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Exam 3: Computing the Tax

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Question 91

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Meg, age 23, is a full-time law student and is claimed by her parents as a dependent. During 2014, she received $1,400 interest income from a bank savings account and $6,000 from a part­time job. What is Meg's taxable income for 2014?

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$1,200. Meg's standard deduction is the ...

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Question 92

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Darren, age 20 and not disabled, earns $4,000 during 2014. Darren's parents cannot claim him as a dependent unless he is a full-time student.

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Question 93

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Regarding dependency exemptions, classify each statement in one of the four categories: -A son lives with taxpayer and earns $3,000.

In January 2014, Jake's wife dies and he does not remarry. For tax year 2014, Jake may not be able to use the filing status available to married persons filing joint returns.

For the year a spouse dies, the surviving spouse is considered married for the entire year for income tax purposes.

During 2014, Madison had salary income of $80,000 and the following capital transactions: $\begin{array}{lr}\text { LTCG } & \$ 13,000 \\\text { LTCL } & 15,000 \\\text { STCG } & 13,000 \\\text { STCL } & 6,000\end{array}$ How are these transactions handled for income tax purposes?

Taylor had the following transactions for 2014: What is Taylor's AGI for 2014?

Regarding the tax formula and its relationship to Form 1040, which, if any, of the following statements is correct?

Homer (age 68) and his wife Jean (age 70) file a joint return. They furnish all of the support of Luther (Homer's 90-year old father), who lives with them. In 2014, they received $6,000 of interest income on city of Chicago bonds and interest income on corporate bonds of $48,000. Compute Homer and Jean's taxable income for 2014.

Match the statements that relate to each other. Note: Choice L may be used more than once. -Abandoned spouse

In 2014, Ashley earns a salary of $55,000, has capital gains of $3,000, and receives interest income of $5,000. Her husband died in 2013. Ashley has a dependent son, Tyrone, who is age 8. Her itemized deductions are $9,000. a. Calculate Ashley's taxable income for 2014. b. What is her filing status?

Because they appear on page 1 of Form 1040, itemized deductions are also referred to as "page 1 deductions."

In 2014, Ed is 66 and single. If he has itemized deductions of $7,400, he should not claim the standard deduction alternative.

Warren, age 17, is claimed as a dependent by his father. In 2014, Warren has dividend income of $1,500 and earns $400 from a part-time job. a. What is Warren's taxable income for 2014? b. Suppose Warren earned $1,200 (not $400) from the part­time job. What is Warren's taxable income for 2014?

When the kiddie tax applies, the child need not file an income tax return because the child's income will be reported on the parents' return.

Regarding dependency exemptions, classify each statement in one of the four categories: -A nephew who lives with taxpayer.

Jayden and Chloe Harper are husband and wife and use the calendar year for tax purposes. a. If the Harpers file a joint return for 2014, can they later switch to separate returns for 2014? b. If the Harpers file separate returns for 2014, can they later switch to a joint return for 2014?

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

Lena is 66 years of age, single, and blind and is not claimed as a dependent. How much gross income must she have before she is required to file a Federal income tax return for 2014?

Regarding dependency exemptions, classify each statement in one of the four categories: -A family friend who is supported by and lives with the taxpayer.