1. Scot and Vidia, married taxpayers, earn $184,000 in taxable income and $5,000 in interest from an investment in City of Tampa bonds. (Use the U.S. tax rate schedule).
a. If Scot and Vidia earn an additional $81,250 of taxable income, what is their marginal tax rate on this income?
b. How would your answer differ if they, instead, had $81,250 of additional deductions?
2. In April of year 1, Martin left his wife Marianne. The couple has two children under the age of 15. While the couple was apart, they were not legally divorced. Marianne remained in the home and paid all the costs of maintaining the home for the remainder of the year. Assuming the couple does not file jointly, which of the following statements regarding filing status is true?
a. No matter the post separation residence(s) of the children, Marianne must file as married filing separately but Martin may qualify to file as head of household.
b. No matter the post separation residence(s) of the children, Martin must file as married filing separately but Marianne may qualify to file as head of household.
c. No matter the post separation residence(s) of the children, both spouses must file as married filing separately.
d. Depending on the post separation residence(s) of the children, both spouses may qualify to file as head of household.
3. This year, Fred and Wilma sold their home (sales price $750,000; cost $200,000). All closing costs were paid by the buyer. Fred and Wilma owned and lived in their home for 20 years. How much of the gain is included in gross income?
a. None
b. $300,000
c. $250,000
d. $550,000
e. $50,000