Question

13. F and B were divorced in 1996, their divorce decree gave custody of their child to B, and under a separate written agreement, B surrendered the dependency exemption to F for the current year. F paid child support of $800 in the current year. B provided the other support of $2,000 for their only child. What is B’s filing status and her number of exemptions? a. Head of household and one b. Head of household and two c. Single and one d. Single and two

14. In what situation is a married person generally required to file separately? a. They are separated and planning a divorce. b. Another taxpayer could claim one spouse as a dependent. c. Either spouse is a nonresident alien. d. Use of the separate return tables yields a lower tax than use of the joint return tables.

15. A penalty is assessed against individuals for failure to make adequate estimated tax payments. Which of the following is not true of that penalty? a. The penalty is not assessed if the tax due is less than $1,000. b. The penalty is not assessed if the total prepayments—withholding, esti¬mated tax payments, and others—are at least 90% of the total tax due for the year. c. The penalty is assessed only with respect to income taxes owed and not self-employment taxes or the alternative minimum tax. d. The penalty is not assessed if the total prepayments—withholding, es¬timated tax payments, and others—equal or exceed the prior year’s tax (unless AGI exceeded $150,000).

16. LMN Partnership is owned equally by R and S, calendar year taxpayers. The partnership reports on a fiscal year ending October 31. During the calendar year 2016, the partnership earned $1,000 a month. During the calendar year 2017, the partnership earned $2,000 a month. During 2016 and 2017, R with¬drew $300 a month. On his personal return for 2017, R will report income from the partnership of a. $1,800 b. $3,500 c. $11,000 d. $12,000

Answer 1

13. Answer is A. Head of household and one.

This is because shesurrendered the dependency exemption to F and now there is only one dependent in the house- the child. Since she has the custody she is the head of household.

14. Answer is C. Either spouse is nonresident alien.

15. Answer is C. The penalty is assessed only with respect to income taxes owed and not self-employment taxes or the alternative minimum tax.

This is false because penalty is assessed with respect to both self-employment and income tax.

16. Answer is C. $11,000

R's share was 50% in the income. The partnership earned 1000*2= 2000 in 2016 (as only 2 months in the FY16- November and December) and earned 2000*10=20000 in FY17 (10 months with 2000 earning each). The total is 22000. R's share is 50%, which is 11000. His withgrawing doesnt mean he wont be charged tax on it.