What is the “alternative minimum tax” that must be paid by ataxpayer filing a joint return, if the taxpayer has taxable incomeof $95,450, adjustments to taxable income of $29,000, taxpreferences of $50,000, and an income tax before the alternativeminimum tax of $6,000?
1. A payment to a nursing home for the care of a disabled,dependent parent qualifies as an “employment related” expense forthe household and dependent care credit.A) TrueB) False2. Payments made to dependent household members may be included inthe computation of dependent care expenses.A) TrueB) False3. Transportation costs for a child between the taxpayer’shousehold and the child care location are allowable child careexpenses.A) TrueB) False4. The credit for outside dependent care applies only to dependentsunder 13 years of age.A) TrueB) False5. The credit for the elderly applies only to individuals age 65 orolder.A) TrueB) False6. Foreign income taxes paid to a foreign country may be claimed asa credit against United States income tax or deducted as anitemized deduction.A) TrueB) False7. Taxpayers may elect to carry forward unused general businesscredit for 10 years rather than back one year and forward 20years.A) TrueB) False8. The work opportunity credit is allowed for up to $2,400.A) TrueB) False9. Although a work opportunity credit usually is available only forqualified first-year wages, qualified second-year wages paid to along-term family recipient can qualify for the credit.A) TrueB) False10. The deduction for foreign taxes is only allowed in the year inwhich the foreign taxes are paid or incurred.A) TrueB) False11. What is the amount of dependent care credit for a couple withtwo children where they spend $5,000 for dependent care and thehusband earns $40,000 for the year and the wife earns $4,500?A) $1,000B) $990C) $900D) $0E) None of the above12. Joe College is married and attends State University for 12months. Joe and his wife have two children. Mrs. College works tohelp put Joe through school. The children, who are four and fiveyears old, are kept at Sleepy Time Day Care School. The Collegespaid the school $4,600 this year to keep the children. The Collegeshad adjusted gross income of $10,000 this year, all of which wasearned by Mrs. College. What amount may the Colleges claim as achild care credit?A) $920B) $480C) $1,610D) $1,200E) None of the above13. Mr. and Mrs. Gumball are both over age 65. They had income thisyear consisting of $8,500 earned income and $1,500 in socialsecurity benefits. What amount may they claim as a credit for theelderly? They file a joint return.A) $900B) $1,165C) $1,275D) $0E) None of the above14. On July 10, 2007, Test Corporation purchased energy equipmentfor $15,000. The equipment has a 5-year cost recovery period. Thecorporation took the appropriate investment credit for 2007. OnAugust 15, 2011, the corporation sold the asset for $10,000. Whatis the amount of investment credit recapture that is due to theIRS?A) $300B) $900C) $1,000D) $1,500E) None of the above15. What is the earned income credit allowed Don Andersen assuminghe has adjusted gross income of $8,500 and earned income of $5,000?He maintains a household for his daughter.A) $2,890B) $3,094C) $1,700D) $016. Ron Ryder worked for both Boilerworks and Diemakers during theyear. His total wages from Boilerworks were $49,000. His totalwages from Diemakers were $20,000. Ron’s wife worked forStenographers during the year and earned total wages of $28,000.What amount can Ron and his wife claim as a credit against theirincome tax for the year because of excess social security taxwithheld if they file a joint return?A) $290B) $580C) $1,240D) $1,530E) None of the above17. What is the “alternative minimum tax” that must be paid by ataxpayer filing a joint return, if the taxpayer has taxable incomeof $95,450, adjustments to taxable income of $29,000, taxpreferences of $50,000, and an income tax before the alternativeminimum tax of $6,000?A) $21,000B) $15,000C) $20,000D) $0E) None of the above18. Which of the following is not a tax preference item forpurposes of the alternative minimum tax?A) Percentage depletion in excess of the adjusted basis inpropertyB) Amortized circulation costsC) Excess intangible drilling costsD) Tax-exempt interest on certain private activity bondsE) All of the above are tax preference items19. The minimum tax credit:A) Provides that the amount of AMT paid by a corporation in oneyear differences can be used to offset the regular tax liability ofa subsequent yearB) May not be used to offset any future AMT tax liabilityC) May be carried forward indefinitely as an offset against regulartax liabilityD) All of the above20. The tax structure of the individual AMT is a two-tierprogressive tax where:A) The first $175,000 of AMT base is taxed at a 15 percent rate andany excess over that amount is taxed at 25 percentB) The first $175,000 of AMT base is taxed at a 26 percent rate andany excess over that amount is taxed at 28 percentC) The first $175,000 of AMT base is taxed at a 25 percent rate andany excess over that amount is taxed at 35 percentD) None of the above21. Which of the following taxpayers derives the most benefits froma $1 tax credit?A) Moderate-income taxpayersB) Higher-income taxpayersC) Lower-income taxpayersD) All of the above derive the same benefit for a $1 tax credit22. Unused general business credits can be:A) Carried back one year and carried forward ten yearsB) Carried back two years and carried forward ten yearsC) Carried back one year and carried forward 20 yearsD) Carried back two years and carried forward 20 yearsE) Carried back three years and carried forward five years23. When tentative minimum tax exceeds the taxpayer’s regular taxliability, the excess represents the taxpayer’s:A) Net income taxB) Alternative minimum tax (AMT)C) Total income tax liabilityD) None of the above24. A work opportunity credit is available for qualifiedsecond-year wages paid to which one of the following?A) Qualified veteransB) Long-term family assistance recipientC) Qualified ex-felonD) High-risk youth25. To claim the disabled access credit, an eligible small businessis defined as:A) One whose gross receipts did not exceed $1 millionB) One who employed no more than 30 full-time employeesC) One who is located in one of the target areas defined by thegovernmentD) a and bE) All of the above26. The low-income housing credit can be claimed by owners ofqualified low-income building for a period of:A) 5 yearsB) 10 yearsC) 15 yearsD) 20 yearsE) None of the above
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