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

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Question 71

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Deductions for AGI are often referred to as "above-the-line" or "page 1" deductions.Explain.

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"Above the line" means before ...

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Question 72

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Arnold is married to Sybil,who abandoned him in 2009.He has not seen or communicated with her since April of that year.He maintains a household in which their son,Evans,lives.Evans is age 25 and earns over $20,000 each year.For tax year 2011,Arnold's filing status is:

A) Married, filing jointly.
B) Married, filing separately.
C) Head of household.
D) Surviving spouse.
E) Single.

F) None of the above
G) A) and E)

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Question 73

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During 2011,Marvin had the following transactions: Marvin's AGI is:

Pedro is married to Consuela,who lives with him.Both are U.S.citizens and residents of Nebraska.Pedro furnishes all of the support of his parents,who are citizens and residents of Mexico.He also furnishes all of the support of Consuela's parents,who are citizens and residents of El Salvador.Consuela has no gross income for the year.If Pedro files as a married person filing separately,how many personal and dependency exemptions can he claim on his return?

Tad claims his 70-year-old mother as a dependent.The mother may not claim an additional standard deduction for her age.

During the current year,Doris received a large gift from her parents and a sizeable inheritance from an uncle.She also paid premiums on an insurance policy on her life.Doris is confused because she cannot find any place on Form 1040 to report these items.Explain.

Once TI (taxable income)is determined,the taxpayer must make a choice between itemizing or claiming the standard deduction.

During the year,Herb had the following transactions: How are these transactions handled for income tax purposes?

In which,if any,of the following situations may the individual not be claimed as a dependent of the taxpayer?

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

When separate income tax returns are filed by married taxpayers,one spouse cannot claim the other spouse as an exemption.

In 2011,Warren sold his personal use automobile for a loss of $9,000.He also sold a personal coin collection for a gain of $10,000.As a result of these sales,$1,000 is subject to income tax.

Kyle and Liza are married and under 65 years of age.During 2011,they furnish more than half of the support of their 18-year old daughter,May,who lives with them.May earns $15,000 from a part-time job,most of which she sets aside for future college expenses.Kyle and Liza also provide more than half of the support of Kyle's cousin who lives with them.Liza's father,who died on January 3,2011,at age 90,has for many years qualified as their dependent.How many personal and dependency exemptions should Kyle and Liza claim?

During 2011,Esther had the following transactions: Esther's AGI is:

Albert buys his mother a TV.For purposes of meeting the support test,Albert can include the cost of the TV.

In determining whether the support test is met for dependency exemption purposes,only the taxable portion of a scholarship is considered.

Claude's deductions from AGI slightly exceed the standard deduction allowed for 2011.Under these circumstances,Claude cannot claim the standard deduction.

Emily,whose husband died in December 2010,maintains a household in which her dependent daughter lives.Which (if any) of the following is her filing status for the tax year 2011? (Note: Emily is the executor of her husband's estate.)

Gain on the sale of collectibles held for more than 12 months is subject to tax at a rate no higher than 28%.

The Deweys are expecting to save on their taxes for 2011.Not only have both incurred large medical expenses,but both reached age 65.During the year,they also recognized a $30,000 loss on some land they sold which was purchased as an investment several years ago.Are the Deweys under a mistaken understanding regarding their tax position? Explain.