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Exam 4: Individual Income Tax Overview, Exemptions, and Filing Status

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Question 21

Multiple Choice

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Which of the following statements regarding personal and dependency exemptions is false?

A) A married couple filing jointly may claim two personal exemptions.
B) To qualify as a dependent of another, an individual must be a resident of the United States.
C) An individual who qualifies as a dependent of another taxpayer may not claim a personal exemption.
D) An individual cannot qualify as a dependent of another as a qualifying relative taxpayer if the individual's gross income exceeds the exemption amount.

E) A) and B)
F) A) and C)

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Question 22

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A taxpayer who is claimed as a dependent on another's tax return may not claim any personal or dependency exemptions on his or her tax return.

A) True
B) False

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Question 23

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Taxpayers need not include an income item in gross income unless there is a specific tax provision requiring the taxpayer to include the income item in gross income.

It is generally more advantageous from a nontax perspective for a married couple to file separately than it is for them to file jointly.

When determining whether a child meets the qualifying child support test for the child's grandparents, scholarships earned by the child do not count as self support provided by the child.

In June of year 1, Edgar's wife Cathy died and Edgar did not remarry during the year. What is his filing status for year 1 (assuming they did not have any dependents) ?

The relationship requirement is more broadly defined (includes more relationships) for a qualifying relative than it is for a qualifying child.

Jasmine and her husband Arty have been married for 25 years. In May of this year, the couple divorced. During the year, Jasmine provided all the support for herself and her 22-year-old child Dexter who lived in the same home as Jasmine for the entire year. Dexter is employed full-time, earning $29,000 this year. What is the Jasmine's most favorable filing status for the year?

Inventory is a capital asset.

If an unmarried taxpayer is able to claim a dependency exemption for another individual, the taxpayer is automatically eligible for the head of household filing status.

From AGI deductions are generally more valuable to taxpayers than for AGI deductions.

Charlotte is the Lucas family's 22-year-old daughter. She is a full-time student at an out-of-state university but plans to return home when the school year ends. During the year, Charlotte earned $4,000 of income working part-time. Her support totaled $30,000 for the year. Of this amount, Charlotte paid $7,000 with her own funds, her parents paid $14,000, and Charlotte's grandparents paid $9,000. Which of the following statements most accurately describes whether Charlotte's parents can claim a dependency exemption for Charlotte?

Which of the following statements regarding realized income is true?

Which of the following shows the correct relationship among standard deduction amounts for the respective filing statuses?

By the end of year 1, Harold and Jamie Allred had been married for 30 years and have filed a joint return every year of their marriage. Their three sons, Jacob, Larry, and Andi, are ages 13, 16, and 23 respectively and all live at home and are fully supported by their parents. Andi is employed full time, earning $17,000 in year 1. How many exemptions are Harold and Jamie entitled to claim?

The relationship requirement for qualifying relative includes cousins.

It is generally more advantageous from a tax perspective for a married couple to file separately than it is for them to file jointly.

A child who is her parents' qualifying child can claim a personal exemption for herself as long as her parents choose not to claim her as a dependent.

Eric and Josephine were married in year 1. In year 2, Eric dies. The couple did not have any children. Assuming Josephine does not remarry, she may file as a qualifying widow in year 3.

Jan is unmarried and has no children, but she provides all of the financial support for her mother, who lives in an apartment across town. Jan's mother qualifies as Jan's dependent. Which is the most advantageous filing status available to Jan?