a.
|
The tax law refers to gross income, yet the term gross income is not found on Form 1040. Explain.
|
b. Why is it important to understand the concept of gross income even though the term is not found on Form 1040?
QI:2-3
Answer the following questions:
a. Explain the distinction between a deduction and a credit.
b. Which is worth more, a $10 deduction or a $10 credit?
c. Explain the difference between refundable and nonrefundable credits.
QI:2-7
a.
|
What determines who must file a tax return?
|
b.
|
Is an individual required to file a tax return if he or she owes no tax?
|
QI:2-9
Tax rules are often very precise. For example, a taxpayer must ordinarily provide "over 50%" of another person's support in order to claim a dependency exemption. Why is the threshold "over 50%" as opposed to "50% or more"?
QI:2-11
Sometimes taxpayers may not be able to file their tax returns by the normal due date. Are extensions available? How long are the extensions? Do extensions enable taxpayers to delay paying the tax they owe?
QI:2-19
a. Explain the principal difference in the tax treatment of an S corporation and a C corporation.
b. Why would a C corporation be used if an S corporation is generally exempt from tax?
QI:2-20
Income earned by C corporations is taxed twice, once when the income is earned and again when it is distributed. If so, how is it possible that operating a business as a C corporation can reduce taxes.
QI:2-21
Answer the following questions:
a.
|
What assets are excluded from capital asset status?
|
b.
|
Are capital gains given favorable tax treatment?
|
c.
|
What is the significance of an asset being classified as a capital asset?
|
d.
|
Are capital losses deductible?
|
QI:2-24
a.
|
Who is liable for additional taxes on a joint return?
|
b.
|
Why is this so important?
|
PI:2-33
Wes and Tina are a married couple and provide financial assistance to several persons during the current year. In all of the situations below, assume that any dependency tests not mentioned have been met.
Requirement
For each situation, determine whether the individuals qualify as Wes and Tina's dependents. (Select the best possible answer in each case.)
Requirement a. Brian is age 24 and Wes and Tina's son. He is a full-time student and lives in an apartment near campus. Wes and Tina provide over 50% of his support. Brian works as a waiter and earned $4,200.Requirement b. Same as Part a except that Brian is a part-time student.
Requirement c. Sherry is age 22 and Wes and Tina's daughter. She is a full-time student and lives in the college dormitory. Wes and Tina provide over 50% of her support. Sherry works part-time as a bookkeeper and earned $5,000.
Requirement d. Same as Part c except that Sherry is a part-time student.
Requirement e. Granny, age 82, is Tina's grandmother and lives with Wes and Tina. During the current year, Granny's only sources of income were her Social Security of $4,800 and interest on U.S. bonds of $4,500. Granny uses her income to pay for 40% of her total support, Wes and Tina provide the remainder of Granny's support.
PI:2-39
Consider the following taxpayer information:
Requirement
For the above taxpayers, indicate which tax form should be used, the applicable filing status, and the number of personal and dependency exemptions available, and the number of children who qualify for the child credit.
a. Arnie is a single college student who earned $7,700 working part-time. He had $200 of interest income and received $1,000 of support from his parents.b. Buddy is a single college student who earned $7,700 working part-time. He had $1,600 of interest income and received $1,000 of support from his parents.
John
and
Patsy
are married and file jointly. In
2016,
John
earned a salary of
$ 42 comma 000.
Patsy
is self-employed. Her gross business income was
$ 55 comma 000
and her business expenses totaled
$ 29 comma 000.
Each contributed
$ 4 comma 700
to a deductible IRA. Their itemized deductions total
$ 12 comma 900.
Compute Parts a, b, and c without regard to self-employment tax.
No comments:
Post a Comment