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Exam 4: Individual Income Tax Overview, Dependents, and Filing Status

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Question 41

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Michael, Diane, Karen, and Kenny provide support for their mother, Janet, who is 75 years old. Janet lives by herself in an apartment in Los Angeles. Janet's gross income for the year is $3,000. Janet provides 10 percent of her own support, Michael provides 40 percent of Janet's support, Diane provides 8 percent of Janet's support, Karen provides 10 percent of Janet's support, and Kenny provides the remaining 32 percent of Janet's support. Under a multiple support agreement, who is eligible to claim Janet as a dependent as a qualifying relative?

A) Michael, Diane, Karen, and Kenny.
B) Michael, Karen, and Kenny.
C) Michael and Kenny.
D) Michael.

E) B) and C)
F) A) and C)

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Question 42

Multiple Choice

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Lebron received $50,000 of compensation from his employer and he received $400 of interest from a municipal bond. What is the amount of Lebron's gross income from these items?

A) $0.
B) $400.
C) $50,000.
D) $50,400.

E) A) and C)
F) A) and B)

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Question 43

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A taxpayer is not permitted to use the head of household filing status if she does not have any dependent children.

Which of the following statements regardingdependents is true?

Lebron received $76,300 of compensation from his employer and he received $545 of interest from a municipal bond. What is the amount of Lebron's gross income from these items?

It is generally more advantageous from a tax perspective for a married couple to file separately than it is for them to file jointly.

Sullivan's wife, Susan, died four years ago. Sullivan has not remarried and he maintains a home for his dependent child, Sammy. In 2020, Sullivan received $70,000 of salary from his employer and $3,000 of qualified business income from a business investment, and he paid $10,000 of itemized deductions. What is Sullivan's taxable income for 2020?

The Tanakas filed jointly in 2020. Their AGI is $120,000. They reported $10,000 of qualified business income and $26,000 of itemized deductions. They also have two dependent qualifying children. The 2020 standard deduction amount for MFJ taxpayers is $24,800. What is the total amount of from AGI deductions they are allowed to claim on their 2020 tax return?

In certain circumstances, a married taxpayer who does not file a joint tax return with her spouse may qualify for the head of household filing status.

Char and Russ Dasrup have one daughter, Siera, who is 16 years old. In November of last year, the Dasrups took in Siera's 16-year-old friend Angela, who has lived with them ever since. The Dasrups have not legally adopted Angela but Siera often refers to Angela as her "sister." The Dasrups provide all of the support for both girls, neither girl receives any income during the year, and both girls live at the Dasrups' residence. Which of the following statements is true regarding whom Char and Russ may claim as dependents for the current year?

Taxpayers need not include an income item in gross income unless there is a specific tax provision requiring the taxpayer to include the income item in gross income.

Qualified dividends are taxed at the same rate as ordinary income.

Charlotte is the Lucas family's 22-year-old daughter. She is a full-time student at an out-of-state university but plans to return home when the school year ends. During the year, Charlotte earned $4,000 of income working part time. Her support totaled $30,000 for the year. Of this amount, Charlotte paid $7,000 with her own funds, her parents paid $14,000, and Charlotte's grandparents paid $9,000. Which of the following statements most accurately describes whether Charlotte's parents can claim Charlotte as a dependent?

To determine filing status, a taxpayer's marital status is determined based on the number of days the taxpayer was married during the year compared to the number of days they were not married.

The standard deduction amount for married filing separately taxpayers (MFS)is less than the standard deduction amount for married filing jointly taxpayers.

Doug and Lisa have determined that their tax liability on their joint return is $3,700. They have made prepayments of $1,000 and also are entitled to a $2,000 child tax credit. What is the amount of their tax refund or taxes due?

To be considered a qualifying child of a taxpayer, the individual must be the son or daughter of the taxpayer.

The test for a qualifying child includes a gross income restriction while the test for qualifying relative does not.

Joanna received $60,000 compensation from her employer, the value of her stock in ABC company appreciated by $5,000 during the year (but she did not sell any of the stock) , and she received $30,000 of life insurance proceeds from the death of her husband. What is the amount of Joanna's gross income from these items?

Mason and his wife, Madison, have been married for five years. Jaxon, who is 18 years old and unrelated to Mason and Madison, has been living with Mason and Madison for the last two years. In May of Year 1, Mason and Madison divorced. Mason and Jaxon stayed in the home and Madison moved out. During Year 2, Mason provided all of Jaxon's support, and Jaxon lived in the home for all of Year 2. Jaxon did not earn any income during Year 2. What is Mason's most favorable filing status for Year 2?