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Exam 4: Individual Income Tax Overview, Dependents, and Filing Status

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Question 1

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Char and Russ Dasrup have one daughter, Siera, who is 16 years old. In November of last year, the Dasrup's took in Siera's 16 year old friend, Angela, who has lived with them ever since. The Dasrup's have not legally adopted Angela but Siera often refers to Angela as "her sister." The Dasrup's provide all of the support for both girls, neither girl receives any income during the year, and both girls live at the Dasrup's residence. Which of the following statements is true regarding who Char and Russ may claim as dependents for the current year?

A) They may claim Siera as a dependent qualifying child they are not allowed to claim Angela as a dependent.
B) They may claim Siera as a dependent qualifying child and they may claim Angela as a dependent qualifying child.
C) They may claim Siera as a dependent qualifying child and they may claim Angela as a dependent qualifying relative.
D) None of these statements is true.

E) A) and B)
F) B) and C)

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Question 2

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The relationship requirement for qualifying relative includes cousins.

A) True
B) False

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Question 3

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Taxpayers need not include an income item in gross income unless there is a specific tax provision requiring the taxpayer to include the income item in gross income.

The income tax base for an individual tax return is:

The only from AGI deductions are the standard deduction and itemized deductions.

An individual may meet the relationship test to be a taxpayer's qualifying relative even if the individual has no family relationship with the taxpayer.

The test for a qualifying child includes a gross income restriction while the test for qualifying relative does not.

Anna is a qualifying child of her parents. However, she was recently married. Anna and her husband filed a joint return. If they had filed separately, Anna would have owed no taxes, though her husband would have owed just $5. Because Anna herself owed no taxes, her parents can still claim her as a dependent.

Sally received $60,000 of compensation from her employer and she received $500 of interest from a corporate bond. What is the amount of Sally's gross income from these items?

A personal automobile is a capital asset.

In April of year 1, Martin left his wife Marianne. The couple has two children under the age of 15. While the couple was apart, they were not legally divorced. Marianne remained in the home and paid all the costs of maintaining the home for the remainder of the year. Assuming the couple does not file jointly, which of the following statements regarding filing status is true?

Charles, who is single, pays all of the costs of maintaining a home for himself and Damarcus. Charles and Damarcus have no family relationship but Damarcus lives with Charles for the entire year. Damarcus qualifies as a qualifying relative for Charles (Charles claims Demarcus as a dependent on his tax return). Charles qualifies for head of household filing status.

For purposes of the dependency exemption qualification, the test for qualifying children includes an age restriction but the test for qualifying relative does not.

All of the following are tests for determining qualifying relative status except ________.

Which of the following statements regarding dependents is false?

Jane and Ed Rochester are married with a two-year-old child who lives with them and whom they support financially. In 2018, Ed and Jane realized the following items of income and expense: They also qualified for a $2,000 child tax credit. Their employers withheld $5,800 in federal income taxes from their paychecks (in the aggregate). Finally, the 2018 standard deduction amount for MFJ taxpayers is $24,000. What is the couple's adjusted gross income?

Greg is single. During 2018, he received $60,000 of salary from his employer. That was his only source of income. He reported $3,000 of for AGI deductions and $9,000 of itemized deductions. The 2018 standard deduction amount for a single taxpayer is $12,000. What is Greg's taxable income?

Filing status determines all of the following except ________

In year 1, the Bennetts' 25-year-old daughter, Jane, is a full-time student at an out-of-state university but she plans to return home after the school year ends. In previous years, Jane has never worked and her parents have always been able to claim her as a dependent. In year 1, a kind neighbor offers to pay for all of Jane's educational and living expenses. Which of the following statements is most accurate regarding whether Jane's parents would be allowed to claim Jane as a dependent for year 1 assuming the neighbor pays for all of Jane's support?

In 2018, Brittany, who is single, cares for her father Raymond. Brittany pays the bills relating to Raymond's home. She also buys groceries and provides the rest of his support. Raymond has no gross income. Brittany received $45,000 of salary from her employer during the year. Brittany reports $3,000 of itemized deductions. What is Brittany's taxable income?