Questions for Classes 3 and 4 TAX 3500 Fall 2011

1. In 2010, Bill is a widower. He maintains a household in which he and his unmarried daughter, Elaine, live. Bill asks if he can claim head of household filing status. What do you need to know about Elaine in order to be able to answer his question? In 2010, George had the following transactions: Alimony received from his ex-wife Salary earned Cash dividends received on stock investment Bequest received Georges AGI for 2010 is: a. $30,000. b. $35,000. c. $37,000. d. $57,000. e. None of the above. 3. In 2010, George had the following transactions: Wages earned Lottery prize Life insurance policy proceeds received Contribution to traditional Individual Retirement Account Medical insurance premiums paid Georges AGI for 2010 is: a. $43,000. b. $45,000. c. $75,000. d. $80,000. e. None of the above. 6. Which, if any, of the following is a deduction for AGI? a. Charitable contributions. b. Mortgage interest paid. c. State income taxes withheld. d. Alimony payments. e. All of the above. $40,000 10,000 30,000 5,000 2,000 $ 5,000 30,000 2,000 20,000

2.

6/14/2011

document1

9.

Peter and Tina are married and under 65 years of age. During 2010, they furnish more than half of the support of their 18-year old son, Cory. Cory earns $7,500 from a parttime job, most of which he sets aside for future college expenses. During 2010, they also furnish more than half of the support of their 25-year old son, Donald, who is a full-time college student. Donald earns $4,500 from a part-time job, most of which he currently spends for college expenses. Peter and Tina also provide more than half of the support of Peters cousin who lives with them for the entire year. How many personal and dependency exemptions should Peter and Tina claim? a. Two. b. Three. c. Four. d. Five. e. Six.
Irene had the following transactions during 2010: Salary Interest income on bonds Issued by City of Boston, MA Issued by Dell Corporation Alimony received from her ex-husband Child support received from her ex-husband City and state income taxes paid Bank loan obtained to pay credit card debt What is Irenes AGI for 2010? $80,000 $2,000 3,000

11.

5,000 3,000 9,000 4,000 10,000

13.

Jill had the following transactions for 2010: Salary Moving expenses incurred to change jobs Inheritance received from deceased uncle Life insurance proceeds from policy on uncles life (Jill was named the beneficiary) Cash prize from church raffle Payment of church pledge $ 90,000 8,000 300,000 200,000 1,000 3,000

What is Jills AGI for 2010?

16. Meg, age 23, is a full-time law student and is claimed by her parents as a dependent. During 2010, she received $1,400 interest income from a bank savings account and $5,600 from a part-time job. What is Megs taxable income for 2010?

6/14/2011

document1

18. Juan is married to Elena, who lives with him. Both are U.S. citizens and residents of Kansas. Juan furnishes all of the support of his parents, who are citizens of Venezuela, but who are residents of Mexico. He also furnishes all of the support of Elenas parents, who are citizens and residents of Venezuela. Elena has no gross income for the year. If Juan files as a married person filing separately, how many personal and dependency exemptions can he claim on his return?

20. Ellen, age 39 and single, furnishes more than 50% of the support of her parents, who do not live with her. Ellen practices as a self-employed interior decorator and has gross income in 2010 of $120,000. Her deductions are as follows: $30,000 business and $8,100 itemized. a. b. What is Ellens taxable income for 2010? Can Ellen qualify for head of household filing status? Explain.

6/14/2011

document1