Federal Taxation - Exam 2
(ALL)Questions & Answers 100%
Solved!
Which taxpayers have limits on their/receive no standard deduction? -
ANSWERSmarried taxpayers filing separate where the other spouse itemizes, non-
resident aliens, and taxpayers with filing periods less than 12 months
limit on standard deduction for dependents - ANSWERSthe greater of $1050 OR
earned income + $350 (note: cannot exceed personal exemption amount of $6300)
multiple support agreement - ANSWERSif a group of people provide over 1/2 the
support of a dependent but no one member provides over 1/2 the support alone, then
eligible members of the group may designate one member to claim the exemption
alimony - ANSWERSdeductible by the payer and taxable to the recipient; must be made
in cash, terminate at death of payee, not be designated as other than alimony (i.e child
support), be made between people living in separate households
tax concept of income - ANSWERSthere must be: 1. an economic benefit 2. realized
income (wherewithal-to-pay, cash-basis) 3. recognized income
tax on qualified dividends - ANSWERS10% or 15% tax bracket = NO tax
25% - 35% tax bracket = 15% tax rate
39.6% tax bracket = 20% tax rate
health insurance (fringe benefit) - ANSWERSwhatever is paid by the employer is not
taxable to the employee (ex. if the premium is $300 and they pay 80%, the $240 paid by
them is not taxable to the employee)
child support - ANSWERSneither taxable nor deductible
property settlement - ANSWERSneither taxable nor deductible
expected return (annuity) - ANSWERSexpected return multiple (given) * annual
payment
exclusion ratio (annuity) - ANSWERScost (investment in the contract) / expected return
current year exclusion (annuity) - ANSWERSexclusion ratio * amount received during
the year who generally claims the dependency exemption for the child of divorced
parents? - ANSWERSthe custodial parent
(ALL)Questions & Answers 100%
Solved!
Which taxpayers have limits on their/receive no standard deduction? -
ANSWERSmarried taxpayers filing separate where the other spouse itemizes, non-
resident aliens, and taxpayers with filing periods less than 12 months
limit on standard deduction for dependents - ANSWERSthe greater of $1050 OR
earned income + $350 (note: cannot exceed personal exemption amount of $6300)
multiple support agreement - ANSWERSif a group of people provide over 1/2 the
support of a dependent but no one member provides over 1/2 the support alone, then
eligible members of the group may designate one member to claim the exemption
alimony - ANSWERSdeductible by the payer and taxable to the recipient; must be made
in cash, terminate at death of payee, not be designated as other than alimony (i.e child
support), be made between people living in separate households
tax concept of income - ANSWERSthere must be: 1. an economic benefit 2. realized
income (wherewithal-to-pay, cash-basis) 3. recognized income
tax on qualified dividends - ANSWERS10% or 15% tax bracket = NO tax
25% - 35% tax bracket = 15% tax rate
39.6% tax bracket = 20% tax rate
health insurance (fringe benefit) - ANSWERSwhatever is paid by the employer is not
taxable to the employee (ex. if the premium is $300 and they pay 80%, the $240 paid by
them is not taxable to the employee)
child support - ANSWERSneither taxable nor deductible
property settlement - ANSWERSneither taxable nor deductible
expected return (annuity) - ANSWERSexpected return multiple (given) * annual
payment
exclusion ratio (annuity) - ANSWERScost (investment in the contract) / expected return
current year exclusion (annuity) - ANSWERSexclusion ratio * amount received during
the year who generally claims the dependency exemption for the child of divorced
parents? - ANSWERSthe custodial parent
