Question 1

Steve records a tentative general business credit of $110,000 for the current year. His net regular tax liability before t general business credit is $125,000, and his tentative minimum tax is $100,000. Compute Steve's allowable general business credit for the year.

Accepted Answer

Steve's allowable general business credi...

Question 2

The maximum credit for child and dependent care expenses is $2,100 if only one spouse is employed and the other spouse is a full-time student.

Accepted Answer

A) True 
 B)False  True

Question 3

In January 2018, Tammy acquired an office building in downtown Syracuse, New York for $400,000. The building was constructed in 1932 and is a certified historic structure. Of the $400,000 cost, $40,000 was allocated to the land.
Tammy immediately placed the building into service, but she quickly realized that substantial renovation would be required to keep and attract new tenants. The renovations, costing $600,000, were of the type that qualifies for the rehabilitation credit. The improvements were completed in October 2018.
a. Compute Tammy's rehabilitation tax credit for the year of acquisition.
b. Determine the cost recovery deduction for 2018.
c. What is the basis in the property at the end of its first year of use by Tammy?

Accepted Answer

The answer of In January 2018, Tammy acquired an office...

Question 4

In the event that overwithholding of FICA tax occurs because the taxpayer has more than one employer, the excess amount should be claimed as a credit on the Federal income tax return of the employee.

Accepted Answer

A) True 
 B)False

Question 5

Child care payments to a relative are not eligible for the credit for child and dependent care expenses if the relative is a child (under age 19) of the taxpayer.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following statements concerning the credit for child and dependent care expenses is not correct?

Accepted Answer

A)   A taxpayer is not allowed both an exclusion from income and the credit for child and dependent care expenses on the same amount.
B)   A taxpayer is not allowed both a deduction as a medical expense and the credit for child and dependent care expenses on the same amount.
C)   If a taxpayer's adjusted gross income exceeds $43,000, the rate for the credit for child and dependent care expenses is 20%.
D)   If a taxpayer's adjusted gross income exceeds $15,000 but is not over $17,000, the rate for the credit for child and dependent care expenses is 35%.
E)   All of the above statements are correct.F) C) and E)
G) B) and D) D

Question 7

Employers are encouraged by the work opportunity tax credit to hire individuals who have been long-term recipients of family assistance welfare benefits.

Accepted Answer

A) True 
 B)False

Question 8

Cardinal Corporation hires two persons certified to be eligible employees for the work opportunity tax credit under the general rules (e.g., food stamp recipients) , each of whom is paid $9,000 during the year. As a result of this event, Cardinal Corporation may claim a work opportunity credit of:

Accepted Answer

A)   $1,440.
B)   $2,880.
C)   $4,800.
D)   $7,200.
E)   None of the above.F) A) and B)
G) A) and E)

Question 9

The low-income housing credit is available to low-income tenants who reside in qualifying low-income housing.

Accepted Answer

A) True 
 B)False

Question 10

Cheryl is single, has one child (age 6) , and files as head of household during 2018. Her salary for the year is $19,500. She qualifies for an earned income credit of the following amount.

Accepted Answer

A)   $0.
B)   $3,298.
C)   $3,327.
D)   $3,461.E) B) and C)
F) A) and B)

Question 11

The purpose of the work opportunity tax credit is to encourage employers to hire individuals from specified target groups traditionally subject to high rates of unemployment.

Accepted Answer

A) True 
 B)False

Question 12

In 2018, George and Martha are married and file a joint tax return claiming their two children, ages 10 and 8 as dependents. Assuming their AGI is $119,650, George and Martha's child tax credit is:

Accepted Answer

A)   $0.
B)   $2,000.
C)   $3,000.
D)   $4,000.E) All of the above
F) A) and C)

Question 13

Ahmad is considering making a $10,000 investment in a venture which its promoter promises will generate immediate tax benefits for him. Ahmad, who normally itemizes his deductions, is in the 28% marginal tax bracket. If the investment is of a type where the taxpayer may claim either a tax credit of 25% of the amount of the expenditure or an itemized deduction for the amount of the investment, what treatment normally would be most beneficial to Ahmad and by how much will Ahmad's tax liability decline because of the investment?

Accepted Answer

A)   $0, take neither the itemized deduction nor the tax credit.
B)   $2,500, take the tax credit.
C)   $2,800, take the itemized deduction.
D)   Both options produce the same benefit.
E)   None of the above.F) A) and E)
G) A) and D)

Question 14

Unused foreign tax credits can be carried back three years and forward fifteen years.

Accepted Answer

A) True 
 B)False

Question 15

A taxpayer who qualifies for the low-income housing credit claims the credit over a 20-year period.

Accepted Answer

A) True 
 B)False  False

Question 16

The ceiling amounts and percentages for 2018 for the two portions of the self-employment tax are:

Accepted Answer

The answer of The ceiling amounts and percentages for 2018...

Question 17

Pat generated self-employment income in 2018 of $76,000. The self-employment tax is:

Accepted Answer

A)   $0.
B)   $5,369.23.
C)   $10,738.46.
D)   $11,628.00.E) B) and D)
F) None of the above

Question 18

If an employee holds two jobs during the year, an overwithholding of FICA tax always will result.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)   The lifetime learning credit is available for qualifying tuition and related expenses incurred by students pursuing only graduate degrees.
B)   The American Opportunity credit permits a maximum credit of 20% of qualified expenses up to $10,000 per year.
C)   The American Opportunity credit is calculated per taxpayer, while the lifetime learning credit is available per eligible student.
D)   Continuing education expenses do not qualify for either education credit.
E)   None of the above statements is true.F) A) and D)
G) C) and D)

Question 20

A taxpayer may qualify for the credit for child and dependent care expenses if the taxpayer's dependent is under age 17.

Accepted Answer

A) True 
 B)False

Exam 12: Tax Credits and Payments

Steve records a tentative general business credit of $110,000 for the current year. His net regular tax liability before t general business credit is $125,000, and his tentative minimum tax is $100,000. Compute Steve's allowable general business credit for the year.

Correct Answer
verified
Steve's allowable general business credi...
View Answer

The maximum credit for child and dependent care expenses is $2,100 if only one spouse is employed and the other spouse is a full-time student.

Correct Answer
verified
True

Correct Answer
verified

In the event that overwithholding of FICA tax occurs because the taxpayer has more than one employer, the excess amount should be claimed as a credit on the Federal income tax return of the employee.

Correct Answer
verified

Child care payments to a relative are not eligible for the credit for child and dependent care expenses if the relative is a child (under age 19) of the taxpayer.

Correct Answer
verified

Which of the following statements concerning the credit for child and dependent care expenses is not correct?

Correct Answer
verified
D

Employers are encouraged by the work opportunity tax credit to hire individuals who have been long-term recipients of family assistance welfare benefits.

Correct Answer
verified

Cardinal Corporation hires two persons certified to be eligible employees for the work opportunity tax credit under the general rules (e.g., food stamp recipients) , each of whom is paid $9,000 during the year. As a result of this event, Cardinal Corporation may claim a work opportunity credit of:

Correct Answer
verified

The low-income housing credit is available to low-income tenants who reside in qualifying low-income housing.

Correct Answer
verified

Cheryl is single, has one child (age 6) , and files as head of household during 2018. Her salary for the year is $19,500. She qualifies for an earned income credit of the following amount.

Correct Answer
verified

The purpose of the work opportunity tax credit is to encourage employers to hire individuals from specified target groups traditionally subject to high rates of unemployment.

Correct Answer
verified

In 2018, George and Martha are married and file a joint tax return claiming their two children, ages 10 and 8 as dependents. Assuming their AGI is $119,650, George and Martha's child tax credit is:

Correct Answer
verified

Correct Answer
verified

Unused foreign tax credits can be carried back three years and forward fifteen years.

Correct Answer
verified

A taxpayer who qualifies for the low-income housing credit claims the credit over a 20-year period.

Correct Answer
verified
False

The ceiling amounts and percentages for 2018 for the two portions of the self-employment tax are:

Correct Answer
verified

Pat generated self-employment income in 2018 of $76,000. The self-employment tax is:

Correct Answer
verified

If an employee holds two jobs during the year, an overwithholding of FICA tax always will result.

Correct Answer
verified

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

Correct Answer
verified

A taxpayer may qualify for the credit for child and dependent care expenses if the taxpayer's dependent is under age 17.

Correct Answer
verified

Exam 12: Tax Credits and Payments

Steve records a tentative general business credit of $110,000 for the current year. His net regular tax liability before t general business credit is $125,000, and his tentative minimum tax is $100,000. Compute Steve's allowable general business credit for the year.

Correct AnswerverifiedSteve's allowable general business credi...View AnswerShow Answer

The maximum credit for child and dependent care expenses is $2,100 if only one spouse is employed and the other spouse is a full-time student.

Correct AnswerverifiedTrue

Correct AnswerverifiedShow Answer

In the event that overwithholding of FICA tax occurs because the taxpayer has more than one employer, the excess amount should be claimed as a credit on the Federal income tax return of the employee.

Correct AnswerverifiedShow Answer

Child care payments to a relative are not eligible for the credit for child and dependent care expenses if the relative is a child (under age 19) of the taxpayer.

Correct AnswerverifiedShow Answer

Which of the following statements concerning the credit for child and dependent care expenses is not correct?

Correct AnswerverifiedD

Employers are encouraged by the work opportunity tax credit to hire individuals who have been long-term recipients of family assistance welfare benefits.

Correct AnswerverifiedShow Answer

Cardinal Corporation hires two persons certified to be eligible employees for the work opportunity tax credit under the general rules (e.g., food stamp recipients) , each of whom is paid $9,000 during the year. As a result of this event, Cardinal Corporation may claim a work opportunity credit of:

Correct AnswerverifiedShow Answer

The low-income housing credit is available to low-income tenants who reside in qualifying low-income housing.

Correct AnswerverifiedShow Answer

Cheryl is single, has one child (age 6) , and files as head of household during 2018. Her salary for the year is $19,500. She qualifies for an earned income credit of the following amount.

Correct AnswerverifiedShow Answer

The purpose of the work opportunity tax credit is to encourage employers to hire individuals from specified target groups traditionally subject to high rates of unemployment.

Correct AnswerverifiedShow Answer

In 2018, George and Martha are married and file a joint tax return claiming their two children, ages 10 and 8 as dependents. Assuming their AGI is $119,650, George and Martha's child tax credit is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Unused foreign tax credits can be carried back three years and forward fifteen years.

Correct AnswerverifiedShow Answer

A taxpayer who qualifies for the low-income housing credit claims the credit over a 20-year period.

Correct AnswerverifiedFalse

The ceiling amounts and percentages for 2018 for the two portions of the self-employment tax are:

Correct AnswerverifiedShow Answer

Pat generated self-employment income in 2018 of $76,000. The self-employment tax is:

Correct AnswerverifiedShow Answer

If an employee holds two jobs during the year, an overwithholding of FICA tax always will result.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A taxpayer may qualify for the credit for child and dependent care expenses if the taxpayer's dependent is under age 17.

Correct AnswerverifiedShow Answer

Correct Answer
verified
Steve's allowable general business credi...
View Answer

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True

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D

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False

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