, SOLUTION MANUAL FOR Income Tax Fundamentals 2026 44th Edition
Whittenburg
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, SOLUTIONS FOR
QUESTIONS AND PROBLEMS
,
, CHAPTER 1
THE INDIVIDUAL INCOME TAX RETURN
Multiple Choice Questions
1. D The income tax includes elements of social 22. B Margaret and her sister do not provide
and economic policy (LO 1.1) more than one-half of the total support
2. C The income tax was authorized by the 16th (LO 1.6)
Amendment in 1913 (LO 1.1) 23. C The daughter fails the age test to be a
3. A The 1040-EZ no longer exists, the 1065 is for qualifying child but passes the gross
partnerships, and the 1120 is for corporations income test ($5,200 in 2025) to be a
(LO 1.2) qualifying relative (LO 1.6)
4. D Partnerships use Form 1065 to report 24. E The child tax credit in 2025 is $2,200
income tax information (LO 1.2) (LO 1.6)
5. A Interest income over $1,500 is reported 25. D The child tax credit for the 13-year-old child
on Schedule B (LO 1.2) is $2,200. The mother is eligible for the other
6. D A partnership is not generally a tax-paying dependent credit of $500 (LO 1.6)
entity (LO 1.2) 26. B Must be age 16 or under for child tax credit
7. C Student loan interest is a for AGI deduction. (LO 1.6)
The other responses are all itemized (from 27. A Head of household standard deduction plus
AGI) deductions (LO 1.3) additional standard deduction for age 65
8. D The deduction for educators’ expenses is a ($23,625 + $2,000) and senior deduction
for AGI deduction (LO 1.3) of $6,000. (LO 1.7)
9. A $98,000 – $15,750 (standard deduction is 28. C Single taxpayers age 65 or older are eligible
more than itemized deductions) (LO 1.3) for a $2,000 additional standard deduction
amount and senior deduction of $6,000.
10. D For AGI adjustments are deducted to get
(LO 1.7)
to AGI (LO 1.3)
29. B Taxpayers that are blind are eligible for
11. B The larger of the two may be deducted
an additional standard deduction amount
(LO 1.3)
(LO 1.7)
12. D The senior deduction is a from AGI
30. E Earned income plus $450, limited to the
deduction (LO 1.3)
maximum standard deduction (LO 1.7)
13. B Filing thresholds generally are the same as
31. B Statutory amount of $1,350 (LO 1.7)
the standard deduction amount (LO 1.4)
32. D Business inventory is not considered a
14. E Ben’s income would need to exceed the
capital asset (LO 1.8)
standard deduction to require filing a tax
return (LO 1.4) 33. B Gain of $15,000 ($25,000 amount realized
less $10,000 adjusted basis) has been held
15. D The standard deduction for married filing
for 12 months or less and is short-term
jointly (LO 1.4)
(LO 1.8)
16. A Single dependent over 65 and blind thresh-
34. C $10,000 = $240,000 – ($270,000 – $40,000)
old is $5,350 for unearned income (LO 1.4)
(LO 1.8)
17. A Joan only qualifies as single (LO 1.5)
35. B $42,000 – $3,000. Net capital losses
18. A As a cousin, Dorothy must live with Glenda of up to $3,000 may be deducted from
to be a qualifying person for head of house- ordinary income for individual taxpayers
hold (LO 1.5) (LO 1.8)
19. D Taxpayer may file married filing jointly in 36. B Line 11a is the adjusted gross income
year of spouse’s death (LO 1.5) line (LO 1.9)
20. B Death of spouse is more than 2 years ago; 37. B Preparers must get a signed authorization to
thus, surviving spouse is not available e-file from the taxpayer. (LO 1.10)
(LO 1.5)
38. B Over 90% of returns are filed electronically
21. B Form 8867 must be completed and filed (LO 1.10)
(LO 1.5)
1-1
,1-2 Chapter 1 – The Individual Income Tax Return
Problems
1. a. Raising revenue to operate the government.
b. Furthering economic goals such as reducing unemployment.
c. Furthering social goals such as encouraging contributions to charities. (LO 1.1)
2. a. Form 1040
b. Schedule B
c. Schedule D
d. Schedule A
e. Schedule 2
f. Schedule E
g. Schedule 3
h. Schedule C
i. Schedule 1 (LO 1.2)
3. a. $66,500 = $73,000 + $500 – $7,000.
b. $31,500, the greater of itemized deductions or the standard deduction of $31,500.
c. $35,000 = $66,500 – $31,500. (LO 1.3)
4. a. $45,000.
b. $15,750, the greater of total itemized deductions or the standard deduction amount.
c. $29,250 = $45,000 – $15,750. (LO 1.3)
5. a. $54,400 = $54,000 + $3,000 – $2,600.
b. $32,000, the greater of itemized deductions or the standard deduction of $31,500.
c. $22,400 = $54,400 – $32,000.
d. $2,243 (Tax Table) (LO 1.3, 1.5, and 1.7)
6. a. $165,000 = $170,000 – $5,000
b. $33,100 = $31,500 + $1,600 for one taxpayer age 65 or older
c. $5,100 = $6,000 – [($165,000 – $150,000) x 6%]
d. $126,800 = $165,000 - $33,100 – $5,100
e. $17,724 = $11,157 + [($126,800 – $96,950) x 22%] (Tax Rate Schedules) (LO 1.3, 1.5, 1.7)
7. Adjusted gross income $19,000
Less: Itemized deductions –2,600
Taxable income $16,400
Marco’s tax liability from the Tax Table is $1,733. Note: because they are married and filing separately
and Marco’s spouse Tatiana itemizes her deductions, Marco must also itemize his deductions, even though
the itemized deductions total is less than the standard deduction to which he would be otherwise entitled.
(LO 1.3, 1.5, and 1.7)
8. Adjusted gross income ($14,200 + $1,300) $ 15,500
Less: Standard deduction (lesser of $1,350 –14,650
or earned income + $450 but not
more than $15,750)
Taxable income $ 850
(LO 1.3, 1.5, and 1.7)
9. a. $32,250 = $51,000 – $15,750.
b. Tax tables. Taxpayers with income up to $100,000 must use the tax tables.
c. $3,995. (LO 1.3, 1.5, and 1.7)
, Solutions for Questions and Problems – Chapter 1 1-3
10. a. $68,000 = $63,000 + $800 + $1,200 + $3,000.
b. $64,500 = $68,000 – $3,500.
c. $31,500, the greater of itemized deductions or the standard deduction of $31,500.
d. $33,000 = $64,500 – $31,500.
e. $3,486
f. $4,900 ($2,200 per child tax credit plus $500 other dependent credit). (LO 1.3, 1.5, 1.6 and 1.7)
11. a. $90,200 = $87,000 + $3,200.
b. $0.
c. $57,100 = $90,200 – $33,100 (itemized deductions). (LO 1.3, 1.5 and 1.7)
12. Taxable income is: $19,583 = $43,333 – $23,750 ($15,750 + $2,000 (additional standard deduction for age
65 or older) + $6,000 (senior deduction)). Tax liability from the tax tables not the tax rate schedules: $2,111.
(LO 1.3, 1.5, and 1.7)
13. Yes. Since Griffin owes Social Security taxes on the unreported tips (greater than $400), he must file an
income tax return. He must file even though his tips may not be subject to income tax in 2025 (see
Chapter 5) (LO 1.4)
14. a. No. Income is less than the $23,625 standard deduction. (See Figure 1.1)
b. Yes. Unearned income was more than $1,350. Also, gross income of $3,000 is more than the larger
of $1,350 or $2,050 (earned income of $1,600 plus $450). (See Figure 1.2)
c. No. Their income is under the $39,100 total of the standard deduction of $33,100 ($31,500 + $1,600)
plus the senior deduction of $6,000. (See Figure 1.1)
d. No. Gross income is less than $31,500, the 2025 standard deduction. (See Figure 1.1)
e. Yes. His earnings exceeded the $400 limit for self-employed persons. (See Figure 1.3) (LO 1.4)
15. a. Allen $2,315. $37,000 – $15,750 = $21,250
b. Boyd $2,555. $39,000 – $15,750 = $23,250
c. Caldwell $3,546. $65,040 – $31,500 = $33,540
d. Dell $3,011. $51,570 – $23,625 = $27,945
e. Evans $5,201. $61,056 – $15,750 = $45,306 (LO 1.5)
16. a. Because their income exceeds $100,000, the tax rate schedules must be used.
b. $13,588 = $11,157 + [22% x ($108,000 – $96,950)]. (LO 1.5)
17. a. A Kayla does not meet the requirements of a qualifying person for head of household because
she is not a related person and did not live in Linda’s home.
b. A The significant other is not a qualifying person as this individual is not one of the relatives
that can be considered a qualifying person for head of household.
c. A or D Head of household is likely preferable. The brother is a qualifying person that lives for more
than one-half the year in the abode.
d. B or C MFJ can be claimed in the year of the spouse’s death and is probably preferable.
e. A, D or E Surviving spouse is likely to be preferable but single or head of household are also possible.
(LO 1.5 and 1.6)
18. Jonas needs to meet the requirements to be a qualifying person. The requirements depend on classification
as a dependent as either a qualifying child or qualifying relative. The overall tests should be applied first:
1. Can Jonas be claimed as a dependent by any other taxpayer?
2. Is Jonas married and does he file a tax return jointly with his spouse for any reason other than to get
a refund?
3. Is Jonas a U.S. citizen or resident alien?
4. Does Jonas have a valid Social Security number?
,1-4 Chapter 1 – The Individual Income Tax Return
The next set of questions are related to qualifying child status:
1. Relationship test: Confirm Jonas’ relationship to Karl.
2. Domicile test: Where did Jonas live during the tax year? Was it more than one-half of the year with Karl?
3. Age test: What is Jonas’ age and is he a full-time student? Is Jonas older than Karl?
4. Support test: How much of Jonas’ support is provided by Jonas? Is it more than one-half?
If Jonas is a qualifying child, then he need not meet the citizenship test to be a qualifying person for head
of household filing status. If Jonas is not a qualifying child, he might be a qualifying relative which would
prompt the following questions:
1. Relationship or member of household test: If Jonas is Karl’s brother, this test has been confirmed in
the qualifying child questions. If Jonas is not one of the qualifying relatives, the remaining tests need
not apply since a person that is not a qualifying relative by living in the taxpayer’s household is not a
qualifying person for purposes of the head of household test.
The following test need only be applied if Jonas is not Karl’s brother but is a qualifying relative for reasons
other than living in Karl’s home:
2. Gross income test: What is Jonas’ 2025 income? Is it less than $5,200?
3. Support test: Does Karl provide more than one-half of Jonas’ support?
Karl’s tax return should include Form 8867. (LO 1.5 and 1.6)
19. Head of household. Maggie’s parents meet the requirements of a qualified person. Maggie is single.
Additionally, she provides a home for her parents. Parents are an exception to the requirement that
dependents must live in the same household as the taxpayer to qualify the taxpayer for head of household
status. (LO 1.5 and 1.6)
20. Single. Unmarried with no dependent.
Married filing jointly. Spouse died in current tax year.
Head of household. Single or abandoned spouse, with qualifying person.
Surviving spouse [qualifying widow(er)]. Spouse died within the past 2 years and has a qualifying
dependent. (LO 1.5)
21. a. Yes, his son qualifies as a dependent, meeting the tests of a qualifying relative.
b. No. To be a qualifying person, his son must live in the same household as Marquez, so Marquez cannot
use the head of household filing status. (LO 1.5 and 1.6)
22. Dependent? Amount of Credit
a. Yes (Income is below $500 other dependent credit
$5,200 gross income test)
b. Yes (Income is below $500 other dependent credit
$5,200 gross income test)
c. Yes $2,200 child tax credit
d. Yes $500 other dependent credit
e. No $0 (LO 1.6)
23. $0. Exemptions were repealed. $2,700. The 11-year-old child qualifies for the $2,200 child tax credit
(under age 17). The 17-year-old qualifies for the other dependent credit of $500. (LO 1.6)
24. No. Because Charles is self-supporting, his parents may not claim him as a dependent. The self-support
test is applied to both children and relatives who otherwise qualify, so Charles is disqualified either way.
(LO 1.6)
25. No. Phillip cannot be claimed as a dependent because he is not a U.S. citizen or a resident of the U.S.,
Canada, or Mexico. (LO 1.6)
, Solutions for Questions and Problems – Chapter 1 1-5
26. The standard deduction is a specific dollar amount that varies with filing status, age, and vision, but not
by type of individual deduction. Total itemized deductions depend on the amount and type of items, with
some items having limitations based on AGI. They include medical expenses, certain taxes, certain interest
expenses, charitable contributions, and miscellaneous deductions.
A taxpayer should claim the larger of the standard deduction or the total allowed itemized deductions to
reduce the taxpayer’s income subject to tax as much as possible. (LO 1.7)
27. i. The “statutory” amount of $1,350.
ii. The earned income of the dependent plus $450
iii. The “typical” standard deduction for a taxpayer of that filing status (e.g., $15,750 for a single taxpayer
that is under age 65 and not blind) (LO 1.7)
28. A spouse in a married filing separate situation when the other spouse is itemizing; most nonresident aliens;
an individual filing a short-year return. (LO 1.7)
29. a. $62,000 = $58,000 + $7,000 – $3,000 ($5,000 capital loss limited to $3,000).
b. $15,750
c. $46,250 = $62,000 – $15,750. (LO 1.3 and 1.8)
30. Gain/(loss) Gain/(loss) Long-term/
Realized Recognized Short-term
a. $5,000 $5,000 Short-term.
b. ($5,000) ($3,000) Long-term. The excess $2,000 loss can be carried forward.
c. ($7,000) ($3,000) Long-term. The net capital loss deduction is $3,000 regardless
of filing status. The excess $4,000 loss can be carried forward.
d. ($4,000) $0 Long-term. Losses on the sale of personal use property are
not deductible.
e. $4,000 $4,000 Short-term. Gains on the sale of personal use property are taxable.
(LO 1.8)
31. The answer will vary depending on the date the problem is assigned and completed. The purpose of the
problem is to familiarize the student with the IRS website. (LO 1.9)
32. Form 4868 is the Application for Automatic Extension of Time To File an U.S. Individual Income Tax Return.
(LO 1.9)
33. A June 2024 article explains that Alston Awards are education-related financial awards provided directly
by universities for academic-related expenses up to $5,980 per year. Generally, if used for qualifying higher-
education expenses, they are not taxable; however, any portion used for room and board is taxable. (LO 1.9)
34. The title of Section 10.34 of Circular 230 is Standards with respect to tax returns and documents, affidavits
and other papers. (LO 1.9)
35. Responses will vary based on date and AI service. The response to the initial prompt was:
You may be able to claim Head of Household (HOH) filing status if you support your brother and he lives
with you, but you must meet all of the following IRS requirements:
1. You must be unmarried or considered unmarried on the last day of the year.
This includes divorced, legally separated, or living apart from a spouse for the last 6 months of the year.
2. You must have paid more than half the cost of keeping up your home for the year.
This includes rent, mortgage interest, property taxes, utilities, food consumed in the home, repairs, etc.
, 1-6 Chapter 1 – The Individual Income Tax Return
3. Your brother must be a qualifying person.
A brother can be a qualifying person for HOH purposes, even if he is not your dependent, as long as:
- He lived with you more than half the year.
- You provided more than half of his total support for the year.
- He is a U.S. citizen or resident, and
- His gross income is less than the exemption amount (unless he qualifies under the member of
household test, which allows a relative to earn any income and still be considered a qualifying
person if you provide over half their support and they live with you all year).
Summary:
You can claim Head of Household if:
- You are unmarried
- Your brother lived with you more than half the year
- You paid more than half the cost of keeping up the home
- You provided more than half of his support
The response for the second prompt was similar but did refer to the standard deduction in 2025 as $14,600
(which is the 2024 amount). (LO 1.9)
36. Tax returns are electronically signed through the use of a PIN. PINs can be generated by either the taxpayer
or by the ERO. Self-selected PINs require the prior year AGI or PIN to authenticate the taxpayer. Before a
PIN can be created by the ERO, the preparer must obtain a signed copy of an IRS E-file signature authoriza-
tion (Forms 8878 or 8879). (LO 1.10)
37. Form 8453, copies of Forms W-2, W-2G, and 1099-R, a copy of the consent to disclose tax information
form, a copy of the electronic return that could be retransmitted, an acknowledgment file for IRS accepted
returns, Forms 8878 and 8879. (LO 1.10)
Writing Assignments
1. Research Solution:
Whittenburg and Gill, CPAs
San Diego, CA
February 20, 20xx
Mr. and Mrs. William Carson
3276 Lakeline Drive
San Diego, CA
Dear William and Sheila,
Thank you for requesting my advice concerning the tax treatment of your brother Jerry. I have researched
your question and am sorry to say that you cannot claim Jerry as a qualifying child.
Although Jerry meets the domicile, age, joint return, citizenship, and self-support test, he does not meet
the relationship test. Even though he is William’s brother, in order to be your qualifying child, he must
be younger than at least one of you.
Although you cannot claim Jerry as a qualifying child, there is a possibility that you could claim him as a
qualifying relative if he earns less than $5,200.
The requirements for a qualifying relative are:
1. He cannot be the qualifying child of another taxpayer. For example, can Jerry’s parents claim him?
2. Relationship test - as your brother, he meets this test.
Whittenburg
Important Notes
The file includes the complete test bank, organized chapter by chapter.
A sample of selected pages has been provided for preview.
All available appendices and Excel files (if included in the original resources) are
provided.
We continuously update our files to ensure you receive the latest and most accurate
editions.
New editions are added regularly – stay connected for updates!
✅ Why Buy From Us?
📚 Complete & organized chapter-by-chapter – no missing content, no guessing.
⚡ Instant digital delivery – get your file the moment you pay, no waiting.
📅 Always up to date – we track new editions so you always get the latest version.
💬 Friendly support – real humans ready to help, anytime you need us.
🔒 Safe & secure – thousands of satisfied students trust us every semester.
🛡️Our Guarantees
💰 Money-Back Guarantee: Not satisfied? We offer a full refund – no questions asked.
🔄 Wrong File? No Problem: Contact us and we will replace it immediately with the
correct version, free of charge.
⏰ 24/7 Support: We are always here – reach out anytime and expect a fast response.
Contact Email:
, SOLUTIONS FOR
QUESTIONS AND PROBLEMS
,
, CHAPTER 1
THE INDIVIDUAL INCOME TAX RETURN
Multiple Choice Questions
1. D The income tax includes elements of social 22. B Margaret and her sister do not provide
and economic policy (LO 1.1) more than one-half of the total support
2. C The income tax was authorized by the 16th (LO 1.6)
Amendment in 1913 (LO 1.1) 23. C The daughter fails the age test to be a
3. A The 1040-EZ no longer exists, the 1065 is for qualifying child but passes the gross
partnerships, and the 1120 is for corporations income test ($5,200 in 2025) to be a
(LO 1.2) qualifying relative (LO 1.6)
4. D Partnerships use Form 1065 to report 24. E The child tax credit in 2025 is $2,200
income tax information (LO 1.2) (LO 1.6)
5. A Interest income over $1,500 is reported 25. D The child tax credit for the 13-year-old child
on Schedule B (LO 1.2) is $2,200. The mother is eligible for the other
6. D A partnership is not generally a tax-paying dependent credit of $500 (LO 1.6)
entity (LO 1.2) 26. B Must be age 16 or under for child tax credit
7. C Student loan interest is a for AGI deduction. (LO 1.6)
The other responses are all itemized (from 27. A Head of household standard deduction plus
AGI) deductions (LO 1.3) additional standard deduction for age 65
8. D The deduction for educators’ expenses is a ($23,625 + $2,000) and senior deduction
for AGI deduction (LO 1.3) of $6,000. (LO 1.7)
9. A $98,000 – $15,750 (standard deduction is 28. C Single taxpayers age 65 or older are eligible
more than itemized deductions) (LO 1.3) for a $2,000 additional standard deduction
amount and senior deduction of $6,000.
10. D For AGI adjustments are deducted to get
(LO 1.7)
to AGI (LO 1.3)
29. B Taxpayers that are blind are eligible for
11. B The larger of the two may be deducted
an additional standard deduction amount
(LO 1.3)
(LO 1.7)
12. D The senior deduction is a from AGI
30. E Earned income plus $450, limited to the
deduction (LO 1.3)
maximum standard deduction (LO 1.7)
13. B Filing thresholds generally are the same as
31. B Statutory amount of $1,350 (LO 1.7)
the standard deduction amount (LO 1.4)
32. D Business inventory is not considered a
14. E Ben’s income would need to exceed the
capital asset (LO 1.8)
standard deduction to require filing a tax
return (LO 1.4) 33. B Gain of $15,000 ($25,000 amount realized
less $10,000 adjusted basis) has been held
15. D The standard deduction for married filing
for 12 months or less and is short-term
jointly (LO 1.4)
(LO 1.8)
16. A Single dependent over 65 and blind thresh-
34. C $10,000 = $240,000 – ($270,000 – $40,000)
old is $5,350 for unearned income (LO 1.4)
(LO 1.8)
17. A Joan only qualifies as single (LO 1.5)
35. B $42,000 – $3,000. Net capital losses
18. A As a cousin, Dorothy must live with Glenda of up to $3,000 may be deducted from
to be a qualifying person for head of house- ordinary income for individual taxpayers
hold (LO 1.5) (LO 1.8)
19. D Taxpayer may file married filing jointly in 36. B Line 11a is the adjusted gross income
year of spouse’s death (LO 1.5) line (LO 1.9)
20. B Death of spouse is more than 2 years ago; 37. B Preparers must get a signed authorization to
thus, surviving spouse is not available e-file from the taxpayer. (LO 1.10)
(LO 1.5)
38. B Over 90% of returns are filed electronically
21. B Form 8867 must be completed and filed (LO 1.10)
(LO 1.5)
1-1
,1-2 Chapter 1 – The Individual Income Tax Return
Problems
1. a. Raising revenue to operate the government.
b. Furthering economic goals such as reducing unemployment.
c. Furthering social goals such as encouraging contributions to charities. (LO 1.1)
2. a. Form 1040
b. Schedule B
c. Schedule D
d. Schedule A
e. Schedule 2
f. Schedule E
g. Schedule 3
h. Schedule C
i. Schedule 1 (LO 1.2)
3. a. $66,500 = $73,000 + $500 – $7,000.
b. $31,500, the greater of itemized deductions or the standard deduction of $31,500.
c. $35,000 = $66,500 – $31,500. (LO 1.3)
4. a. $45,000.
b. $15,750, the greater of total itemized deductions or the standard deduction amount.
c. $29,250 = $45,000 – $15,750. (LO 1.3)
5. a. $54,400 = $54,000 + $3,000 – $2,600.
b. $32,000, the greater of itemized deductions or the standard deduction of $31,500.
c. $22,400 = $54,400 – $32,000.
d. $2,243 (Tax Table) (LO 1.3, 1.5, and 1.7)
6. a. $165,000 = $170,000 – $5,000
b. $33,100 = $31,500 + $1,600 for one taxpayer age 65 or older
c. $5,100 = $6,000 – [($165,000 – $150,000) x 6%]
d. $126,800 = $165,000 - $33,100 – $5,100
e. $17,724 = $11,157 + [($126,800 – $96,950) x 22%] (Tax Rate Schedules) (LO 1.3, 1.5, 1.7)
7. Adjusted gross income $19,000
Less: Itemized deductions –2,600
Taxable income $16,400
Marco’s tax liability from the Tax Table is $1,733. Note: because they are married and filing separately
and Marco’s spouse Tatiana itemizes her deductions, Marco must also itemize his deductions, even though
the itemized deductions total is less than the standard deduction to which he would be otherwise entitled.
(LO 1.3, 1.5, and 1.7)
8. Adjusted gross income ($14,200 + $1,300) $ 15,500
Less: Standard deduction (lesser of $1,350 –14,650
or earned income + $450 but not
more than $15,750)
Taxable income $ 850
(LO 1.3, 1.5, and 1.7)
9. a. $32,250 = $51,000 – $15,750.
b. Tax tables. Taxpayers with income up to $100,000 must use the tax tables.
c. $3,995. (LO 1.3, 1.5, and 1.7)
, Solutions for Questions and Problems – Chapter 1 1-3
10. a. $68,000 = $63,000 + $800 + $1,200 + $3,000.
b. $64,500 = $68,000 – $3,500.
c. $31,500, the greater of itemized deductions or the standard deduction of $31,500.
d. $33,000 = $64,500 – $31,500.
e. $3,486
f. $4,900 ($2,200 per child tax credit plus $500 other dependent credit). (LO 1.3, 1.5, 1.6 and 1.7)
11. a. $90,200 = $87,000 + $3,200.
b. $0.
c. $57,100 = $90,200 – $33,100 (itemized deductions). (LO 1.3, 1.5 and 1.7)
12. Taxable income is: $19,583 = $43,333 – $23,750 ($15,750 + $2,000 (additional standard deduction for age
65 or older) + $6,000 (senior deduction)). Tax liability from the tax tables not the tax rate schedules: $2,111.
(LO 1.3, 1.5, and 1.7)
13. Yes. Since Griffin owes Social Security taxes on the unreported tips (greater than $400), he must file an
income tax return. He must file even though his tips may not be subject to income tax in 2025 (see
Chapter 5) (LO 1.4)
14. a. No. Income is less than the $23,625 standard deduction. (See Figure 1.1)
b. Yes. Unearned income was more than $1,350. Also, gross income of $3,000 is more than the larger
of $1,350 or $2,050 (earned income of $1,600 plus $450). (See Figure 1.2)
c. No. Their income is under the $39,100 total of the standard deduction of $33,100 ($31,500 + $1,600)
plus the senior deduction of $6,000. (See Figure 1.1)
d. No. Gross income is less than $31,500, the 2025 standard deduction. (See Figure 1.1)
e. Yes. His earnings exceeded the $400 limit for self-employed persons. (See Figure 1.3) (LO 1.4)
15. a. Allen $2,315. $37,000 – $15,750 = $21,250
b. Boyd $2,555. $39,000 – $15,750 = $23,250
c. Caldwell $3,546. $65,040 – $31,500 = $33,540
d. Dell $3,011. $51,570 – $23,625 = $27,945
e. Evans $5,201. $61,056 – $15,750 = $45,306 (LO 1.5)
16. a. Because their income exceeds $100,000, the tax rate schedules must be used.
b. $13,588 = $11,157 + [22% x ($108,000 – $96,950)]. (LO 1.5)
17. a. A Kayla does not meet the requirements of a qualifying person for head of household because
she is not a related person and did not live in Linda’s home.
b. A The significant other is not a qualifying person as this individual is not one of the relatives
that can be considered a qualifying person for head of household.
c. A or D Head of household is likely preferable. The brother is a qualifying person that lives for more
than one-half the year in the abode.
d. B or C MFJ can be claimed in the year of the spouse’s death and is probably preferable.
e. A, D or E Surviving spouse is likely to be preferable but single or head of household are also possible.
(LO 1.5 and 1.6)
18. Jonas needs to meet the requirements to be a qualifying person. The requirements depend on classification
as a dependent as either a qualifying child or qualifying relative. The overall tests should be applied first:
1. Can Jonas be claimed as a dependent by any other taxpayer?
2. Is Jonas married and does he file a tax return jointly with his spouse for any reason other than to get
a refund?
3. Is Jonas a U.S. citizen or resident alien?
4. Does Jonas have a valid Social Security number?
,1-4 Chapter 1 – The Individual Income Tax Return
The next set of questions are related to qualifying child status:
1. Relationship test: Confirm Jonas’ relationship to Karl.
2. Domicile test: Where did Jonas live during the tax year? Was it more than one-half of the year with Karl?
3. Age test: What is Jonas’ age and is he a full-time student? Is Jonas older than Karl?
4. Support test: How much of Jonas’ support is provided by Jonas? Is it more than one-half?
If Jonas is a qualifying child, then he need not meet the citizenship test to be a qualifying person for head
of household filing status. If Jonas is not a qualifying child, he might be a qualifying relative which would
prompt the following questions:
1. Relationship or member of household test: If Jonas is Karl’s brother, this test has been confirmed in
the qualifying child questions. If Jonas is not one of the qualifying relatives, the remaining tests need
not apply since a person that is not a qualifying relative by living in the taxpayer’s household is not a
qualifying person for purposes of the head of household test.
The following test need only be applied if Jonas is not Karl’s brother but is a qualifying relative for reasons
other than living in Karl’s home:
2. Gross income test: What is Jonas’ 2025 income? Is it less than $5,200?
3. Support test: Does Karl provide more than one-half of Jonas’ support?
Karl’s tax return should include Form 8867. (LO 1.5 and 1.6)
19. Head of household. Maggie’s parents meet the requirements of a qualified person. Maggie is single.
Additionally, she provides a home for her parents. Parents are an exception to the requirement that
dependents must live in the same household as the taxpayer to qualify the taxpayer for head of household
status. (LO 1.5 and 1.6)
20. Single. Unmarried with no dependent.
Married filing jointly. Spouse died in current tax year.
Head of household. Single or abandoned spouse, with qualifying person.
Surviving spouse [qualifying widow(er)]. Spouse died within the past 2 years and has a qualifying
dependent. (LO 1.5)
21. a. Yes, his son qualifies as a dependent, meeting the tests of a qualifying relative.
b. No. To be a qualifying person, his son must live in the same household as Marquez, so Marquez cannot
use the head of household filing status. (LO 1.5 and 1.6)
22. Dependent? Amount of Credit
a. Yes (Income is below $500 other dependent credit
$5,200 gross income test)
b. Yes (Income is below $500 other dependent credit
$5,200 gross income test)
c. Yes $2,200 child tax credit
d. Yes $500 other dependent credit
e. No $0 (LO 1.6)
23. $0. Exemptions were repealed. $2,700. The 11-year-old child qualifies for the $2,200 child tax credit
(under age 17). The 17-year-old qualifies for the other dependent credit of $500. (LO 1.6)
24. No. Because Charles is self-supporting, his parents may not claim him as a dependent. The self-support
test is applied to both children and relatives who otherwise qualify, so Charles is disqualified either way.
(LO 1.6)
25. No. Phillip cannot be claimed as a dependent because he is not a U.S. citizen or a resident of the U.S.,
Canada, or Mexico. (LO 1.6)
, Solutions for Questions and Problems – Chapter 1 1-5
26. The standard deduction is a specific dollar amount that varies with filing status, age, and vision, but not
by type of individual deduction. Total itemized deductions depend on the amount and type of items, with
some items having limitations based on AGI. They include medical expenses, certain taxes, certain interest
expenses, charitable contributions, and miscellaneous deductions.
A taxpayer should claim the larger of the standard deduction or the total allowed itemized deductions to
reduce the taxpayer’s income subject to tax as much as possible. (LO 1.7)
27. i. The “statutory” amount of $1,350.
ii. The earned income of the dependent plus $450
iii. The “typical” standard deduction for a taxpayer of that filing status (e.g., $15,750 for a single taxpayer
that is under age 65 and not blind) (LO 1.7)
28. A spouse in a married filing separate situation when the other spouse is itemizing; most nonresident aliens;
an individual filing a short-year return. (LO 1.7)
29. a. $62,000 = $58,000 + $7,000 – $3,000 ($5,000 capital loss limited to $3,000).
b. $15,750
c. $46,250 = $62,000 – $15,750. (LO 1.3 and 1.8)
30. Gain/(loss) Gain/(loss) Long-term/
Realized Recognized Short-term
a. $5,000 $5,000 Short-term.
b. ($5,000) ($3,000) Long-term. The excess $2,000 loss can be carried forward.
c. ($7,000) ($3,000) Long-term. The net capital loss deduction is $3,000 regardless
of filing status. The excess $4,000 loss can be carried forward.
d. ($4,000) $0 Long-term. Losses on the sale of personal use property are
not deductible.
e. $4,000 $4,000 Short-term. Gains on the sale of personal use property are taxable.
(LO 1.8)
31. The answer will vary depending on the date the problem is assigned and completed. The purpose of the
problem is to familiarize the student with the IRS website. (LO 1.9)
32. Form 4868 is the Application for Automatic Extension of Time To File an U.S. Individual Income Tax Return.
(LO 1.9)
33. A June 2024 article explains that Alston Awards are education-related financial awards provided directly
by universities for academic-related expenses up to $5,980 per year. Generally, if used for qualifying higher-
education expenses, they are not taxable; however, any portion used for room and board is taxable. (LO 1.9)
34. The title of Section 10.34 of Circular 230 is Standards with respect to tax returns and documents, affidavits
and other papers. (LO 1.9)
35. Responses will vary based on date and AI service. The response to the initial prompt was:
You may be able to claim Head of Household (HOH) filing status if you support your brother and he lives
with you, but you must meet all of the following IRS requirements:
1. You must be unmarried or considered unmarried on the last day of the year.
This includes divorced, legally separated, or living apart from a spouse for the last 6 months of the year.
2. You must have paid more than half the cost of keeping up your home for the year.
This includes rent, mortgage interest, property taxes, utilities, food consumed in the home, repairs, etc.
, 1-6 Chapter 1 – The Individual Income Tax Return
3. Your brother must be a qualifying person.
A brother can be a qualifying person for HOH purposes, even if he is not your dependent, as long as:
- He lived with you more than half the year.
- You provided more than half of his total support for the year.
- He is a U.S. citizen or resident, and
- His gross income is less than the exemption amount (unless he qualifies under the member of
household test, which allows a relative to earn any income and still be considered a qualifying
person if you provide over half their support and they live with you all year).
Summary:
You can claim Head of Household if:
- You are unmarried
- Your brother lived with you more than half the year
- You paid more than half the cost of keeping up the home
- You provided more than half of his support
The response for the second prompt was similar but did refer to the standard deduction in 2025 as $14,600
(which is the 2024 amount). (LO 1.9)
36. Tax returns are electronically signed through the use of a PIN. PINs can be generated by either the taxpayer
or by the ERO. Self-selected PINs require the prior year AGI or PIN to authenticate the taxpayer. Before a
PIN can be created by the ERO, the preparer must obtain a signed copy of an IRS E-file signature authoriza-
tion (Forms 8878 or 8879). (LO 1.10)
37. Form 8453, copies of Forms W-2, W-2G, and 1099-R, a copy of the consent to disclose tax information
form, a copy of the electronic return that could be retransmitted, an acknowledgment file for IRS accepted
returns, Forms 8878 and 8879. (LO 1.10)
Writing Assignments
1. Research Solution:
Whittenburg and Gill, CPAs
San Diego, CA
February 20, 20xx
Mr. and Mrs. William Carson
3276 Lakeline Drive
San Diego, CA
Dear William and Sheila,
Thank you for requesting my advice concerning the tax treatment of your brother Jerry. I have researched
your question and am sorry to say that you cannot claim Jerry as a qualifying child.
Although Jerry meets the domicile, age, joint return, citizenship, and self-support test, he does not meet
the relationship test. Even though he is William’s brother, in order to be your qualifying child, he must
be younger than at least one of you.
Although you cannot claim Jerry as a qualifying child, there is a possibility that you could claim him as a
qualifying relative if he earns less than $5,200.
The requirements for a qualifying relative are:
1. He cannot be the qualifying child of another taxpayer. For example, can Jerry’s parents claim him?
2. Relationship test - as your brother, he meets this test.
