Question

1) Bill takes 8 credits in the quarter system. He is 25 years old and lives with his mother. He made $3,900 from a Hearthstone video game tournament. Yes, he is that good.

I. Bill’s mother can claim him as a dependent as a qualifying child.

II. Bill’s mother can claim him as a dependent as a qualifying relative.

A) Only I is true

B) Only II is true

C) Both are correct

D) Neither is Correct

2) Gwen and Blake haven’t sold records in two years. As a result, they got real jobs, got married, and had one child. Their child is two years old and goes to daycare while they work. Their qualified child care expenses for the year total $4,000 and their AGI is $35,000. What is the amount of the tax credit for dependent care they will take?

A) $0

B) $600

C) $750

D) $800

E) $1,000

F) $1,050

G) $1,400

H) $3,000

3) Donald has an AGI of $40,000. He made a donation to a charity for $20,000 worth of securities that he purchased for $10,000 2 years ago. How much can he deduct in the current year and carry forward?

A) Current = 20,000, Carryforward = 0

B) Current = 8,000, Carryforward = 12,000

C) Current = 10,000, Carryforward = 10,000

D) Current = 12,000, Carryforward = 8,000

E) Current = 12,000, Carryforward = 0

4) Doug has the following interest expenses:

1) Interest on mortgage of business building.

2) Interest on credit cards.

3) Student loan interest.

Which interest expense(s) is/are considered deductible?

A) Statements I and III

B) Statements I and II

C) All Statements

D) None of the statements

Answer 1

1. Answer is D. Neither is correct.

It is bacause Bill does not fulfill the criteria to be a Qualifying Child due to age restrictions.

Age: One of the following:

1. Under 19 years of age
2. A full-time student under 24 years of age.

2. Answer is G) $1400.

The child tax credit is upto $2000 but refundable portion is only upto $1400.

3. Answer is A) Current = 20,000, Carryforward = 0

It is because the Donation of Investment is deductible at its Fair Value. It is non cash deduction allowed under Tax Laws. Capital gains taxes would not be levied.

4. Answer is A) Statements I and III.

It is bacause Interest on Credit Cards is not deductible wereas Interest on Mortgage of Business Building and Student Loan is allowed.