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Exam 12: Tax Credits and Payments

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Question 51

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Which of the following correctly describes the tax credit for rehabilitation expenditures?

A) The cost of enlarging any existing business building is a qualifying expenditure.
B) The cost of facilities related to the building (e.g., a parking lot) is a qualifying expenditure.
C) No recapture provisions apply.
D) No credit is allowed for the rehabilitation of personal use property.
E) None of the above.

F) C) and D)
G) B) and D)

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Question 52

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Both education tax credits are available for qualified tuition expenses,and in certain instances,also may be available for room and board.

A) True
B) False

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Question 53

Multiple Choice

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Several years ago,Sarah purchased a structure for $150,000 that was placed in service in 1929.In the current year,she incurred qualifying rehabilitation expenditures of $200,000.The amount of the tax credit for rehabilitation expenditures,and the amount by which the building's basis for cost recovery would increase as a result of the rehabilitation expenditures are the following amounts.

Identify the statement below that is false.

Explain the purpose of the tax credit for rehabilitation expenditures and describe the general characteristics of its computation.

During 2017,Barry (who is single and has no children) earned a salary of $13,000.He is age 30.His earned income credit for the year is:

The tax credit for rehabilitation expenditures for certified historic structures differs from that for qualifying structures that are not certified historic structures.

During the year,Purple Corporation (a U.S.Corporation) has U.S.-source income of $1,800,000 and foreign income of $600,000.The foreign-source income generates foreign income taxes of $150,000.The U.S.income tax before the foreign tax credit is $816,000.Purple Corporation's foreign tax credit is:

An employer calculates the amount of income tax withheld from salary or wages based on the information an employee provides on the following form:

Some (or all) of the tax credit for rehabilitation expenditures will have to be recaptured if the rehabilitated property is disposed of prematurely or if it ceases to be qualifying property.

Pat generated self-employment income in 2017 of $76,000.The self-employment tax is:

Bob and Sally are married,file a joint tax return,report AGI of $116,000,and have two children.Del is beginning her freshman year at State College during Fall 2017,and Owen is beginning his senior year at Southwest University during Fall 2017.Owen completed his junior year during the Spring semester of 2016 (i.e.,he took a "leave of absence" during the 2016-2017 school year) .Both Del and Owen are claimed as dependents on their parents' tax return. Del's qualifying tuition expenses and fees total $5,000 for the Fall semester,while Owen's qualifying tuition expenses were $6,100 for the Fall 2017 semester.Del's room and board costs were $3,200 for the Fall semester.Owen did not incur room and board costs,as he lived with his aunt and uncle during the year. Full payment is made for the tuition and related expenses for both children at the beginning of each semester.In addition to the children's college expenses,Bob also spent $3,000 on professional education seminars during the year in order to maintain his license as a practicing dentist.Bob attended the seminars during July and August 2017.Compute the available education tax credits for Bob and Sally for 2017.

Expenses that are reimbursed by a taxpayer's employer under a dependent care assistance program can also qualify for the credit for child and dependent care expenses.

The tax benefit received from a tax credit is never affected by the tax rate of the taxpayer.

Which of the following issues does not need resolution in an employer's effort to comply with employment tax payment requirements?

Which of the following statements concerning the credit for child and dependent care expenses is not correct?

The base amount for the Social Security portion (old age,survivors,and disability insurance) is different from that for the Medicare portion of FICA.

The low-income housing credit is available to low-income tenants who reside in qualifying low-income housing.

Bradley has two college-age children,Clint,a freshman at State University,and Abigail,a junior at Northwest University.Both Clint and Abigail are full-time students.Clint's expenses during the 2017 fall semester are as follows: $2,400 tuition,$250 books and course materials,and $1,600 room and board.Abigail's expenses for the 2017 calendar year are as follows: $10,200 tuition,$1,200 books and course materials,and $3,600 room and board.Tuition and the applicable room and board costs are paid at the beginning of each semester. ​ Bradley is married,files a joint tax return,claims both children as dependents,and reports a combined AGI with his wife Allie of $114,000 for 2017.Determine Bradley's available education tax credit for 2017.

Steve records a tentative general business credit of $110,000 for the current year.His net regular tax liability before the general business credit is $125,000,and his tentative minimum tax is $100,000.Compute Steve's allowable general business credit for the year.