Q1. Anna, age 75, receives social security benefits of $6,000. The following people also provided money for her support.
Alex, son $3,000
Ray, brother $1,000
Freeda, neighbor $4,000
Janice, daughter $2,200
Assuming a multiple support agreement, which donors above can possibly claim an exemption for Anna under a multiple support agreement? Explain your answer.
Q2. What is the definition of a capital asset?
An asset that has an expected life of more than one year and that is not bought and sold in the usual course of business. Buildings and machinery are examples of capital assets.
Q3. Which of the following assets are considered capital assets if you sold them?
Sale of bonds in your portfolio?
Sale of an auto which you used for personal use?
Sale of an auto which you used for business purposes?
Sale of an auto by an auto dealer?
Q4. Assuming the same amount of taxable income put the following filing status in order from lowest tax rates to highest.
A. Single
B. Married filing jointly
C. Married filing separately
D. Head of household
Q5. Jim provided over 50% of the support for his brother who lived with him. His brother is 21 years old and had dividend income of $2200. He is not in school. Can Jim claim his brother as a dependent under the qualifying child rules, qualifying relative rules or neither? Justify your answer.
Q6. Joanne's mother lives in Joanne's house. Joanne estimated that she could have rented the room where her mother lives for $3,000. Joanne purchased clothing for her mother at cost of $900. She bought food for the household of $4,800. She also purchased a stereo system which cost $1,600 which she put in the living room. She paid mortgage payments on the house of $4,900 and property taxes on the house of $1800. How much can Joanne's mother spend on herself and still allow Joanne claim the exemption for her mother?
Q7. The Johnson family files married filing jointly. They have three children, age 20, 18, and 16. Their adjusted gross income was $123,600. In 2009 how much child tax credit can they take on their tax return?