Ch. 12

Question 1

Angie and Patrick were married on September 1 of this year. Following a honeymoon in Hawaii, Patrick died of a heart attack. Neither Angie nor Patrick had any dependent’s. What filing status can Angie use for this year?

Answer 1

Married filing jointly

Question 2

Bruce, a single taxpayer, has been transferred by his company to Philadelphia. He sold his house for $650,000 and he had an adjusted basis of $330,000. He owned and lived in the home for 18 months. What is his capital gain from sale in residence?

Answer 2

320,000 - (250,000 X 18/24) = 132,500

Question 3

Child support is…

Answer 3

Not taxable income

Question 4

How do you calculate a failure to pay penalty that is 21.5 months late for $5,000?

Answer 4

22 X .005 X 5,000 = 550

Question 5

How do you calculate a failure to file penalty on $5,000?

Answer 5

25% X $5,000 = 1250 - (.005 X 5 X 5,000) = $1,125

Question 6

Sam’s Turbo Repair purchased a new machine for cleaning and retooling the turbo blades on semi trucks. The machine cost was $30,000, 10% sales tax and $1,000 delivery and setup fee. What is STRs basis in the new machine?

Answer 6

$34,000

Question 7

The standard deduction for married filing jointly is?

Answer 7

$24,400

Question 8

What is the additional standard deduction per person for those 65 or over?

Answer 8

$1,300