Shared Flashcard Set


TAX Final
Undergraduate 4

Additional Accounting Flashcards





A man widowed during the year may


a) file as a surviving spouse

b)file a joint return

c) file as head of household

d) none of the above

Joint Return

Dependents must live wiht the taxpayer for the entire tax year or be related. A relationship that does not count is 


a) mother -in-law




e) cousins

f) all the above are qualified relationships


the gross income test does not apply in determining the dependency status of 

a) elderly parents

b)full-time students

c)children under the age of 19

d) disabled relatives 

e) none of the avove

Children under the age of 19

Angie, a widow of five years. Her son James is 22, a full-time student with AGI of $3,000, all of which is devoted to the cost of his college education. James lives in his mother's home along wiht his wife and 2 year old son. James does not file a joint return with his wife. Angie pays all of the costs of maintaining the home and pays all of the cost of food and clothing for the members of her household. 


How many personal and dependent exemptions may angie take?


What is Angie's filing status?


4 total dependent and personal expemptions 


Head of household

Betty's son Andrew is 17, dropped out of high school to pursue a career in music and has income of $12,000 from his band. Andrew still lives at home. Can Betty claim a personal exemption for Andrew, assuming she provides over half of his support?
Yes she can

Pat pays Chris the follwing amounts under a divorce decree that stipulates that all such payments are alimony: $50,000, year 1; $30,000, year 2; 10,000, year 3.


What is the amount of alimony allowed as a deduction for year 2?


What is the amont of income or dection reported by Pat in year 3.



Year 2:  $25,000


year 3: $12,500

Pat also pays $1,000 a month to Chris as child support. Pat made payments of $13,000 in 2012 (the additional $1,000 was a late payment for 2011). Chris is a cash basis taxpayer. What amount of income must Chris report for 2012?




Zoey Blume earns $20,000 a year as a bookkeeper. Her husband Wally Blume is a full time student and has only $1,500 of taxable income from a part-time job during the year. They file jointly for the tax year. Zoey pasy her mother (comment: payments to relatives are allowed as long as they are not a dependant of the payor) Abbie to care for her pre-school son in mother's home paying her $2,300 during the year.


What is the amount of dependent care expense eligible for computing the dependent care credit?


What is the amount of Blume's credit for child care for the year?



Amount of expenses : $2,300


Credit: $713

Taxpayer Joe owes $900 in federal tax before consideration of withholding and tax credits. Joe had $300 withheld from his wages and his earned income tax credit is computed as $1,400. Joe will pay or receive how much back when he files his tax return?
$800 dollar refund

Professional service corporations:


a) pay tax at a rate of 34% 

b) usually have little or no taxable income after paying compensation

c)usually retain about $50,000 a year in pre-tax income

d) cannot be used by medical doctors

e) none of the above

usually have little or no taxable income after paying compensation

Entrepreneur D and spouse E spend about $100,000 a year more than can be justified in reasonable compensation from his printing business. If D decides to convert his proprietorship to another form of business he should:


a)form an S corporation

b)form a partnership

c) form an LLC

d) form a C corporation

e) any of the above except D

Any of the above except a C corporation

Father F transferred 60% of his stock in FSD, andS corporation to his children, dividing the gift equally between son S and daughter D several years ago. Only F works in the company. an examination of the tax return of the FSD corporation by the IRS would probably look closely at

a)the allocation of income between shareholders

b)whether the compensation paid to F is too high

c) whether compensation paid to F is too low

d) none of the above

Whether  compensation paid to F is too Low

Limited liability and a single level of tax is available in 

a) an S corporation

b) a general partnership

c) an LLC

d) a corporation

e) both a and c


an S corporation


an LLC


The major difference(s) between a regular partnership and an LLC are: 

a)an LLC cannot be as flexible in the allocation of income

b)LLC offer limited liability to all of their partners

c)LLC has no general partner

d) all of the above

e) both b and c

LLC offer limited liability to all of their partners &LLC has no general partner

Rents paid to a shareholder for the use of an office building owned by the shareholder are: 

a) not deductible to the corporation

b)divident income to the shareholder

c)both a and b are true to the extent rents are in excess of fair market value

d)none of the above

both a and b are true to the extent rents are in excess of fair market value

The IRS has determined that a payment of $30,000 was unreasonable compensation to D the daugheter of S, the sole shareholder, by a C corporation. This finding could result in :

a)disallowance of the deductin to the corporation

b) taxable gift by S

c)dividend income to S

d) all of the above

all of the above
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