Ch 3-4 3600

Topics: Generally Accepted Accounting Principles, Marriage, Divorce Pages: 7 (2003 words) Published: October 27, 2014
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 support of Kyle’s cousin who lives with them. Liza’s father, who died on January 3, of the current year, at age 90, has for many years qualified as their dependent. How many personal and dependency exemptions should Kyle and Liza claim?

a. Two.
b. Three.
c. Four.
d. Five.
e. None of the above.

____

6. Millie, age 80, is supported during the current year as follows: Percent of Support
20%
35%
25%
20%

Weston (a son)
Faith (a daughter)
Jake (a cousin)
Brayden (unrelated close family friend)

During the year, Millie lives in an assisted living facility. Under a multiple support agreement, indicate which parties can qualify to claim Millie as a dependent. a.
b.
c.
d.
e.

Weston and Faith.
Faith.
Weston, Faith, Jake, and Brayden.
Faith, Jake, and Brayden.
None of the above.

2

____

7. Which of the following taxpayers may file as a head of household? Ron provides all the support for his mother, Betty, who lives by herself in an apartment in Fort Lauderdale. Ron pays the rent and other expenses for the apartment and properly claims his mother as a dependent.

Tammy provides over one-half the support for her 18-year old brother, Dan. Dan earned $4,200 this year working at a fast food restaurant and is saving his money to attend college next year. Dan lives in Tammy’s home.

Joe’s wife left him late in December of last year. No legal action was taken and Joe has not heard from her this year. Joe supported his 6-year-old son, who lived with him throughout this year.
a.
b.
c.
d.
e.

____

8. During the year, Kim sold the following assets: business auto for a $1,000 loss, stock investment for a $1,000 loss, and pleasure yacht for a $1,000 loss. Presuming adequate income, how much of these losses may Kim claim?

a.
b.
c.
d.
e.

____

Ron only.
Tammy only.
Joe only.
Ron and Joe only.
Ron, Tammy, and Joe.

$0.
$1,000.
$2,000.
$3,000.
None of the above.

9. Kirby is in the 15% tax bracket and had the following capital...
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