Reference no: EM131587150

Q1. Bill and betty have one child, bobby who is six years old. Bill's earnings are $ 15000 and betty's are $ 14000. Other income includes interest income of $ 450. They paid $ 2600 to tiny tot day care center to keep bobby so they could both work. What is their child care credit?

a. $ 720

b. $ 728

c. $ 884

d. $ 910

e. None of the above

Q2. Roger is considering making a $ 6000 investment in a venture that its promoter promises will generate immediate tax benefits for him. Roger, who does not anticipate itemizing his deductions, is in the 30% marginal income tax bracket. It the investment os of a type that produces a tax credit 40% of the amount of the expenditure, by how much will Roger's tax liability decline because of the investment?

a. $ 0

b. $ 1800

c. $ 2200

d. $ 2400

e. None of the above.

Q3. George and Martha are married and file a joint tax return claiming their two children ages 10 and 17 as dependents. Assuming their AGI is $ 99,650, George and Martha's child tax credit is :

a. $ 0

b. $ 1000

c. $ 1500

d. $ 2000

e. None of the above.

Q4. While Susan was on vacation during the current year, someone broke into her home and stole the following items:

A personal computer the cost of the computer was $ 8,000. The computer had a fair market value of $ 4,000 at the time of the theft.

A painting, which susan purchased as an investment for $ 10,000, had a fair market value of

$ 17,000.

Silverware purchased for $ 3000 had a fair market value of $ 5000. Cash of $ 30000.

Susan's adjusted gross income, before considering any of the above items, are $ 60,000. Determine the total amount of Susan's itemized deductions resulting from the theft.

Q5. Last year, 2015, Sarah (who files as single) had silverware worth $ 10,000 (basis $ 9000) stolen from her home. Sarah's insurance company told her that her policy did not cover the theft. Sarah's other itemized deductions last year were $ 2000. She had AGI of $ 30,000 last year. In August of 2016, Sarah's insurance company decided that Sarah's policy did cover the theft of the silverware and they paid sarah $ 5000. Determine the tax treatment of the 5000 received by Sarah during 2016. The standard deduction for singles in 2015 is $6300.