Test bank taxation of individuals and business entities 2015 6e by brian c spilker chap004

TRUE AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation Blooms: Understand Learning Objective: 04-01 Describe the formula for calculating an indivi

Chapter 04 Individual Income Tax Overview, Exemptions, and Filing Status

True / False Questions

1 Relative to for AGI deductions, from AGI deductions tend to relate to items that are

more personal in nature

True False

2 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 True False

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

True False

4 Taxpayers are generally allowed to claim deductions for expenditures unless a

specific tax provision indicates the expenditure is not deductible

9 Itemized deductions and the standard deduction are deductions from AGI but

deductions for personal and dependency exemptions are deductions for AGI

True False

10 The standard deduction amount varies by filing status

20 Taxpayers may prepay their tax liability through withholdings and through estimated tax payments

True False

21 In certain circumstances, a taxpayer who provides less than half the support of another may still be able to claim a dependency exemption for that person as a qualifying relative

True False

22 A child who is her parents' qualifying child can claim a personal exemption for herself

as long as her parents choose not to claim her as a dependent

True False

31 When determining whether a child meets the qualifying child support test for the child's grandparents, scholarships earned by the child do not count as self support provided by the child

32 An individual with gross income of $5,000 could qualify as a qualifying child of another taxpayer but could not qualify as a qualifying relative of another taxpayer True False

33 An individual receiving $5,000 of tax exempt income during the year could qualify as

a qualifying child of another taxpayer but could not qualify as a qualifying relative of another taxpayer

43 Jeremy and Annie are married During the year Jeremy dies When Annie files her tax return for the year in which her husband dies, she may file under the married filing jointly filing status even if she does not remarry

True False

44 Jennifer and Stephan are married at year end and they file separate tax returns If Jennifer itemizes deductions on her return, Stephan must also itemize deductions on his return even if his itemized deductions don't exceed his standard deduction True False

45 Bonnie and Ernie file a joint return Bonnie works and receives income during the year but Ernie does not If the couple files a joint tax return, Ernie is responsible for paying any taxes due if Bonnie is unable to pay the taxes

True False

46 Eric and Josephine were married in year 1 In year 2, Eric dies The couple did not have any children Assuming Josephine does not remarry, she may file as a qualifyingwidow in year 3

49 A taxpayer may qualify for the head of household filing status if she has no

dependent children but pays more than half of the cost of maintaining a separate household for her dependent mother and/or father

True False

50 If an unmarried taxpayer provides more than half the support for a cousin who lives

in the taxpayer's home for the entire year, the taxpayer will qualify for head of household filing status

True False

51 If an unmarried taxpayer is able to claim a dependency exemption for another individual, the taxpayer is automatically eligible for the head of household filing status

True False

52 Charles, who is single, pays all of the costs of maintaining a home for himself and Damarcus Charles and Damarcus have no family relationship but Damarcus lives with Charles for the entire year Damarcus qualifies as a qualifying relative for

Charles (Charles claims a dependency exemption for Damarcus on his tax return) Charles qualifies for head of household filing status

True False

53 In certain circumstances, a married taxpayer who files separately may qualify for the head of household filing status

True False

54 If no one qualifies as the dependent of an unmarried taxpayer, the unmarried

taxpayer may still be able to qualify for the head of household filing status

True False

Multiple Choice Questions

55 The income tax base for an individual tax return is:

A Realized income from whatever source

56 Which of the following series of inequalities is generally most accurate?

A Gross income ≥ adjusted gross income ≥ taxable

57 Which of the following statements regarding realized income is true?

A Taxpayers need not include realized income in gross income unless a specific provision of the tax code requires them to do so

B Realized income requires some type of transaction or exchange with a

58 Which of the following statements regarding exclusions and/or deferrals is false?

A Exclusions are favorable because taxpayers never pay tax on income that

61 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), 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?

62 Which of the following statements regarding tax deductions is false?

A Taxpayers are not entitled to any deductions unless specific provisions in the tax code allow the deductions

B Deductions can be labeled as deductions above the line or deductions

below the line

C From AGI deductions tend to be associated with business activities while for AGI deductions tend to be associated with personal activities

D The standard deduction is a from AGI

deduction

63 Which of the following statements regarding for AGI tax deductions is true?

A Taxpayers subtract for AGI deductions from gross income to

65 Which of the following is NOT a from AGI deduction?

68 Which of the following statements regarding exemptions is correct?

A Personal exemptions are more valuable than dependency

D Taxpayers subtract exemption deductions from adjusted gross income in

determining taxable income

69 Which of the following types of income are not considered ordinary income?

71 Which of the following statements is true:

A Income character determines the tax year in which the

72 Which of the following statements regarding tax credits is true?

A Tax credits reduce taxable income dollar for

dollar

B Tax credits provide a greater tax benefit the greater the taxpayer's

marginal tax rate

C Tax credits reduce taxes payable dollar for

dollar

D None of these statements is

true

73 Jamison's gross tax liability is $7,000 Jamison had $2,000 of available credits and he had $4,000 of taxes withheld by his employer What is Jamison's taxes due (or taxes refunded) with his tax return?

A $0 taxes due and $0 tax

77 All of the following are tests for determining qualifying child status except the

A Even if Anna's parents provided the remaining $14,000 of support for Anna

($34,000 minus $12,000 minus $8,000), they would not be able to claim her as a dependent

B Even if Anna's grandparents provided the remaining $14,000 of support for Anna ($34,000 minus $12,000 minus $8,000) they would not be able to claim her as a dependent

C Because she provided more than half her own support, Anna may claim a personal exemption for herself

D None of these statements is

true

80 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 a dependency exemption for Charlotte?

A Yes, Charlotte is a qualifying child of her

out-of-a dependent In yeout-of-ar 1, out-of-a kind neighbor offers to pout-of-ay for out-of-all of Jout-of-ane's educout-of-ationout-of-al out-of-and living expenses Which of the following statements is most accurate regarding

whether Jane's parents would be allowed to claim an exemption for Jane in year 1 assuming the neighbor pays for all of Jane's support?

A No, Jane must include her neighbor's gift as income and thus fails the gross incometest for a qualifying relative

B Yes, because she is a full-time student and does not provide more than half of her own support, Jane is considered her parent's qualifying child

C No, Jane is too old to be considered a qualifying child and fails the support test of aqualifying relative

D Yes, because she is a student, her absence is considered as "temporary."

Consequently she meets the residence test and is a considered a qualifying child

of the Bennetts

82 Sheri and Jake Woodhouse have one daughter, Emma, who is 16 years old They also have taken in Emma's friend, Harriet, who has lived with them since February of the current year and is also 16 years of age The Woodhouses have not legally adopted Harriet but Emma often refers to Harriet as "her sister." The Woodhouses provide all

of the support for both girls, and both girls live at the Woodhouse residence Which of

the following statements is true regarding the dependency exemptions (and the

reason for the exemptions) Sheri and Jake may claim for the current year for these girls?

A One exemption for their daughter Emma as a qualifying child but no

exemption for Harriet

B One exemption for Emma as a qualifying child and one exemption for Harriet as a qualifying child

C One exemption for Emma as a qualifying child and one exemption for Harriet as a qualifying relative

D None of these statements is

true

83 Char and Russ Dasrup have one daughter, Siera, who is 16 years old In November of last year, the Dasrup's took in Siera's 16 year old friend, Angela, who has lived with them ever since The Dasrup's have not legally adopted Angela but Siera often refers

to Angela as "her sister." The Dasrup's provide all of the support for both girls, neithergirl receives any income during the year, and both girls live at the Dasrup's

residence Which of the following statements is true regarding the dependency

exemptions (and the reason for the exemptions) Char and Russ may claim for the current year for these girls?

A One exemption for their daughter Siera as a qualifying child but no exemptionfor Angela

B One exemption for Siera as a qualifying child and one exemption for Angela as a qualifying child

C One exemption for Siera as a qualifying child and one exemption for Angela as a qualifying relative

D None of these statements is

85 Catherine de Bourgh has one child, Anne, who is 18 years old at the end of the year Anne lived at home for seven months during the year before leaving home to attend State University for the rest of the year During the year, Anne earned $6,000 while working part time Catherine provided 80 percent of Anne's support and Anne

provided the rest Which of the following statements regarding whether Anne is Catherine's qualifying child for the current year is correct?

A Anne is a qualifying child of

A Yes, Dustin is a qualifying child of

88 All of the following are tests for determining qualifying relative status except

89 Which of the following statements regarding the difference between the requirements

for a qualifying child and the requirements for a qualifying relative is false?

A The relationship requirement is more broadly defined (more inclusive) for

qualifying relatives than for qualifying children

B Qualifying children are subject to age restrictions while qualifying

relatives are not

C The support test for qualifying relatives focuses on the support the potential dependent self provides while the support test for qualifying children focuses on the support the taxpayer provides

D Qualifying relatives are subject to a gross income restriction while qualifying children are not

90 Earl and Lawanda Jackson have been married for 15 years They have no children Ned, who is an old friend from high school, has been living with the Jacksons during the current year Which of the following is a true statement regarding whether the Jacksons can claim a dependency exemption for Ned in the current year?

A If Ned moved into the Jackson's home in June and he lived there for the remainder

of the year, he may qualify as the Jackson's qualifying relative

B Assume that Ned originally moved into the Jackson's home two years ago and he has lived there ever since If, this year, Ned earned $3,000 at a part time job and

he received $5,000 in municipal bond interest, he may qualify as the Jackson's dependent as long as the Jacksons provided more than half his support

C If Ned lived in the Jackson's home for the entire year, he will qualify as their

dependent no matter who provided his support

D If Ned is over 19 or he is not a full-time student, he cannot qualify as the Jackson's dependent

91 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% of her own support, Michael provides 40%

of Janet's support, Diane provides 8% of Janet's support, Karen provides 10% of Janet's support, and Kenny provides the remaining 32% of Janet's support Under a multiple support agreement, who may claim a dependency exemption for Janet as a qualifying relative?

A Michael, Diane, Karen, and

92 Filing status determines all of the following except

A the applicable standard deduction

94 Lydia and John Wickham filed jointly in year 1 They divorced in year 2 In late year 2, the IRS discovered that the Wickham's underpaid their year 1 taxes by $2,000 Both Lydia and John worked in year 1 and received equal income but John had $2,000 less tax withheld than did Lydia Who is legally liable for the tax underpayment?

96 In June of year 1, Eric's wife Savannah died Eric did not remarry during year 1, year

2, or year 3 Eric maintains the household for his dependent daughter Catherine in year 1, year 2, and year 3 Which is the most advantageous filing status for Eric in year 2?

97 Which of the following statements about a qualifying person for head of household filing status is true?

A One individual (who is a qualifying person) may qualify more than one taxpayer forhead of household filing status

B The taxpayer is required to live with a qualifying person for the entire year in order

to qualify for head of household filing status

C A taxpayer's parent cannot be a qualifying person for purposes of determining head of household filing status

D A qualifying person must have a family relationship with the taxpayer in order for the qualifying person to qualify the taxpayer for head of household filing status

98 In June of year 1, Jake's wife Darla died The couple did not have any children and Jake did not remarry in year 1 or year 2 Which is the most favorable filing status for Jake in year 2?

Jane is unmarried and has no children, but provides more than half of her mother's financial support Jane's mother lives in an apartment across town and has a part-time job earning $5,000 a year Which is the most advantageous filing status

of maintaining the household When Marianne filed her tax return for year 1, she filed

a return separate from Martin What is Marianne's most favorable filing status for year 1?

remainder of the year Assuming the couple does not file jointly, which of the

following statements regarding filing status is true?

A No matter the post separation residence(s) of the children, both spouses must file

as married filing separately

B No matter the post separation residence(s) of the children, Martin must file as married filing separately but Marianne may qualify to file as head of household

C No matter the post separation residence(s) of the children, Marianne must file as married filing separately but Martin may qualify to file as head of household

D Depending on the post separation residence(s) of the children, both spouses may qualify to file as head of household

Which of the following is not a requirement for a married taxpayer to be treated as

unmarried at the end of the year for filing status purposes?

A The taxpayer claims a dependency exemption for

a child

B The taxpayer pays more than half the costs of maintaining his or her home for the entire year and the home is the principal residence for a dependent qualifying child for more than half the year

C The taxpayer files a tax return separate from the other

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 forthe 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?

Kabuo and Melinda got married on December 15, year 1 Kabuo's salary for the year was $54,000, and Melinda's was $62,000 In addition, Kabuo received $250 of

interest income, ($100 of which was from municipal bonds), and Melinda received

$10,000 of alimony from a former spouse If Kabuo and Melinda choose to file jointly, what is their year 1 gross income?

110

John Maylor is a self-employed plumber of John's John Service, his sole proprietorship.In the current year, John's John Service had revenue of $120,000 and $40,000 of business expenses

John also received $2,000 of interest income from corporate bonds

What is John's adjusted gross income assuming he had no other income or expenses (ignore any deduction for self-employment tax)?

The Tanakas filed jointly in 2014 Their AGI is $120,000 They reported $10,000 of itemized deductions and they have two dependent children The 2014 standard deduction amount is $12,400 and each exemption is $3,950 What is the total amount of from AGI deductions they are allowed to claim on their 2014 tax return?

113

The Dashwoods have calculated their taxable income to be $80,000 for 2014, which

includes $2,000 of long-term capital gains Using the appropriate tax rate schedule,

calculate the Dashwood's income tax liability assuming they are married and file a joint return

114

Tom Suzuki's tax liability for the year is $2,450 He had $2,050 of federal income taxes withheld from his paycheck during the year by his employer and has $2,000 in tax credits What are Tom's taxes due or tax refund for the year?

Jane and Ed Rochester are married with a two-year-old child who lives with them and whom they support financially In 2014, Ed and Jane realized the following items of income and expense:

They also qualified for a $1,000 tax credit Their employers withheld $1,800 in taxes from their paychecks (in the aggregate) Finally, the 2014 standard deduction amount

is $12,400 and the 2014 exemption amount is $3,950

dependency exemptions are Sam and Tacy entitled to claim for the year and for whom are they allowed to claim the exemption(s)?

121

Sullivan's wife Susan died four years ago Sullivan has not remarried and he maintains a home for his dependent child Sammy In 2014, Sullivan received $70,000

of salary from his employer and he paid $6,000 of itemized deductions What is Sullivan's taxable income for 2014?

122

Hannah, who is single, received a qualified dividend of $1,000 Hannah's marginal ordinary income tax rate is 28% What amount of tax must she pay on the $1,000 dividend?

In 2014, Brittany, who is single, cares for her father Raymond Brittany pays the bills relating to Raymond's home She also buys groceries and provides the rest of his support Raymond has no gross income Brittany received $45,000 of salary from heremployer during the year Brittany reports $3,000 of itemized deductions What is Brittany's taxable income?

In February of 2013, Lorna and Kirk were married During 2014, Lorna received

$40,000 of compensation from her employer and Kirk received $30,000 of

compensation from his employer The couple together reported $2,000 of itemized deductions Lorna and Kirk filed separately in 2014 What is Lorna's taxable income and what is her tax liability (use the applicable tax rate schedule)?

Chapter 04 Individual Income Tax Overview, Exemptions, and

Filing Status Answer Key

True / False Questions

1 Relative to for AGI deductions, from AGI deductions tend to relate to items that are

more personal in nature

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 2 Medium Topic: Individual income tax formula

2 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

Blooms: Understand Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 2 Medium Topic: Individual income tax formula

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

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Analyze Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 1 Easy Topic: Individual income tax formula

4 Taxpayers are generally allowed to claim deductions for expenditures unless a specific tax provision indicates the expenditure is not deductible

Blooms: Understand Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 1 Easy Topic: Individual income tax formula

5 From AGI deductions are generally more valuable to taxpayers than for AGI

deductions

FALSE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Analyze Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 2 Medium Topic: Individual income tax formula

6 From AGI deductions are commonly referred to as deductions "below the line."

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 2 Medium Topic: Individual income tax formula

7 For AGI deductions are commonly referred to as deductions "below the line."

FALSE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 2 Medium Topic: Individual income tax formula

8 For AGI deductions are commonly referred to as deductions "above the line."

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 2 Medium Topic: Individual income tax formula

9 Itemized deductions and the standard deduction are deductions from AGI but deductions for personal and dependency exemptions are deductions for AGI

FALSE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 2 Medium Topic: Individual income tax formula

10 The standard deduction amount varies by filing status

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Analyze Blooms: Understand Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 1 Easy Topic: Individual income tax formula

11 Taxpayers are allowed to deduct more for each personal exemption they claim than for each dependency exemption they claim

FALSE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 2 Medium Topic: Individual income tax formula

12 A personal automobile is a capital asset

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking

and generally explain each formula component.

Level of Difficulty: 1 Easy Topic: Individual income tax formula

13 The character of income determines the rate at which the income is taxed

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 1 Easy Topic: Individual income tax formula

14 Inventory is a capital asset

FALSE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 1 Easy Topic: Individual income tax formula

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

FALSE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 1 Easy Topic: Individual income tax formula

16 Certain types of income are taxed at a lower rate than ordinary income

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 1 Easy Topic: Individual income tax formula

17 In addition to the individual income tax, individuals may be required to pay taxes imposed on tax bases other than the individual's regular taxable income

TRUE

Blooms: Understand Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 2 Medium Topic: Individual income tax formula

18 Tax credits reduce taxable income dollar for dollar

FALSE

Tax credits directly reduce taxes payable

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 1 Easy Topic: Individual income tax formula

19 Tax credits are generally more valuable than tax deductions because tax credits reduce a taxpayer's gross tax liability dollar for dollar while tax deductions do not

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 2 Medium Topic: Individual income tax formula

20 Taxpayers may prepay their tax liability through withholdings and through

estimated tax payments

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-01 Describe the formula for calculating an individual taxpayer's taxes payable or refund

and generally explain each formula component.

Level of Difficulty: 1 Easy Topic: Individual income tax formula

21 In certain circumstances, a taxpayer who provides less than half the support of another may still be able to claim a dependency exemption for that person as a qualifying relative

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand

Topic: Individual income tax formula

22 A child who is her parents' qualifying child can claim a personal exemption for herself as long as her parents choose not to claim her as a dependent

FALSE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-02 Explain the requirements for determining a taxpayer's personal and dependency

exemptions Level of Difficulty: 3 Hard Topic: Personal and dependency exemptions

23 A taxpayer who is claimed as a dependent on another's tax return may not claim any personal or dependency exemptions on his or her tax return

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-02 Explain the requirements for determining a taxpayer's personal and dependency

exemptions Level of Difficulty: 2 Medium Topic: Personal and dependency exemptions

24 Anna is a qualifying child of her parents However, she was recently married Anna and her husband filed a joint return If they had filed separately, Anna would have owed no taxes, though her husband would have owed just $5 Because Anna herself owed no taxes, her parents can still claim her as a dependent

FALSE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-02 Explain the requirements for determining a taxpayer's personal and dependency

exemptions Level of Difficulty: 3 Hard Topic: Personal and dependency exemptions

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

FALSE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-02 Explain the requirements for determining a taxpayer's personal and dependency

exemptions Level of Difficulty: 2 Medium Topic: Personal and dependency exemptions

26 For purposes of the qualifying child residence test, a child's temporary absence from the taxpayer's home for attending school full-time is counted as though the child lived in the taxpayer's home during the absence

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-02 Explain the requirements for determining a taxpayer's personal and dependency

exemptions Level of Difficulty: 3 Hard Topic: Personal and dependency exemptions

27 An individual may never be considered as both a qualifying relative and a

qualifying child of the same taxpayer

Blooms: Understand Learning Objective: 04-02 Explain the requirements for determining a taxpayer's personal and dependency

exemptions Level of Difficulty: 2 Medium Topic: Personal and dependency exemptions

28 An individual may be considered as a qualifying child of her parents and a

qualifying child of her grandparents in the same year

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-02 Explain the requirements for determining a taxpayer's personal and dependency

exemptions Level of Difficulty: 3 Hard Topic: Personal and dependency exemptions

29 An individual may meet the relationship test to be a taxpayer's qualifying relative even if the individual has no family relationship with the taxpayer

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-02 Explain the requirements for determining a taxpayer's personal and dependency

exemptions Level of Difficulty: 2 Medium Topic: Personal and dependency exemptions

30 When determining whether a child meets the qualifying child support test for the parents, scholarships earned by the child do not count as self support provided by the child

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-02 Explain the requirements for determining a taxpayer's personal and dependency

exemptions Level of Difficulty: 2 Medium Topic: Personal and dependency exemptions

31 When determining whether a child meets the qualifying child support test for the child's grandparents, scholarships earned by the child do not count as self support provided by the child

FALSE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-02 Explain the requirements for determining a taxpayer's personal and dependency

exemptions Level of Difficulty: 2 Medium Topic: Personal and dependency exemptions

32 An individual with gross income of $5,000 could qualify as a qualifying child of another taxpayer but could not qualify as a qualifying relative of another

Blooms: Understand Learning Objective: 04-02 Explain the requirements for determining a taxpayer's personal and dependency

exemptions Level of Difficulty: 2 Medium Topic: Personal and dependency exemptions

33 An individual receiving $5,000 of tax exempt income during the year could qualify

as a qualifying child of another taxpayer but could not qualify as a qualifying relative of another taxpayer

FALSE

The taxpayer could qualify as a qualifying relative (doesn't fail the gross income test) because the tax exempt income is excluded from gross income

AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Analyze Learning Objective: 04-02 Explain the requirements for determining a taxpayer's personal and dependency

exemptions Level of Difficulty: 3 Hard Topic: Personal and dependency exemptions

34 The relationship requirement is more broadly defined (includes more relationships)for a qualifying relative than it is for a qualifying child

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-02 Explain the requirements for determining a taxpayer's personal and dependency

exemptions Level of Difficulty: 2 Medium Topic: Personal and dependency exemptions

35 The relationship requirement for qualifying relative includes cousins

FALSE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-02 Explain the requirements for determining a taxpayer's personal and dependency

exemptions Level of Difficulty: 2 Medium Topic: Personal and dependency exemptions

36 The relationship requirement for qualifying relative requires the potential

qualifying relative to have a family relationship with the taxpayer

FALSE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-02 Explain the requirements for determining a taxpayer's personal and dependency

exemptions Level of Difficulty: 2 Medium Topic: Personal and dependency exemptions

37 The test for qualifying children includes an age restriction but the test for

qualifying relative does not

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-02 Explain the requirements for determining a taxpayer's personal and dependency

exemptions Level of Difficulty: 1 Easy Topic: Personal and dependency exemptions

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

FALSE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-02 Explain the requirements for determining a taxpayer's personal and dependency

exemptions Level of Difficulty: 2 Medium Topic: Personal and dependency exemptions

39 If a taxpayer does not provide more than half the support of a child, that child cannot qualify as the taxpayer's qualifying child

FALSE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-02 Explain the requirements for determining a taxpayer's personal and dependency

exemptions Level of Difficulty: 2 Medium Topic: Personal and dependency exemptions

40 To determine filing status, a taxpayer's marital status is determined on January 1

of the tax year in question

FALSE

Marital status is determined at year-end

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Understand Learning Objective: 04-03 Determine a taxpayer's filing status.

Level of Difficulty: 1 Easy Topic: Filing status

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

FALSE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Analyze Learning Objective: 04-03 Determine a taxpayer's filing status.

Level of Difficulty: 1 Easy Topic: Filing status

42 It is generally more advantageous from a nontax perspective for a married couple

to file separately than it is for them to file jointly

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Analyze Learning Objective: 04-03 Determine a taxpayer's filing status.

Level of Difficulty: 2 Medium

Topic: Filing status

43 Jeremy and Annie are married During the year Jeremy dies When Annie files her tax return for the year in which her husband dies, she may file under the married filing jointly filing status even if she does not remarry

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Analyze Learning Objective: 04-03 Determine a taxpayer's filing status.

Level of Difficulty: 2 Medium

Topic: Filing status

44 Jennifer and Stephan are married at year end and they file separate tax returns If Jennifer itemizes deductions on her return, Stephan must also itemize deductions

on his return even if his itemized deductions don't exceed his standard deduction

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Analyze Learning Objective: 04-03 Determine a taxpayer's filing status.

Level of Difficulty: 3 Hard Topic: Filing status

45 Bonnie and Ernie file a joint return Bonnie works and receives income during the year but Ernie does not If the couple files a joint tax return, Ernie is responsible forpaying any taxes due if Bonnie is unable to pay the taxes

TRUE

AACSB: Reflective Thinking AICPA: BB Critical Thinking Accessibility: Keyboard Navigation

Blooms: Analyze Learning Objective: 04-03 Determine a taxpayer's filing status.

Level of Difficulty: 2 Medium

Topic: Filing status