Part 1

Answer 1:

False, the widower can file joint tax return.

Answer 2:

True, for the purpose of federal tax the amount is not excludable.

Answer 3:

False, the taxpayers cannot claim spouse as dependent whether he or she is maintaining residency with them or not.

Answer 4:

True, the greater of his earned income $3,500 + 350 = $3,850

Answer 5:

True, the doctrine of constructive receipt is not applicable on taxpayers with accrual basis.

Answer 6:

The standard deduction is $350 and the additional standard deduction is $1,550 is for anyone that is over 65 years or blind.

= $350 + $1,550

$1,900.

Answer 7:

False, the alimony payments should not be included in the gross income of Emmanuel.

Answer 8:

Betty and Robert can claim 3 dependents in their tax return.

Answer 9:

False, Grant can claim them as dependent in his joint return as he is a qualifying relative.

Answer 10:

The adjusted gross income of Kelly $58,000

65,000+8,000-10,000-4,000 = $58,000

Answer 11:

A cash basis taxpayer must report all of their income in the year they received

Answer 12:

True, The economic gains and losses does not gets recognized until when the asset gets sold or it is exchanged.

Answer 13:

False, Kate parents can claim her as dependent because Kate is a qualifying relative.

Answer 14:

False, the taxpayers can use the standard deductions and itemized deductions to reduce their taxable income.

Answer 15:

False, the federal gross income of Lina is $22,000 ($16,000+$6,000).

Answer 16:

The full amount of allowable basic and additional standard deductions for the year will be $1,

900. ($350+$1550).

Answer 17:

The De minimis fringe benefit is the referred as lower value perks that is provided by the employer. The perks which is treated as de minimis fringe benefit might not be accounted or taxed within some jurisdictions as it has either very small or it is very difficult in accounting.

Answer 18:

False, they are still considered married even if their spouse dies during the year for income tax purpose.

Answer 19:

True, Yana can claim both the mother in law and ex-husband as dependents.

Answer 20:

Olivia should claim itemized deductions amount of $14,212 because the standard deduction would only allow her deduction of $12,550.

Answer 21:

The employees would be required to follow the accrual method to report the salary in their tax return.

Answer 22:

Income from property is taxed to the person who owns the property.

Answer 23:

False, taxpayers that are following the cash basis are required to report the income in gross income during the year it is received instead of the year in which it is earned.

Answer 24:

True

Answer 25:

The gross income of Domino TV Cable

One-eight (3/24) of the payments based on two-year contract was earned (1/8 x 140,400 = 17,550) and one-fourth (1/4 x 103,680 = 25,920) were earned 2021 and it is included in the 2021 gross income. The balance payment of 200,610 should be included in the 2022 gross income.

Answer 26:

All the employees are needed to exclude the value of meals from gross income.

Answer 27:

False, the married couple should choose to itemize the expenses or may decide to use the standard deduction in order to reduce their taxable income.

Answer 28:

$4,500 can be claimed.

Answer 29:

True, Regal Co., should recognize the sale in its gross income for 2021 year.

Answer 30:

The gross income that Grace should include in her assessable income stands $400.

Answer 31:

Single

Answer 32:

False, an abandoned spouse is considered as a single taxpayer. Consequently, an abandoned spouse meet the requirements to be considered as a head of household filing status.

Answer 33:

The AGI of Linda is computed below;

Salary = 90,000

Cash dividend = 4,000

Inheritance from Uncle = 25,000

Capital losses = (6,000)

AGI = 90,000+4,000+25,000-6,000 = $113,000

Answer To 34:

True, Henry must add to his income in 2022 to correct the error he has made in 2021.

Answer To 35:

$0, none of the amounts will be included in her gross income.

Answer To 36:

Some taxpayers might qualify for two types of standard deductions.

Answer To 37:

A Cousin that does not lives with taxpayer

Answer To 38:

An above the line deduction involves deduction from AGI.

Answer To 39:

Daniel is qualified to claim Dominic as a dependent

Answer To 40:

Tobys tax liability is = 320 (15,000-12,000+4,000-6,000 X 32%)

Answer To 41:

Monica is required to include in his gross income $0.

Part 2:

Answer 1:

$9,000 (10,000+5,000+7,000-13,000)

Answer 2:

True

Answer 3:

True, the standard deduction provides $28,800 (26,200 + 1300 + 1300)

Answer 4:

True

Answer 5:

Henry provides all of the support for his stepfather, Richie, who lives by himself in a retirement home. Henry pays for Richie’s living expenses and properly claims him as a dependent.

Answer 6:

The payment of $20,000 cash satisfies all the requirements relating to alimony treatment. Even though the circumstances suggest that Toby is paying Pam for her share of marital property, the agreement should specify that the payments are not considered as alimony to avoid treatment of alimony.

Answer 7:

The statement a, b and d are correct while statement C is not correct.

Answer 8;

True, as Andy is dependent and he does not live with his brother Harrison.

Answer 9:

True

Answer 10:

B: The taxpayer A was already informed about his check for services that was rendered was available on December 15 of current year, however he waited until January 15 of the following year to pick up the check.

Answer 11:

Anton must include the sale of stock amount of $600,000.

Answer 12:

False, the parents cannot claim her as a dependent even if she is not living with them.

Answer 13:

Add the income of $4580 from baby sitting and the added deduction of 350 as long as the income does not exceed $6,200. The standard deduction is $350.

Answer 14:

She should include $900,000 in her gross income.

Answer 15:

The taxable income of Shonda is $700

Answer 16:

False, they are considered married all through the year even though their spouse has died.

Answer 17:

The filing status of Kathleen is Joint.

Answer 18;

The taxable income of Samantha is $1650 (2000-350).

Answer 19:

True, her standard deduction is $1,750.

Answer 20:

Under the alimony rules, the IRS gives permission to the paying spouses to claim deductions for the alimony amount and the receiver is required to report the same as income.

Answer 21:

Tamara can claim 2 personal and dependency exemptions.

Answer 22:

For the twelve month Oscar can deduct 24,000 ($2,000 x 12).

Answer 23:

Sell investment assets, Keep investment assets

Answer 24:

Their standard deduction for 2020 is 28,700 (24800 + 1300 + 1300 + 1300).

Answer 25:

Taxpayers founds an inadvertent overstatement of deductions that is equivalent to 30% of gross income.

Answer 26:

True.

Answer 27:

False

Answer 28:

Harriet must include the reimbursed amount in her gross income.

Answer 29:

Anisha should include 30,000 in her gross income.

Answer 30:

False

Answer 31:

True, Julius qualifies for head of household filing status.

Answer 32:

True,

Answer 33:

False, despite the fact that the taxpayer chooses to itemize, the deductions regarding the AGI can be obtained.

Answer 34:

True,

Answer 35:

Computation of AGI

In the books of Alissa

For the year ended 2020

Particulars

Amount ($)

Assessable Income

Salary

80000

Interest income on savings account

3000

Inheritance from aunt

30000

Total Assessable Income

113000

Allowable Deductions

Contributions to traditional IRA

6000

Interest on student loans

1500

Total Allowable Deductions

7500

AGI

105500

Answer 36:

True

Answer 37:

The employees of non-management that purchases automobiles at discount rate are not needed to recognize the income from purchase.

Answer 38:

The gross income the company must report from two year contract in 2021 is $1140.

Answer 39:

Matt will be considered Head of the Household for the entire year.

Answer 40:

Derek and Anna can claim 2 dependents.