Solution manual with appendix for income tax fundamentals 2023 41st edition by gerald e whittenburg steven gill

CHAPTERy1

THEy INDIVIDUALy INCOMEy TAXy RETURN

s yearyofyspouse’sydeathy(LOy1.5)
y
Groupy 1y –y Multipley ChoiceyQuestions
e
1. DyTheyincomeytaxyincludesyelementsyofysocialya h
ndyeconomicypolicyy(LOy1.1) o
2. C l
Theyincomeytaxywasyauthorizedybyyt d
y
hey16thyAmendmentyiny1913y(LOy1.1) (
3. C They 1040Ay andy 1040- L
EZy noy longery existy andythey1120yisyforycorpo O
y
rationsy(LOy1.2) 1
4. DyPartnershipsyuseyFormy1065ytoyreportyinc .
omeytaxyinformation.yAypartnery willyrepo 5
rty theiry sharey ofy incomey fromy ay part- )
ynershipyonyayForm1040y(LOy1.2)
19. D
5. DyCapitalygainsyandylossesyareyreportedyd y

T
irectlyyonytheyfaceyofytheyFormy1040y(
a
fromyScheduleyD)y(LOy1.2)
x
6. DyAypartnershipyisynotygenerallyyaytax- p
payingyentityy(LOy1.2) a
7. C y
StudentyloanyinterestyisyayforyAGIyde e
duction.yTheyotheryresponsesyareyallyitemized r
y
y(fromyAGI)ydeductions y(LOy1.3)
m
8. B a
They deductiony fory IRAy contributi y
onsy isy ayforyAGIydeductiony(LOy1.3) y

f
9. Dy $98,000y–
i
y$13,000y(standardydeductionyisy lessythan l
yitemizedy deductions)y (LOy 1.3)
e
10. Dy ForyAGIyadjustmentsyareydeductedytoygetyt y


oyAGIy(LOy1.3) m
a
11. B r
Theylargeryofytheytwoymayybeyd r
eductedy(LOy1.3) i
12. A Anyexclusionyreducesygrossyincomey(LOy 1.3) e
13. B d
y
Filingythresholdsygenerallyyareythey f
sameyasythey standardy deductiony amounty(L i
Oy 1.4) l
14. DyBen’syincomeywouldyneedytoyexceedytheysta i
ndardydeductionytoyrequireyfilingyaytaxyre n
turny(LOy1.4) g
y
15.y Dy $25,900y+y$1,400y(LOy1.4) j
16. C Singleydependentyovery65yandyblindythresh- o
yoldy isy $4,500y fory unearnedy incomey (LOy 1.4) i
17. CyJoanyqualifiesyasyeitherysingleyoryheadyofyh n
ousehold;yhowever,yheadyofyhouseholdyi t
symoreyadvantageousy(LOy1.5) l
18. DyAlthoughyDorothyydoesynotyliveywithyGlen y
y

da,ysinceyDorothyyisyayparentythatyGlenday i
supports,yGlendaymayyfileyasyheadyofyhou n

, Eithery Margarety ory hery sistery(buty notyboth)y
mayyclaimytheymotheryasyaydependentyundery
20. C aymultipleysupportyagreementy(LOy1.6)
22. DyTheydaughteryfailsytheyageytestytoybeyayq
S ualifyingychildyandysheyfailsytheygrossyi
u ncomeytesty($4,400yiny2022)ytoybeyayq
r ualifyingyrelativey(LOy1.6)
23. vDy Theychildytaxycredityiny2022yisy$2,000y(
i LOy1.6)
v
24. iB Theychildy taxycredity fory they 13-year-
n oldy childyisy$2,000.yTheymotherydoesynotyme
g etytheysupporty testy andy cannotybey claimedy(L
y Oy 1.6)
s
25. B
p
Mustybeyagey16yoryunderyforychildytaxycredity
o
(LOy1.6)
u
26. sA
e Headyofyhouseholdystandardydeductionyplusy
y additionalystandardydeductionyforyagey65y($
i 19,400y+y$1,750)y(LOy1.7)
s
27. yByTaxpayersyagey65yoryolderyareyeligibleyf
p oryanyadditionalystandardydeductiony
r amounty(LOy1.7)
28. eB
f Taxpayersythaty areyblindy areyeligibleyforya
e nyadditionalystandardydeductionyamounty(
r LOy1.7)
r
29. eDy Earnedyincomeyplusy$400y(LOy1.7)
30. dE
y
Standardydeductionymayynotyexceedytypical
t yamounty(LOy1.7)
o
31. yDy Businessyinventoryyisynotyconsideredyayc
h apitalyassety(LOy1.8)
32. eAyGainyofy$15,000y($25,000yamountyrealizedyles
a
sy$10,000yadjustedybasis)yhasybeenyheldyfor
d
y ymoreythany12ymonthsyandyisylong-

o termy(LOy1.8)
f y$10,000y=y$240,000y–y($270,000y–
33.yC
y

h y$40,000)y(LOy1.8)
34. oAy $43,000y–
u y$3,000.y Netycapitalylossesyofyupytoy$3,000y
s mayybeydeductedyfromyordinaryyincomeyf
e oryindividualytaxpayersy(LOy1.8)
35. hCy Liney7yisycapitalygainyory (loss)y(LOy1.9)
o
36. lByPreparersymustygetyaysignedyauthorizationytoye-
d fileyfromytheytaxpayer.y(LOy1.10)
37. yByAbouty90%yofyreturnsyareyfiledyelectronicallyy(L
( Oy1.10)
1-1 L
O
y

1
.
5
)
21. E

,
, 1-2 Chaptery 1y –y They Individualy Incomey Taxy Return



Groupy 2y –y Problems
1. a. Raisingyrevenueytoyoperateytheygovernment.
b. Furtheringyeconomicygoalsysuchyasyreducingyunemployment.
c. Furtheringy socialy goalsy suchy asyencouragingy contributionsy toycharities.y (LOy 1.1)
2. a. Formy1040
b. Scheduley B
c. Scheduley D
d. ScheduleyA
e. Scheduley 2
f. ScheduleyE
g. Scheduley 3
h. Scheduley C
i. Scheduley1y (LOy1.2)
3.y a. $36,300y=y$42,000y+y$300y–y$6,000.
b. $25,900,y they greatery ofy itemizedy deductionsy ory they standardy deductiony ofy $25,900.
c. $10,400y=y$36,300y–y$25,900.y (LOy1.3)
4.y a. $25,000.
b. $12,950,y they greatery ofy totaly itemizedy deductionsy ory they standardy deductiony amount.
c. $12,050y=y$25,000y –y$12,950.y (LOy 1.3)
5.y a. $53,800y=y$54,000y+y$2,800y–
y$3,000y($7,000ycapitalylossylimited yto y$3,000).yb. $12,950
c. $40,850y=y$53,800y–y$12,950.y (LOy1.3yandy1.8)
6.y a. $47,500y=y$48,000y+y$2,500y–y$3,000.
b. $25,900,y they greatery ofy itemizedy deductionsy ory they standardy deductiony ofy $25,900.
c. $21,600y =y $47,500y –y $25,900.
d.y $2,184y(TaxyTable)y (LOy1.3,y1.5,yandy1.7)
7. Adjustedygrossyincome
$18,000yLess:
Itemizedydeductions –2,400
Taxableyincome $15,600
Marco’sytaxyliabilityyfromytheyTaxyTableyisy$1,670.yNote:ybecauseytheyyareymarriedyandyfilingyseparatelyyandyMar-
yco’syspouseyTatianayitemizesyherydeductions,yMarcoymustyalsoyitemizeyhisydeductions,yevenythoughytheyitemizedy

deductionsytotalyisylessythanytheystandardydeductionyheywouldybeyotherwiseyentitledyto.y(LOy1.3,y1.5,yandy1.7)
8.y Adjustedygrossyincomey($13,200y+y$1,450)
$y14,650yLess:
Standardydeduction –12,950
Taxableyincome $y 1,700
(LOy1.3,y1.5,yandy1.7)
(Note:ySeeyChaptery6yforytheytaxycreditycomputationyforydependentycollegeystudentsyunderyagey24.)
9.y a. $34,050y =y $47,000y –y $12,950.
b. Taxytables.y Taxpayersywithyincomeyupytoy$100,000ymustyuseytheytaxytables.
c. $3,884.y (LOy1.3,y1.5,yandy1.7)
10.y a.
$66,000y=y$50,000y+y$8,000y+y$5,000y+y$3,000.y
b. $63,500y=y$66,000y–y$2,500.
c. $27,000,y they greatery ofy itemizedy deductionsy ory they standardy deductiony ofy $25,900.
d.y y $36,500y=y $63,500y –y$27,000.
e. $3,972y (LOy1.3,y1.5,yandy1.7)