, she receiv
74. [LO 4] In 2012, Elaine paid $2,800 of tuition and $600 for books for her dependent son to attend
State University this past fall as a freshman. Elaine files a joint return with her husband. What is
the maximum American opportunity credit Elaine can cl
66. [LO 3] Brooke works for Company A for all of 2012, earning a salary of $50,000.
a. What is her FICA tax obligation for the year? (Assume the 4.2 percent Social Security tax
rate applies for 2012).
$2,825. Because Brookes salary is below the $110,100 S
49. [LO 1] Whitney received $75,000 of taxable income in 2012. All of the income was salary from
her employer. What is her income tax liability in each of the following alternative situations?
a. She files under the single filing status.
[LO 4] Is the foreign tax credit a personal credit or a business credit? Explain.
It doesnt fit neatly into either category. The foreign tax credit is available to both individuals
and businesses. U.S. citizens and businesses must pay U.S. tax on their wo
[LO 2] cfw_Planning Lee is single and he runs his own business. He uses the cash method of
accounting to determine his business income. Near the end of the year, Lee performed work that
he needs to bill a client for. The value of his services is $5,000. L
[LO 1] What is the kiddie tax and on whose tax return is the kiddie tax liability reported? Explain.
The kiddie tax is a tax at the parents marginal rate on the childs unearned income in excess of
$1,900. Generally, the kiddie tax liability is reported on
1. Summarize the best practices discussed in Circular 230. Cite the
Tax advisors should provide clients with the highest quality
representation and put forth their best effort in providing advice and
preparing or assist
April 1, 2015
Dependency exemption for a missing child (kidnapped)
Mel and Cindy Gibson had two of their three children kidnapped on
March 15, 2014 (Ellen 10, Rachel 12). On March 28, 2015 Rachel
1. Subsequent events:
a. Type I subsequent events provide evidence about conditions that existed at the
balance sheet date. The financial statements numbers should be adjusted to
reflect this information. An example of this would be a lawsuit that was set
This is a 400 level research course, superficial, incomplete answers are not
acceptable. Conciseness and thoroughness are important.
1. What section of the IRC defines a qualifying child? In your own
words, concisely but thoroughly state the require
Tax Research Memo 2
Depreciation of land
Depreciation and Dump
Depreciation and land and refuse
Deprecation refuse dump
Depreciation and holes
Land and deduction
April 2, 2015
Depreciation of land (space
Lab/Homework Admin. Authority
1. The IRS issues numerous pronouncements. Name the four most important
pronouncements for tax research.
Other written determinations/letter rulings
2. Latrell recent
Day 1 Assignment: LAB 1
1. CHECKPOINT-RIA PRACTICE (Use for all questions below):
A. Enter the term wedding and search only these 2 sources: IRS Publications &
i. How many hits do you get?
ii. How many of the hits are in the IRS
LAB Ethics and Professional Standards
Go to IRS.gov website. Open Circular 230. The site is
CONTROL F ALLOWS YOU TO SEARCH THIS DOCUMENT AND ALL PDF
DOCUMENTS. An important tool!
Regulations Governing Practice bef
[LO 1] It has been suggested that tax policy favors deductions for AGI compared to itemized
deductions. Describe two ways in which deductions for AGI are treated more favorably than
[LO 2] Describe the types of expenses that constitute miscellaneous itemized deductions and explain why
these expenses rarely produce any tax benefits.
Miscellaneous itemized deductions consist of employee business expenses (not reimbursed under
[LO 2] Describe the type of medical expenditures that qualify for the medical expense deduction. Do the
cost of meals consumed while hospitalized qualify for the deduction? Do over-the-counter drugs
and medicines qualify for the deduction?
[LO 1 2] Tim is a single, cash-method taxpayer with one personal exemption. In April of this year Tim
paid $1,020 with his state income tax return for the previous year. During the year, Tim had $5,400
of state income tax and $18,250 of federal income tax
1. How does the Tax Court reconcile the opposite holdings of two or more Courts of
Appeals for taxpayers who reside in different parts of the country?
To reconcile the opposite holdings of two or more Courts of Appeals for taxpayers