46: In each of the
following independent situations, determine Winston’s filing status for
2013. Winston is not married.
a. Winston lives alone, but he maintains a household in which his parents
live. The mother qualifies as Winston’s
dependent, but the father does not.
b.
Winston lives alone but maintains a household
in which his married daughter, Karin, lives.
Both Karin and her husband (Winston’s son-in-law) qualify as Winston’s
dependents.
c.
Winston maintains a household in which he and
a family friend, Ward, live. Ward
qualifies as Winston’s dependent.
.
d.
Winston maintains a household in which he and
his mother-in-law live. Winston’s wife
died in 2012.
e. Same as (d), except that Winston’s wife disappeared (i.e., she did not
die) in 2011.
47: Christopher
died in 2011 and is survived by his wife, Chloe, and their 18 year old son,
Dylan, Chloe is the executor of Christopher’s estate and maintains the
household in which she and Dylan live.
All of their support is furnished by Chloe while Dylan saves his
earnings. Dylan’s status for 2011-2013
is as follows:
|
Year |
Earnings |
Student Status |
|
2011 |
$ 5,000 |
Yes |
|
2012 |
7,000 |
No |
|
2013 |
6,000 |
Yes |
What is Chloe’s filing status for:
a. 2011?
b.
2012
c. 2013?
48: Nadia died in
2012 and is survived by her husband, Jerold (age 44); her married son, Travis
(age 22); and her daughter-in-law, Macy (age 18). Jerold is the executor of his wife’s
estate. He maintains the household where
he, Travis, and Macy live and furnishes all of their support. During 2012 and 2013, Travis is a full-time
student, while Macy earns $7,000 each year from a part-time job. Travis and Macy do not file jointly during
either year. What is Jerold’s filing
status for 2012 and 2013 if all parties reside in:
a. Idaho (a community property state)?
b. Kansas (a common law state)?
49: Paige, age 17, is claimed as a
dependent on her parents’ 2013 return on which they report taxable income of
$120,000 (no qualified dividends or capital gains). Paige earned $3,900 pet sitting and $4,000 in
interest on a savings account. What are
Paige’s taxable income and tax liability for 2013?
50: Terri, age 16, is claimed as a
dependent on her parents’ 2013 return.
During the year, Terri earned $5,000 in interest income and $3,000 from
part-time jobs.
a. What is Terri’s taxable income?
b.
How much of Terri’s income is taxed at her
rate? At her parents’ rate?
c. Can the parental election be made?
Why or why not?
52: During the
year, Chester had the following transactions involving capital assets:
Gain
on the sale of an arrowhead collection (acquired as an investment at different
times but all pieces have been held for more than one year)
Loss
on the sale of IBM Corporation stock (purchased 11 months ago as an investment)
Gain
on the sale of a city lot (acquired 5 years ago as an investment)
a. If Chester is in the 33% bracket, how much income tax results?
b. $300
[($2000 x 15%) + ($2000 x 0%)].
53: Each year, Tom
and Cindy Bates normally have itemized deductions of $10,000, including a
$4,000 pledge payment to their church.
Upon the advice of a friend, they do the following: in early January 2013, they pay their pledge
for 2012; during 2013, they pay the pledge for 2013; and in late December 2013,
they prepay their pledge for 2014.
a. Explain what the Bates are trying to accomplish
b.
What will be the tax saving if their marginal
tax bracket is 25% for all three years? (Assume that the standard deduction
amounts for 2013 and 2014 are the same).
c. Write a letter to Tom and Cindy Bates (8212 Bridle Court, Reston, VA
20194) summarizing your analysis.
