BU404 Midterm Review Day 3

Under Clint’s will, all of his property passes to either the Lutheran Church or to his spouse. No Federal estate tax will be due on Clint’s death.

• True

• False

In December 2023, Adriana collected the December 2023 and January 2024 rent from a tenant. Adriana is a cash basis taxpayer. The amount collected in December 2023 for the 2024 rent should be included in her 2024 gross income.

• True

• False

The realization requirement gives an incentive to own assets that have increased in value and to sell assets whose value has decreased.

• True

• False

Regarding the Tax Tables related to the Federal income tax, which of the following statements is correct?

• For any one year, the Tax Tables are issued by the IRS after the Tax Rate Schedules.

• The Tax Tables will always yield the same amount of tax as the Tax Rate Schedules.

• Taxpayers can elect as to whether they use the Tax Tables or the Tax Rate Schedules.

• The Tax Tables can be used by an estate but not by a trust.

Regarding the rules applicable to filing of income tax returns, which of the following is an incorrect statement:

• Married persons who file joint returns cannot later (after the due date of the return) substitute separate returns.

• Married persons who file separate returns can later (after the due date of the return) substitute a joint return.

• The usual test as to when a taxpayer must file a return is based on the total of the following: personal exemption + basic standard deduction + both additional standard deductions.

• Special filing requirement rules exist for taxpayers who are claimed as dependents of another.

A qualifying child cannot include:

• A married son who files a joint return.

• A daughter who is away at college.

• A brother who is 28 years of age and disabled.

• A grandmother.

In which of the following situations may the individual not be claimed as a dependent of the taxpayer?

• A former spouse who lives with the taxpayer (divorce took place last year).

• A stepmother who does not live with the taxpayer.

• A married daughter who lives with the taxpayer.

• A half-brother who does not live with the taxpayer and is a citizen and resident of Honduras.

Which of the following statements relating to the standard deduction is correct?

• If a taxpayer dies during the year, the standard deduction must be prorated.

• If a taxpayer is claimed as a dependent of another, the additional standard deduction is allowed in full (i.e., no adjustment is necessary).

• If spouses file separate returns, both must claim the standard deduction (rather than itemize their deductions from AGI).

• If a taxpayer is claimed as a dependent of another, no basic standard deduction is allowed.

A child who is married cannot be subject to the kiddie tax.

• True

• False

Currently, the top income tax rate in effect is not the highest it has ever been.

• True

• False