Ch 3-4 3600

Good Essays
Ch 3-4 3400 Fall 2014

Name

Multiple Choice
Identify the choice that best completes the statement or answers the question.

____

1. During this year, Marvin had the following transactions:
Salary
Bank loan (proceeds used to buy personal auto)
Alimony paid
Child support paid
Gift from aunt

$50,000
10,000
12,000
6,000
20,000

Marvin’s AGI is:
a. $32,000.
b. $38,000.
c. $44,000.
d. $56,000.
e. $64,000.
____

2. During this year, Sarah had the following transactions:
Salary
Interest income on City of Baltimore bonds
Damages for personal injury (car accident)
Punitive damages (same car accident)
Cash dividends from Chevron Corporation stock

$ 80,000
1,000
100,000
200,000
7,000

Sarah’s AGI is:
a. $185,000.
b. $187,000.
c. $285,000.
d. $287,000.
e. $387,000.

____

3. Sylvia, age 17, is claimed by her parents as a dependent. During this year, she had interest income from a bank savings account of $2,000 and income from a part-time job of $4,200. Sylvia’s taxable income is:
a.
b.
c.
d.
e.

$4,200 – $4,550 = $0.
$6,200 – $5,700 = $500.
$6,200 – $4,550 = $1,650.
$6,200 – $1,000 = $5,200.
None of the above.
1

____

4. Merle is a widow, age 80 and blind, who is claimed as a dependent by her son. During this year, she received $4,800 in Social Security benefits, $2,350 in bank interest, and
$1,800 in cash dividends from stocks. Merle’s taxable income is:
a. $4,150 – $1,000 – $3,100 = $50.
b. $4,150 – $3,100 = $1,050.
c. $4,150 – $1,000 – $1,550 = $1,600.
d. $8,950 – $1,000 – $3,100 = $4,850.
e. None of the above.

____

5. Kyle and Liza are married and under 65 years of age. During this year, they furnish more than half of the support of their 19-year old daughter, May, who lives with them. She graduated from high school in May of last year. May earns $15,000 from a part-time job, most of which she sets aside for future college expenses. Kyle and Liza also provide more than half of the

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