Question 1

In May 2008, Cindy incurred qualifying rehabilitation expenditures of $500,000 on a certified historic structure and properly claimed the tax credit for rehabilitation expenditures.In March 2012, she sold the building at a loss.Calculate the rehabilitation expenditures credit recapture that she must report in 2012.

Accepted Answer

Because the property was hel...

Question 2

For purposes of computing the credit for child and dependent care expenses, the qualifying employment-related expenses are limited to an individual's actual or deemed earned income.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following correctly reflects current rules regarding estimated tax payments for individuals?

Accepted Answer

A)  Employees are not subject to the estimated tax payment provisions.
B)  Any penalty imposed for underpayment is deductible for income tax purposes.
C)  Married taxpayers may not make joint estimated tax payments unless they file a joint income tax return.
D)  No quarterly payments are required if the taxpayer's estimated tax is under $1,000.
E)  None of the above.F) B) and C)
G) A) and E)

Question 4

A taxpayer who qualifies for the low-income housing credit claims the credit over a 15-year period.

Accepted Answer

A) True 
 B)False

Question 5

In describing FICA taxes, which (if any)  of the following statements is incorrect?

Accepted Answer

A)  The base amounts for 2013 probably will increase from the 2012 amounts.
B)  The base amounts for the Social Security and Medicare portions are the same.
C)  If both spouses work, excess FICA taxes need not result.
D)  Excess FICA taxes can be claimed as an income tax credit.
E)  None of the above.F) A) and D)
G) D) and E)

Question 6

Ahmad is considering making a $5,000 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)  $1,250, take the tax credit.
C)  $1,400, take the itemized deduction.
D)  Both options produce the same benefit.
E)  None of the above.F) B) and E)
G) C) and E)

Question 7

The tax credit for rehabilitation expenditures for certified historic structures differs from that for qualifying structures that are not certified historic structures.

Accepted Answer

A) True 
 B)False

Question 8

During 2012, Eleanor earns $120,000 in wages as an employee of an accounting firm.She also earns $26,000 in gross income from an outside consulting service she operates.Deductible expenses paid in connection with the consulting service amount to $6,000.Eleanor also has a recognized long-term capital gain of $1,000 from the sale of a stock investment.She must pay a self-employment tax on:

Accepted Answer

A)  $0.
B)  $20,000.
C)  $26,000.
D)  $27,000.
E)  None of the above.F) D) and E)
G) B) and D)

Question 9

Certain high-income individuals are subject to three additional Medicare taxes beginning in 2013-on wages, unearned income, and tax credits claimed.

Accepted Answer

A) True 
 B)False

Question 10

Several years ago, Sarah purchased a structure for $150,000 that was originally placed in service in 1929.In the current year, she incurred qualifying rehabilitation expenditures of $200,000.The amount of the tax credit for rehabilitation expenditures, and the amount by which the building's basis for cost recovery would increase as a result of the rehabilitation expenditures are the following amounts:

Accepted Answer

A)  $20,000 credit, $180,000 basis.
B)  $20,000 credit, $200,000 basis.
C)  $20,000 credit, $350,000 basis.
D)  $40,000 credit, $160,000 basis.
E)  None of the above.F) All of the above
G) D) and E)

Question 11

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) D) and E)
G) A) and C)

Question 12

A FIFO method is applied to general business credit carryovers, carrybacks, and utilization of credits earned during a particular year.

Accepted Answer

A) True 
 B)False

Question 13

Green Company, in the renovation of its building, incurs $9,000 of expenditures that qualify for the disabled access credit. The disabled access credit is:

Accepted Answer

A)  $8,750.
B)  $4,500.
C)  $4,375.
D)  $4,250.
E)  None of the above.F) B) and C)
G) C) and D)

Question 14

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 15

How does the FICA tax compare to the self-employment tax? How are these two taxes similar and how do they differ?

Accepted Answer

These taxes, commonly referred to as "pa...

Question 16

The maximum child tax credit under current law is $1,200 per qualifying child.

Accepted Answer

A) True 
 B)False

Question 17

Only self-employed individuals are required to make estimated tax payments.

Accepted Answer

A) True 
 B)False

Question 18

During the year, Purple Corporation (a U.S.Corporation)  has U.S.-source income of $900,000 and foreign income of $300,000.The foreign-source income generates foreign income taxes of $75,000.The U.S.income tax before the foreign tax credit is $408,000.Purple Corporation's foreign tax credit is:

Accepted Answer

A)  $56,250.
B)  $75,000.
C)  $102,000.
D)  $408,000.
E)  None of the above.F) B) and E)
G) A) and E)

Question 19

In 2011, Juan and Juanita incur $9,800 in legal and adoption fees directly related to the adoption of an infant son born in a nearby state.Over the next year, they incur another $4,500 of adoption expenses.The adoption becomes final in 2012.Which of the following choices properly reflects the amounts and years in which the adoption expenses credit is available. 2011 2012

Accepted Answer

A)  $9,800 $ 4,500
B)  None $12,650
C)  None $14,300
D)  $9,800 $ 2,850
E)  None of the above.F) A) and B)
G) A) and C)

Question 20

Unless a taxpayer is disabled, the tax credit for the elderly or disabled is available only if the taxpayer is at least 59 1/2 years old.

Accepted Answer

A) True 
 B)False

Exam 12: Tax Credits and Payments

Green Company, in the renovation of its building, incurs $9,000 of expenditures that qualify for the disabled access credit. The disabled access credit is:

Correct Answer
verified

How does the FICA tax compare to the self-employment tax? How are these two taxes similar and how do they differ?

Correct Answer
verified
These taxes, commonly referred to as "pa...
View Answer

A taxpayer who qualifies for the low-income housing credit claims the credit over a 15-year period.

Correct Answer
verified

During the year, Purple Corporation (a U.S.Corporation) has U.S.-source income of $900,000 and foreign income of $300,000.The foreign-source income generates foreign income taxes of $75,000.The U.S.income tax before the foreign tax credit is $408,000.Purple Corporation's foreign tax credit is:

Correct Answer
verified

Only self-employed individuals are required to make estimated tax payments.

Correct Answer
verified

Which of the following correctly reflects current rules regarding estimated tax payments for individuals?

Correct Answer
verified

For purposes of computing the credit for child and dependent care expenses, the qualifying employment-related expenses are limited to an individual's actual or deemed earned income.

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

The maximum child tax credit under current law is $1,200 per qualifying child.

Correct Answer
verified

Unless a taxpayer is disabled, the tax credit for the elderly or disabled is available only if the taxpayer is at least 59 1/2 years old.

Correct Answer
verified

The tax credit for rehabilitation expenditures for certified historic structures differs from that for qualifying structures that are not certified historic structures.

Correct Answer
verified

Correct Answer
verified

A FIFO method is applied to general business credit carryovers, carrybacks, and utilization of credits earned during a particular year.

Correct Answer
verified

In describing FICA taxes, which (if any) of the following statements is incorrect?

Correct Answer
verified

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

Correct Answer
verified

Certain high-income individuals are subject to three additional Medicare taxes beginning in 2013-on wages, unearned income, and tax credits claimed.

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified
Because the property was hel...
View Answer

Exam 12: Tax Credits and Payments

Green Company, in the renovation of its building, incurs $9,000 of expenditures that qualify for the disabled access credit. The disabled access credit is:

Correct AnswerverifiedShow Answer

How does the FICA tax compare to the self-employment tax? How are these two taxes similar and how do they differ?

Correct AnswerverifiedThese taxes, commonly referred to as "pa...View AnswerShow Answer

A taxpayer who qualifies for the low-income housing credit claims the credit over a 15-year period.

Correct AnswerverifiedShow Answer

During the year, Purple Corporation (a U.S.Corporation) has U.S.-source income of $900,000 and foreign income of $300,000.The foreign-source income generates foreign income taxes of $75,000.The U.S.income tax before the foreign tax credit is $408,000.Purple Corporation's foreign tax credit is:

Correct AnswerverifiedShow Answer

Only self-employed individuals are required to make estimated tax payments.

Correct AnswerverifiedShow Answer

Which of the following correctly reflects current rules regarding estimated tax payments for individuals?

Correct AnswerverifiedShow Answer

For purposes of computing the credit for child and dependent care expenses, the qualifying employment-related expenses are limited to an individual's actual or deemed earned income.

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

The maximum child tax credit under current law is $1,200 per qualifying child.

Correct AnswerverifiedShow Answer

Unless a taxpayer is disabled, the tax credit for the elderly or disabled is available only if the taxpayer is at least 59 1/2 years old.

Correct AnswerverifiedShow Answer

The tax credit for rehabilitation expenditures for certified historic structures differs from that for qualifying structures that are not certified historic structures.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A FIFO method is applied to general business credit carryovers, carrybacks, and utilization of credits earned during a particular year.

Correct AnswerverifiedShow Answer

In describing FICA taxes, which (if any) of the following statements is incorrect?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Certain high-income individuals are subject to three additional Medicare taxes beginning in 2013-on wages, unearned income, and tax credits claimed.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answerverified Because the property was hel...View AnswerShow Answer

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These taxes, commonly referred to as "pa...
View Answer

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Because the property was hel...
View Answer