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Exam 14: Special Tax Computation Methods, tax Credits, and Payment of Tax

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Question 31

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The child and dependent care credit is available to any parent who pays for child care for a child under age 13.

A) True
B) False

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Question 32

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An individual taxpayer who is self-employed and an active investor has qualified for foreign tax credits,nonrefundable personal tax credits and general business credits.Because he knows there are differing limitations on the application of these credits,with resulting interrelated aspects,he wants to know the appropriate order for their application.The appropriate order of the application of these three classes of tax credits is as follow:

A) (1) foreign tax credits; (2) general business credits; (3) nonrefundable personal tax credits.
B) (1) general business credits; (2) foreign tax credits; (3) nonrefundable personal tax credits.
C) (1) foreign tax credits; (2) nonrefundable personal tax credits; (3) general business credits.
D) (1) nonrefundable personal tax credits; (2) foreign tax credits; (3) general business credits.

E) B) and D)
F) A) and D)

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Question 33

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The Lifetime Learning Credit is partially refundable.

Bonjour Corp.is a U.S.-based corporation with operations in France.The operations in France generated $200,000 of taxable income whereas worldwide operations generated total taxable income of $2,000,000.Its U.S.tax liability before credits is $680,000.Determine the allowable foreign tax credit assuming taxes paid to France as follows: a. $40,000. b. $80,000.

Describe the differences between the American Opportunity Tax credit and the Lifetime Learning credit.

A couple has filed a joint tax return since they were first married.Because of self-employment income and significant investment income,they have made joint quarterly estimated tax payments.Before year-end the couple has divorced,and they will each file their own individual returns.The estimated payments made jointly while still married earlier in the year will be divided evenly between the two individual returns.

In computing the alternative minimum taxable income,no deduction is allowed for

In computing AMTI,tax preference items are

Hawaii,Inc.,began a child care facility for its employees during the year.The corporation incurred the following expenses: What is the amount of Hawaii's credit for employer-provided child care?

The foreign tax credit is equal to the smaller of foreign taxes paid or accrued in the tax year or the portion of the U.S.income tax liability attributable to the income earned in all foreign countries.

In computing AMTI,adjustments are

If estimated tax payments equal or exceed 100% of the actual tax liability for the prior year,there is generally (assuming AGI less than or equal to $150,000) no penalty for underpayment of estimated taxes.

Marguerite and Josephus have two children,ages 13 and 10.Their modified AGI is $120,500.What is their child tax credit?

Which of the following expenditures will qualify as a research expenditure for purposes of the research credit?

During the year,Jim incurs $500,000 of rehabilitation expenditures in connection with a certified historic structure used in his business.The adjusted basis of the structure was $400,000 at the time the rehabilitation began. a.What is the amount,if any,of his rehabilitation credit for the year? b.What is the depreciable basis of the rehabilitation expenditures?

Octo Corp.purchases a building for use in its business at a cost of $100,000.The building was built in 1930 and needs substantial work so it can be used.Octo spends $150,000 on qualifying renovations.Octo will earn a rehabilitation credit of

Lara started a self-employed consulting business in the last part of the year and earned $60,000 of self- employment earnings.She had been employed as manager in a consulting firm prior to starting her own business and had earned $175,000. (a) What is Lara's Additional Medicare Tax for 2017,if any? (b) What is Lara's deduction for AGI for the Additional Medicare Tax?

Jorge has $150,000 of self-employment earnings from a sole proprietorship.Jorge's self-employment tax (rounded) for 2017 is

ChocoHealth Inc.is developing new chocolate products providing abundant health benefits at low calorie counts.For the past three years,it spent an average of $500,000 per year on research.ChocoHealth has spent $900,000 on research.The company has elected the simplified credit.For the current year,it will earn a research credit of

If an individual is an employee and also has self-employment income,the maximum tax base for computing self-employment tax is reduced by the wages that are subject to the FICA tax.