89. Mr. and Mrs. Arlette spent $5,900 for child care for their 12-year-old daughter

89. Mr. and Mrs. Arlette spent $5,900 for child care for their 12-year-old daughter. Mr. Arlette’s earned

income was $178,000, Mrs. Arlette’s earned income was $33,100, and the AGI on their joint return was

$225,200. Calculate their dependent care credit.

A. $5,900

B. $1,180

C. $600

D. $0

90. Mr. and Mrs. Borem spent $1,435 for child care for their two dependent children, who are two and four

years old. Mr. Borem’s earned income was $55,870, Mrs. Borem had no earned income, and the AGI on

their joint return was $66,210. Calculate their dependent care credit.

A. $0

B. $287

C. $502

D. $1,435

91. Mr. and Mrs. Harvey’s tax liability before credits was $1,675. Their income tax withholding was $1,050,

and they are entitled to a $1,189 earned income credit. Which of the following statements is true?

A. The Harveys are entitled to a $1,050 tax refund.

B. The Harveys are entitled to a $1,189 tax refund.

C. The Harveys are entitled to a $564 tax refund.

D. The Harveys owe no additional tax but they are not entitled to a refund.

92. Mr. Marshall was employed by IMP Inc. until October, when he accepted a new position with Turine Inc.

Mr. Marshall earned $129,000 compensation from IMP and $36,000 compensation from Turine. Which

of the following statements is false?

A. Turine must withhold Social Security tax from Mr. Marshall’s $36,000 compensation.

B. Turine must withhold Medicare tax from Mr. Marshall’s $36,000 compensation.

C.

Mr. Marshall is entitled to an income tax credit for excess Social Security tax withheld by his

employers this year.

D. None of the above is false.

93. Mrs. Lincoln was employed by GGH Inc. until October, when he accepted a new position with Murdock

Inc. Mrs. Lincoln earned $145,000 compensation from GGH and $36,000 compensation from Murdock.

Which of the following statements is false?

A. Murdock must withhold Social Security tax from Mrs. Lincoln’s $36,000 compensation.

B. Murdock must withhold Medicare tax from Mrs. Lincoln’s $36,000 compensation.

C.

Mrs. Lincoln is entitled to an income tax credit for both excess Social Security tax and excess Medicare

tax withheld by her employers this year.

D.

Both GGH and Murdock must pay the full amount of employer payroll tax on the compensation paid

to Mrs. Lincoln.

94. Which of the following statements concerning the individual alternative minimum tax (AMT) is true?

A.

The calculation of alternative minimum taxable income begins with taxable income for regular tax

purposes.

B. A taxpayer with no tax preference items for the year can’t be liable for AMT.

C. An individual is allowed the same exemption as a corporation in calculating the AMT base.

D. The individual AMT rate is a flat 28%.

95. Ruth Anne, a single taxpayer, reported $152,600 alternative minimum taxable income before any

exemption on her Form 1040. Calculate Ruth Anne’s alternative minimum tax exemption.

A. $10,025

B. $38,425

C. $48,450

D. None of the above

96. Mr. and Mrs. Stern reported $312,400 alternative minimum taxable income before any exemption on their

Form 1040. Calculate their alternative minimum tax exemption.

A. $0

B. $40,600

C. $74,450

D. None of the above

97. Mr. and Mrs. Reid reported $135,700 ordinary taxable income for regular tax purposes and had $58,200

positive AMT adjustments and preferences. Compute their tentative AMT.

A. $31,967

B. $33,911

C. $37,161

D. $40,019

98. Mr. and Mrs. Luang reported $417,900 ordinary taxable income for regular tax purposes and had $39,100

positive AMT adjustments and preferences. Compute their tentative AMT.

A. $124,460

B. $127,960

C. $104,594

D. None of the above

99. Mr. and Mrs. King’s regular tax liability on their joint return was $111,850. Which of the following

statements is true?

A. If the Kings’ tentative minimum tax is $103,300, their total tax liability is $103,300.

B. If the Kings’ tentative minimum tax is $103,300, their total tax liability is $111,850.

C. If the Kings’ tentative minimum tax is $143,800; their total tax liability is $143,800.

D. Both b. and c. are true.

100.Ms. Dorley’s regular tax liability on her Form 1040 is $45,890. Which of the following statements is

true?

A. If Ms. Dorley’s tentative minimum tax is $50,700, her total tax liability is $97,590.

B. If Ms. Dorley’s AMT is $6,380, her total tax liability is $52,270.

C. If Ms. Dorley’s AMT is $10,112, her total tax liability is $45,890.

D. If Ms. Dorley’s tentative minimum tax is $38,682, her total tax liability is $38,682.

101.Ms. Kilo’s regular income tax before credits on her Form 1040 is $45,890, and she has a $5,700 minimum

tax credit from a previous year. Which of the following statements is true?

A. If Ms. Kilo’s tentative minimum tax is $50,500, her total tax liability is $44,800.

B. If Ms. Kilo’s tentative minimum tax is $42,400, her total tax liability is $40,190.

C. If Ms. Kilo’s tentative minimum tax is $42,400, her total tax liability is $42,400.

D. Both a. and c. are true.

102.Last year, Mr. Corbett’s AGI was $141,000, and his total tax liability was $33,650. This year, his total

tax liability is $35,290. Compute the minimum amount of current year tax that Mr. Corbett had to prepay

(withholding and estimated payments) to avoid an underpayment penalty.

A. $31,761

B. $33,650

C. $30,285

D. $35,290

103.Last year, Mr. Tyker’s AGI was $182,800, and his total tax liability was $51,650. This year, his total

tax liability is $65,440. Compute the minimum amount of current year tax that Mr. Tyker had to prepay

(withholding and estimated payments) to avoid an underpayment penalty.

A. $65,440

B. $51,650

C. $56,815

D. $58,896

104.Which of the following statements regarding tax payments is true?

A

.

Sole proprietors must make quarterly estimated payments of income tax, but self-employment tax is

not due until the return is filed.

B.

Sole proprietors must make quarterly estimated payments of self-employment tax, but income tax is not

due until the return is filed.

C. Sole proprietors must make quarterly estimated payments of income tax and self-employment tax.

D. Sole proprietors are not required to pay income tax or self-employment tax until the return is filed.

105.Which of the following statements concerning extensions of time to file an individual tax return is true?

A. The extension of time to file does not extend the time for payment of tax.

B. The extension of time to file is for four months.

C.

An individual who requests an extension of time to file must provide the IRS with a reasonable

explanation.

D. The IRS may disapprove an extension request if the taxpayer fails to provide a reasonable explanation.

106.Which of the following statements concerning extensions of time to file an individual tax return is false?

A. The extension of time to file does not extend the time for payment of any tax due.

B.

An individual may receive an automatic extension of the filing date without providing any explanation

to the IRS.

C. The extended due date of a calendar-year individual tax return is October 15 of the following year.

D. An extension request must be filed before the end of the taxable year.

107.Mr. and Mrs. Reece couldn’t complete their 2010 Form 1040 before April 15, 2011. They estimate that

they will have a $700 balance of tax due with the return. Which of the following statement is true?

A. If the Reeces fail to file their return by April 15, they will owe penalties to the IRS.

B.

The Reeces can file an extension request by April 15 to extend the tax payment and filing date for six

months without penalty.

C.

The Reeces can file an extension request by April 15 to extend the filing date for six months without

penalty. They must pay the $700 estimated balance of tax due with the extension request.

D. None of the above is true.

108.Determine Mr. Smith’s 2011 filing status in each of the following independent cases.

a. Mr. Smith and Mrs. Smith were legally divorced on December 1. Mr. Smith has not remarried and has

no dependent children.

b. Mr. Smith and the first Mrs. Smith were legally divorced on February 10. Mr. Smith remarried the

second Mrs. Smith on December 5. He has no dependent children.

c. Mrs. Smith dies on June 22. Mr. Smith has not remarried and has no dependent children.

d. Mrs. Smith died on November 1, 2009. Mr. Smith has not remarried and maintains a home for one

dependent child.

e. Mrs. Smith died on April 3, 2010. Mr. Smith has not remarried and has no dependent children.

f. Mr. and Mrs. Smith were legally divorced on September 10, 2007. Mr. Smith has not remarried and

maintains a home for his two dependent children.

109.Mr. and Mrs. Bennett file a joint tax return. Determine if each of the following unmarried individuals is

either a qualifying child or a qualifying relative for whom the couple can claim an exemption.

a. Son Alex, age 22, lives in his parents’ home and works fulltime as a tax accountant. Alex is selfsupporting

except for the fact that he does not pay rent to his parents.

b. Daughter Samantha, age 20, is a full-time college student. Samantha lives in a dormitory during the

school year, but her parents’ home is her permanent residence and they provide 100% of her financial

support.

c. Mr. Bennett’s brother Max is 42 years old and mentally handicapped. Max lives in a privately operated

group home, and Mr. and Mrs. Bennett provide 100% of his financial support. Max has no gross income.

d. Mrs. Bennett’s mother, Vera, age 67, lives in a retirement community. Mr. and Mrs. Bennett provide

about 75% of her financial support. Vera earned $5,000 this year as a part-time receptionist.

110.Eileen, a single individual, had $125,000 taxable income. Compute her income tax assuming that:

a. Taxable income includes no capital gains.

b. Taxable income includes $14,000 capital gain eligible for the 15% preferential rate.

111.Alice Grim, a single taxpayer, has $219,000 taxable income, which includes a $20,000 capital gain

taxed at 15%. Her alternative minimum taxable income in excess of her exemption amount is $237,400.

Compute Alice’s regular tax, AMT, and total tax

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