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Exam 3: Tax Determination: Personal and Dependency Exemptions: an Overview of Property Transactions

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Question 21

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Derek,age 46,is a surviving spouse.If he has itemized deductions of $11,700 for 2011,Derek should not claim the standard deduction.

A) True
B) False

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Question 22

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In meeting the criteria of a qualifying child for dependency exemption purposes,when if ever,might the child's income become relevant?

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The amount of income earned by the quali...

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Question 23

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Heloise,age 74 and a widow,is claimed as a dependent by her daughter.For 2011,she had income as follows: $2,500 interest on municipal bonds; $3,200 Social Security benefits; $3,000 income from a part-time job; and $2,800 dividends on stock investments.What is Heloise's taxable income for 2011?

As opposed to itemizing deductions from AGI,the majority of individual taxpayers choose the standard deduction.

Bill had the following transactions for 2011: What is Bill's AGI for 2011?

Mel is not quite sure whether an expenditure he made is a deduction for AGI or a deduction from AGI.Since he plans to choose the standard deduction option for the year,does the distinction matter? Explain.

In order to claim a dependency exemption for other than a qualifying child,a taxpayer must meet the support test.Generally,this is done by furnishing more than 50% of a dependent's support.What exceptions exist,if any,where the support furnished need not be more than 50%?

In terms of the tax formula applicable to individual taxpayers,which,if any,of the following statements is correct?

Kyle,whose wife died in December 2008,filed a joint tax return for 2008.He did not remarry,but has continued to maintain his home in which his two dependent children live.What is Kyle's filing status as to 2011?

Contrast the tax consequences resulting from the following filing status situations:

Regarding head of household filing status,comment on the following:

Under the income tax formula,a taxpayer must choose between deductions for AGI and the standard deduction.

A dependent cannot claim a personal exemption on his or her own return.

Dan and Donna are husband and wife and file separate returns for the year.If Dan itemizes his deductions from AGI,Donna cannot claim the standard deduction.

The Martins have a teenage son who has become an accomplished bagpiper.With proper promotion and scheduling,the son has good income potential by charging for his services at special events (particularly funerals).However,the Martins are fearful that the income could generate a kiddie tax and cause them the loss of a dependency exemption deduction.Are the Martins' concerns justified? Explain.

When the kiddie tax applies and the parents are divorced,the applicable parent (for determining the parental tax)is the one with the greater taxable income.

Clara,age 68,claims head of household filing status.If she has itemized deductions of $9,500 for 2011,she should not claim the standard deduction.

Bertha had the following transactions during 2011: What is Bertha's AGI for 2011?

Debby,age 18,is claimed as a dependent by her mother.During 2011,she earned $1,100 in interest income on a savings account.Debby's standard deduction is $1,400 ($1,100 + $300).

Surviving spouse filing status begins in the year in which the deceased spouse died.