Question

NOTE: All questions will be based on Tax Cuts & Jobs Act (TCJA) and tax returns prepared after 2017

38) In the fall of 2016, James went back to school to earn a master of accountancy degree. He incurred $7,000 of qualified educational expenses and his modified AGI for the year was $40,000. James fully utilized the AOC to obtain his bachelor degree. His Lifetime Learning Credit is

A) $1,000.

B) $1,400.

C) $1,800.

D) $2,500.

39) All of the following statements are true regarding the Lifetime Learning Credit except which one?

A) In order to qualify for the Lifetime Learning Credit, a student must be enrolled 1/2 time.

B) Qualifying expenses include those for tuition and related fees but not for room and board.

C) The Lifetime Learning credit may be claimed for any degree or nondegree course at a college or university that helps an individual acquire or improve their job skills.

D) The Lifetime Learning credit and the American Opportunity Tax credit may not be taken in the same tax year with respect to the same student's tuition and related fees.

40) A taxpayer will be ineligible for the earned income credit if he or she has disqualified investment income of more than $3,400 in 2016. Disqualified income includes all the following except

A) net capital gains.

B) tax-exempt interest.

C) net rental income.

D) self-employment income.

41) Which one of the following is a refundable credit?

A) earned income credit

B) child and dependent care credit

C) lifetime learning credit

D) credit for the elderly and disabled

Answer 1

Answer:-

(38) In the fall of 2016, James went back to school to earn a master of accountancy degree. He incurred $7,000 of qualified educational expenses and his modified AGI for the year was $40,000. James fully utilized the AOC to obtain his bachelor degree. His Lifetime Learning Credit is $1,400.. CALCULATION ARE AS UNDER :-

$7,000 * 20% = $1,400 MAXIMUM TO $2,000

So, In this question $1,400 is avaible Lifetime Learning Credit.

So, Answer is (B) $1,400

(39) All of the following statements are true regarding the Lifetime Learning Credit except which one?

So, Answer is (C)The Lifetime Learning credit may be claimed for any degree or nondegree course at a college or university that helps an individual acquire or improve their job skills.

(40) A taxpayer will be ineligible for the earned income credit if he or she has disqualified investment income of more than $3,400 in 2016. Disqualified income includes all the following except Self- Employment Income. All Other Income Like net capital gains, tax-exempt interest , net rental income are included.So,

So, Answer is (D) Self- Employment Income.

(41) Earned Income Credit is refundable Credit. All other credit like child & dependent care credit, lifetime learing credit, credit for elderly & disabled are not refundable credit.

So, Answer is (A) Earned Income Credit.