Question: Lois is single. She provides more than

> Brendan and Theresa are married and have three children in college. Their twin daughters, Christine and Katlyn, are freshmen and attend the same university. Their son, Kevin, is a graduate student. Brendan and Theresa pay $12,000 in tuition and fees (

> Martina is single and has two children in college. Matthew is a sophomore and Christine is in her fifth year of college. Martina pays $3,600 in tuition and fees for Matthew, $700 for textbooks, and $2,000 for his room and board. Christine's tuition an

> Determine the amount of the child-and-dependent care credit to which each of the following taxpayers is entitled: a. Caryle and Philip are married and have a 4-year-old daughter. Their adjusted gross income is $48,000, and they pay $2,100 in qualified c

> Determine the amount of the child and dependent care credit to which each of the following taxpayers is entitled: a. Michael and Gladys are married and have a 7-year-old child. Their adjusted gross income is $44,050, and they pay $3,300 in qualified chi

> Determine the total allowable 2016 earned income credit in each of the following situations: a. Rina is single and earns $6,800 in salary for the year. In addition, she receives $2,200 in unemployment compensation during the year. b. Lachlan is single wi

> Determine the total allowable 2016 earned income credit in each of the following situations: a. Judy is single and earns $6,500 in salary for the year. In addition, she receives $3,500 in unemployment compensation during the year. b. Monica is a single

> Miguel and Katrina have 2 children under age 17, have earned income of $16,000, and pay $1,836 in Social Security tax. Their tax liability is $1,050 before the child credit. a. What amount can they claim as a child credit, and what portion of the cred

> Neville and Julie are married and have two children ages 19 and 14. Their adjusted gross income for the year is $85,000. a. What amount can they claim for the child credit? b. What amount can they claim for the child credit if their children are ages

> Anika and Jespar are married and have two children ages 16 and 14. Their adjusted gross income for the year is $98,000. a. What amount can they claim for the child credit? b. What amount can they claim for the child credit if their adjusted gross inco

> During the last five months of the year, Dwana opens a new internet telecommunications business called Dwan-Com. Dwan-Com bills $50,000 of revenues, but only receives $40,000 cash. Dwan-Com incurs $3,000 of supply expenses and $41,000 of labor costs.

> State whether each of the following payments is a tax. Explain your answers. a. To incorporate his business, Alex pays the state of Texas a $2,000 incorporation fee. b. The city paves a road and assesses each property owner on the road $4,000 for his or

> Calculate the 2017 tax liability and the tax or refund due for each situation: a. Mark is single with no dependents and has a taxable income of $60,000. He has $10,700 withheld from his salary for the year. b. Harry and Linda are married and have taxab

> For each of the dependents in problem 63, calculate the income tax on their taxable income. In each case, assume that their parents' taxable income is $128,000. Data from Problem 63: Determine the taxable income of each of the following dependents in

> Determine the taxable income of each of the following dependents in 2017: a. Louis is 12 and receives $1,250 in interest income. b. Jackson is 16. He earns $2,050 from his newspaper route and receives $700 in dividends on GCM stock. c. Loretta is 18 an

> Jeff and Marion are married with 3 dependents. Their adjusted gross income in 2017 is $338,300. Their itemized deductions total $34,600, including $4,900 in investment interest. a. What is their 2017 taxable income? b. Assume that their adjusted gross i

> Orley is a single individual with no dependents who has an adjusted gross income of $279,000 in 2017. Orley's itemized deductions total $19,400, which includes $1,200 in deductible medical costs and $5,700 in investment interest. a. What is Orley's 2017

> Michael owns a hair salon. During the current year, a tornado severely damages the salon and destroys his personal automobile, which is parked outside. It costs Michael $12,000 to make the necessary repairs to the salon. He had paid $21,500 for the au

> Lee is a college professor with an adjusted gross income of $32,000. Lee has a lot of bad luck this year. First, a tornado blows the roof off of his house, causing $4,900 in damage. His insurance company reimburses him only $1,200 for the roof damage.

> Edna works as a marketing consultant. In her spare time, she enjoys painting. Although she sells some of her work at local craft shows, she either displays most of her paintings at home or gives them to family and friends. During the year, she receive

> Trevor is an English professor at Clayton College. His adjusted gross income for the year is $58,000 including $5,000 he won at the racetrack. Trevor incurs the following during the year: Investment advice……………………………………………………..$ 550 Subscriptions to a

> Chloe and Emma start a new business, Cement Sidewalks and Accessories (CSA), during the current year. CSA is organized as a partnership. Chloe owns 40% of CSA; Emma owns the remaining 60%. Chloe and Emma come to your firm for advice on the tax conseque

> Kweisi incurs the following employment-related expenses during the year: Airfare …………………………………$2,000 Lodging………………………………..1,500 Meals……………………………………1,200 Entertainment ………………………….800 Incidentals………………………………500 His employer maintains an accountable reimb

> In each of the following situations, explain why the taxpayer's action is or is not tax evasion: a. Jamal owns an electrical appliance repair service. When a client pays him in cash, he gives the cash to his daughter, Tasha. Jamal does not report the c

> Miguel is a successful businessman who has been approached by St. Kilda University to make a donation to its capital campaign. He agrees to contribute $75,000, but he is unsure which of the following assets he should contribute: Write a letter to Migu

> Determine the allowable charitable contribution in each of the following situations: a. Karen attends a charity auction where she pays $250 for two tickets to a Broadway show. The tickets have a face value of $150. b. State University holds a raffle to

> Jana gives property worth $54,000 to her alma mater during the current year. She purchased the property several years ago for $32,000. a. What is Jana's maximum deduction if the property is ordinary income property? b. What is Jana's maximum deduction i

> Liang pays $12,000 in interest on debt which was used to purchase portfolio investments. He receives $6,000 in interest from a certificate of deposit, $4,200 in royalties, and $2,000 in interest on municipal bonds during the year. His investment-relate

> Stoycho and Selen are married. Their marginal tax rate is 28%. They have the following investment income for 2016 and 2017: Their adjusted gross income before considering the investment income is $84,050 in 2016 and $73,500 in 2017. Stoycho and Sele

> Marjorie is single and has the following investment income: Interest on savings…………………………………$2,900 Municipal bond interest…………………………….1,500 Dividends………………………………………………..7,600 She pays investment interest expense of $15,000. The interest expense relate

> Mandy is interested in purchasing a new automobile for personal use. The dealer is offering a special 1.9% interest rate on new cars. Last fall, she opened a home equity line of credit with her bank. If she uses the line of credit to purchase the car,

> Astrid originally borrowed $600,000 to acquire her home. When the balance on the original mortgage is $540,000, she purchases a ski chalet by borrowing $500,000, which is secured by a mortgage on the chalet. Astrid pays $45,000 in interest on her home

> What is the difference between an expense and a loss?

> Keith bought his home several years ago for $110,000. He paid $10,000 down on the purchase and borrowed the remaining $100,000. When the home is worth $230,000 and the balance on his mortgage is $40,000, Keith borrows $120,000 using a home equity loan.

> On March 1, Roxanne acquires a house for $160,000. She pays $20,000 down and borrows the remaining $140,000 by obtaining a 15-year mortgage. Roxanne pays $3,500 in closing costs and $2,500 in points in purchasing the house. During the year, she pays $

> For each of the following situations, state whether the taxpayer's action is tax evasion or tax avoidance: a. Tom knows that farm rent received in cash or farm produce is income subject to tax. To avoid showing a cash receipt on his records, he rented 50

> Robin purchases a new home costing $80,000 in 2016. She pays $8,000 down and borrows the remaining $72,000 by securing a mortgage on the home. She also pays $1,750 in closing costs, $1,600 in points to obtain the mortgage, $900 in qualified mortgage ins

> Rocco owns a piece of land as investment property. He acquired the land in 1994 for $18,000. On June 1, 2017, he sells the land for $80,000. As part of the sale, the buyer agrees to pay all of the property taxes ($3,600) for the year. a. What is Rocco’

> Frank and Liz are married. During 2017, Frank has $2,800 in state income taxes withheld from his paycheck, and Liz makes estimated tax payments totaling $2,200. In May 2018, they receive a state tax refund of $465. What is the proper tax treatment of

> Simon is single and a stockbroker for a large investment bank. During 2017, he has withheld from his paycheck $2,250 for state taxes and $400 for city taxes. In June 2018, Simon receives a state tax refund of $145. What is the proper tax treatment of

> Jesse is a resident of New Jersey who works in New York City. He also owns rental property in South Carolina. During 2017, he pays the following taxes: New Jersey State estimated tax payments……………………………………………..$ 850 New York City income tax withheld

> Paula lives in Arkansas, a state, which imposes a state income tax. During 2017, she pays the following taxes: Federal tax withheld………………………………5,125 State income tax withheld………………………1,900 State sales tax – actual receipts…………………370 Real estate tax ……

> Lian is 56 years old and is injured in an automobile accident this year. She is hospitalized for 4 weeks and misses 3 months of work after getting out of the hospital. The costs related to her accident are Hospitalization……………………………$ 16,100 Prescriptio

> Ramona owns 20% of the stock of Miller, Inc. Miller reports the following items for the current year: Sales………………………………………………………………$3,400,000 Gain on sale of stock held for 2 years…………………... 250,000 Cost of goods sold……………………………………………..1,800,000 Operat

> Rebecca and Irving incur the following medical expenses during the current year: Medical insurance premiums ………………………..$4,500 Hospital…………………………………………………………...950 Doctors………………………………………………………….1,925 Dentist ……………………………………………………………...575 Veterinarian……………

> Hector is 66 years of age. During the year, his wife dies. Identify the tax issue(s) posed by the facts presented. Determine the possible tax consequences of each issue that you identify.

> Troy’s 2015 tax return is audited. The auditor determines that Troy inadvertently understated his ending inventory in calculating his business income. The error creates an additional tax liability of $5,000. The IRS charges interest on the additional

> Tina owns and operates Timely Turn Tables (TTT) as a sole proprietorship. TTT's taxable income during the current year is $80,000. In addition to the TTT income, Tina has the following income and expenses during the current year: Interest income………………

> Jacqueline is single. In June 2017, she receives a refund of $250 from her 2016 state tax return. Her 2016 itemized deductions were $8,000. In October 2017, her 2015 state tax return is audited, and she has to pay an additional $340 in state taxes. Du

> Myrth is 67, single, and has poor hearing. She pays $300 for special equipment attached to her phones to amplify a caller's voice. Identify the tax issue(s) posed by the facts presented. Determine the possible tax consequences of each issue that you id

> Kahn is 21 years old and a full-time student. He lives at home with his parents and pays less than half of his support. During the year, he earns $6,400 working as a sales clerk in a department store. Identify the tax issue(s) posed by the facts presen

> This is the final part of a six part problem that allows you to prepare the 2016 tax return for Laurie and Lynn Norris. As with the previous parts, this part of the problem will ask you to prepare a portion of their tax return. You should then complete

> RESEARCH PROBLEM Amanda graduated summa cum laude in marketing from State University. As an honor student, she was a member of Beta Gamma Sigma, an honorary business fraternity. She has agreed to donate $250,000 to State if the university uses the pro

> Ozzello Property Management is organized as a partnership. The owners, Lorenzo, Erwin, and Michelle, share profits and losses 30:30:40. Ozzello has the following results for the current year: Management fees………………………………………$230,000 Long-term gain on sa

> What is the federal income tax base?

> Ben is single and works as a lawyer. His mother lives in a nursing home which costs $30,000 per year. Ben pays $10,000, his mother pays $6,000, and her health insurance policy pays the remaining $14,000. His mother's only income for the year is $9,000

> The Internet is a useful resource for tax planning. One useful tax planning tool can be found at the Turbo Tax web site (http://www.turbotax.com). At this site, by clicking on the tax Tax calculator and Tips and then clicking on Tax Caster you can estim

> With the recent changes in the tax law definition of a dependent, it is interesting to compare how the United States definition of a dependent differs throughout the world. Go to the Australian Government Tax webpage at http://www.ato.gov.au/. Type the

> Ross and Jessica are married and have one child, Joy, who is two years old. Ross is a recent college graduate and works as a software engineer. Jessica is a full-time student at Hendrick College, and attends classes in the Fall and Spring semesters. R

> Leroy and Amanda are married and have 3 dependent children. During the current year, they have the following income and expenses: Salaries…………………………………………$120,000 Interest income………………………………..45,000 Royalty income………………………………….27,000 Deductions for AGI

> You have just been hired as a tax accountant by a local public accounting firm. One partner is impressed by your writing skills and asks you to write a one-page memo to a client describing the general rules on the deductibility of meals and entertainmen

> Casandra and Gene are married and have a daughter who is a junior at State University. Their adjusted gross income for the year is $78,000, and they are in the 25% marginal tax bracket. They paid their daughter's $3,500 tuition, $450 for textbooks, and

> Royce received an antique watch as a gift from his grandfather. The fair market value of the watch is $12,500. The watch has been missing all year and is not covered by insurance. Identify the tax issue(s) posed by the facts presented. Determine the

> Jose donates stock worth $20,000 to the United Way. He purchased the stock several years ago for $8,000. His adjusted gross income is $60,000. Identify the tax issue(s) posed by the facts presented. Determine the possible tax consequences of each issu

> Diedre is single and has dividend income of $7,500 and a $6,000 long-term capital gain. She pays $9,000 of investment interest. The interest expense relates to all of the assets in her portfolio. Diedre has no tax-exempt income, her marginal tax rate

> During the current year, Inge sells stock purchased three years ago at a loss of $9,000. She also owns a 10% interest in Chatham, Inc., which is organized as an S corporation. Chatham reports ordinary income of $80,000 and a short-term capital gain of

> Donna bought her home several years ago for $200,000. She paid $20,000 down on the purchase and borrowed the remaining $180,000. When the home is worth $280,000 and the balance on the mortgage is $120,000, she borrows $110,000 using a home equity loan.

> Dwight purchases a new home costing $100,000 in the current year. He pays $15,000 down and borrows the remaining $85,000 by securing a mortgage on the home. He also pays $2,000 in closing costs, and $1,700 in points to obtain the mortgage. He pays $7,5

> Tom, an executive for a large corporation, enjoys the challenge of preparing his tax return. He is aggressive in preparing his return and searches through all the available publications to reduce his tax liability. In all the years Tom has completed hi

> Why is a taxpayer's filing status important?

> What limitations are placed on miscellaneous itemized deductions?

> What is an ad valorem tax? What is the significance of an ad valorem tax?

> Elki would like to invest $50,000 in tax-exempt securities. He now has the money invested in a certificate of deposit that pays 5.75% annually. What rate of interest would the tax-exempt security have to pay to result in a greater return on Elki's inve

> What is the standard deduction? Explain its relationship to a taxpayer's itemized deductions.

> Under what circumstances can a married person file as a head-of-household?

> What is a surviving spouse? Explain the tax benefit available to a surviving spouse.

> Refer to problem 71. In the following year, Jawan has the following capital gains and losses: Short-term capital loss………………………………..$ 1,300 Long-term capital gain………………………………….8,600 Long-term capital loss…………………………………..4,100 What is the effect of the c

> What is a multiple support agreement? When is a multiple support agreement necessary?

> Which parent is entitled to claim the dependency exemption for a child when the parents are divorced? Can the other parent ever claim the dependency exemption?

> What are the five tests that must met for an individual to be considered a dependent as a qualifying child? As a qualifying relative? Briefly explain each test.

> What is the difference between a personal exemption and a dependency exemption? Are all taxpayers allowed a personal exemption?

> What determines who must file a tax return?

> Compare and contrast the American Opportunity Tax Credit with the Lifetime Learning Tax Credit.

> Does the child-care credit help promote a progressive tax rate structure? Explain.

> Art is in the 28% marginal tax bracket for 2017. He owes a $10,000 bill for business expenses. Since he reports taxable income on a cash basis, he can deduct the $10,000 in either 2017 or 2018, depending on when he makes the payment. He can pay the bi

> What are the general criteria for eligibility for the child- and dependent-care credit?

> Is the child credit refundable? Explain.

> Merlene owns a bookstore. The store needs repainting, but she is short of cash to hire a painter. Fred is a painter who enjoys fine mystery novels. Merlene makes a deal with Fred to have him paint the bookstore for any 30 mystery novels Merlene has in

> What are the general criteria for eligibility for the earned income credit?

> Can all taxpayers who claim a child as a dependent receive a child tax credit for that child? Explain.

> Why did Congress enact the "kiddie tax"?

> What is the standard deduction amount for a dependent? Under what conditions can a dependent claim the same standard deduction as a single individual who is not a dependent?

> Explain the operation of the itemized deduction phase-out. What stops a taxpayer from losing all itemized deductions under the phase-out?

> Explain how the deduction allowed for a charitable contribution of ordinary income property is different from the deduction for the donation of long-term capital gain property.

> What limits are placed on deductions for charitable contributions?

> Inga, an attorney, completed a job for a client in November 2017. If she bills the client immediately, she will receive her $10,000 fee before the end of the year. By delaying the billing for a month, she will not receive the $10,000 until 2018. What

> Why is interest paid on a loan used to purchase municipal bonds not deductible?

> In 2011, Awnings, Inc., issues $200,000 of 15%, 20-year bonds payable at par. During 2017, when Awnings' bonds are trading at 93, the company purchases and retires $100,000 par value of the bonds. Identify the tax issue(s) posed by the facts presented.

> In what year(s) are points paid to acquire a loan deductible? Explain.

> Which types of interest are deductible as itemized deductions? What limitations (if any) are imposed on the deduction?

> Explain the limitations placed on deductions for medical expenses.