Income Tax Fundamentals 2 024, 42e Gerald Whittenburg, Steven Gil l (Solutions Manual All Cha pters, 100% Original Verified, A+ G rade)
All Chapters Solutions Manu al Supplement files downlo ad link at the end of this file. CHAPTER 1
THE INDIVIDUAL INCOME TAX RETURN
Group 1 – Multiple Choice Questions
1-11. D The income tax includes elements of social
and economic policy (LO 1.1)
2. C The income tax was authorized by the 16th
Amendment in 1913 (LO 1.1) 3. C The 1040A and 1040-EZ no longer exist and
the 1120 is for corporations (LO 1.2)
4. D Partnerships use Form 1065 to report
income tax information. A partner will report their share of income from a part- nership on a Form 1040 (LO 1.2)
5. D Capital gains and losses are reported
directly on the face of the Form 1040 (from Schedule D) (LO 1.2) 6. D A partnership is not generally a tax-paying
entity (LO 1.2)
7. C Student loan interest is a for AGI deduction.
The other responses are all itemized (from AGI) deductions (LO 1.3)
8. B The deduction for IRA contributions is a
for AGI deduction (LO 1.3)
9. B $98,000 – $13,850 (standard deduction is
more than itemized deductions) (LO 1.3)
10. D For AGI adjustments are deducted to get
to AGI (LO 1.3)
11. B The larger of the two may be deducted (LO 1.3)
12. D The QBI deduction is a from AGI deduction (LO 1.3)
13. B Filing thresholds generally are the same as
the standard deduction amount (LO 1.4)
14. E Ben’s income would need to exceed the
standard deduction to require filing a tax return (LO 1.4)
15. E $27,700 + $1,500 (LO 1.4)16. C Single dependent over 65 and blind thresh- old is $4,950 for unearned income (LO 1.4)
17. C Joan qualifies as either single or head of
household; however, head of household is more advantageous (LO 1.5)
18. A As a cousin, Dorothy must live with Glenda to be a qualifying person for head of house- hold (LO 1.5)19. D Taxpayer may file married filing jointly in
year of spouse’s death (LO 1.5)
20. B Death of spouse is more than 2 years ago thus
surviving spouse is not available (LO 1.5) 21. B Form 8867 must be completed and filed (LO 1.5)
22. E Either Margaret or her sister (but not both)
may claim the mother as a dependent under a multiple support agreement (LO 1.6)
23. D The daughter fails the age test to be a
qualifying child and she fails the gross income test ($4,700 in 2023) to be a qualifying relative (LO 1.6)
24. D The child tax credit in 2023 is $2,000 (LO 1.6)
25. C The child tax credit for the 13-year-old child
is $2,000. The mother is eligible for the other dependent credit of $500 (LO 1.6)
26. B Must be age 16 or under for child tax credit (LO 1.6) 27. E Head of household standard deduction plus
additional standard deduction for age 65 ($20,800 + $1,850) (LO 1.7)
28. B Taxpayers age 65 or older are eligible
for an additional standard deduction amount (LO 1.7)
29. B Taxpayers that are blind are eligible for
an additional standard deduction amount (LO 1.7)
30. D Earned income plus $400, limited to the
maximum standard deduction (LO 1.7)
31. C Earned income plus $400 (LO 1.7)32. D Business inventory is not considered a
capital asset (LO 1.8)
33. A Gain of $15,000 ($25,000 amount realized
less $10,000 adjusted basis) has been held for more than 12 months and is long-term (LO 1.8)34. C $10,000 = $240,000 – ($270,000 – $40,000) (LO 1.8)
35. A $43,000 – $3,000. Net capital losses of up
to $3,000 may be deducted from ordinary income for individual taxpayers (LO 1.8)
36. E Line 13 is the qualified business income
deduction (LO 1.9)
37. B Preparers must get a signed authorization to
e-file from the taxpayer. (LO 1.10)
38. B About 90% of returns are filed electronically (LO 1.10) Group 2 – 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 Bc. Schedule Dd. Schedule Ae. Schedule 2f. Schedule Eg. Schedule 3h. Schedule Ci. Schedule 1 (LO 1.2)
3. a. $37,300 = $43,000 + $300 – $6,000.
b. $27,700 , the greater of itemized deductions or the standard deduction of $27,700.
c. $9,600 = $37,300 – $27,700. (LO 1.3)
4. a. $35,000 .
b. $13,850 , the greater of total itemized deductions or the standard deduction amount.
c. $21,150 = $35,000 – $13,850. (LO 1.3)
5. a. $56,000 = $56,000 + $3,000 – $3,000 ($7,000 capital loss limited to $3,000).
b. $13,850
c. $42,150 = $56,000 – $13,850. (LO 1.3 and 1.8)
6. a. $51,600 = $52,000 + $2,600 – $3,000.
b. $27,700 , the greater of itemized deductions or the standard deduction of $27,700.
c. $23,900 = $51,600 – $27,700.
d. $2,431 (Tax Table) (LO 1.3, 1.5, and 1.7)
7. Adjusted gross income $18,000
Less: Itemized deductions –2,400
Taxable income $15,600
Marco’s tax liability from the Tax Table is $1,655 . Note: because they are married and filing separately and Mar-
co’s spouse Tatiana itemizes her deductions, Marco must also itemize his deductions, even though the itemizeddeductions total is less than the standard deduction he would be otherwise entitled to. (LO 1.3, 1.5, and 1.7)
8. Adjusted gross income ($14,200 + $1,450) $ 15,650
Less: Standard deduction –13,850
Taxable income $ 1,800
(LO 1.3, 1.5, and 1.7)
(Note: See Chapter 7 for the tax credit computation for dependent college students under age 24.)
9. a. $35,150 = $49,000 – $13,850.
b. Tax tables. Taxpayers with income up to $100,000 must use the tax tables.
c. $4,001 . (LO 1.3, 1.5, and 1.7)
10. a. $68,000 = $52,000 + $8,000 + $5,000 + $3,000.
b. $65,250 = $68,000 – $2,750.
c. $28,000 , the greater of itemized deductions or the standard deduction of $27,700.
d. $37,250 = $65,250 – $28,000.
e. $4,033 (LO 1.3, 1.5, and 1.7)
11. a. $90,500 = $86,700 + $3,800.
b. $0.
c. $62,800 = $90,500 – $27,700 (standard deduction). (LO 1.3, 1.5, 1.6, and 1.7)1-2 Chapter 1 – The Individual Income Tax Return 12. Taxable income is: $2 8,650 = $42,500 – $13,850. Tax liability from the tax tables not the tax rate schedules:
$3,221. (LO 1.3, 1.5, and 1.7)
13. Y es. Since Griffin owes Social Security taxes on the unreported tips (greater than $400), he must file an
income tax return. (LO 1.4)
14. a. Y es. Income is more than the $20,800 standard deduction. (See Figure 1.1)
b. Y es. Unearned income was more than $1,250. Also, gross income of $2,900 is more than the larger
of $1,250 or $2,000 (earned income of $1,600 plus $400). (See Figure 1.2)
c. No. Their income is under the $29,200 standard deduction [$27,700 + $1,500 (over 65 years old)].
(See Figure 1.1)
d. Y es. Gross income is greater than $27,700, the 2023 standard deduction. (See Figure 1.1)
e. Y es. His earnings exceeded the $400 limit for self-employed persons. (See Figure 1.3) (LO 1.4.)
15. a. Allen $2,441. $36,000 – $13,850 = $22,150
b. Boyd $2,705. $38,200 – $13,850 = $24,350
c. Caldwell $3,919. $64,020 – $27,700 = $36,320
d. Dell $3,301. $50,922 – $20,800 = $30,122
e. Evans $5,246. $59,003 – $13,850 = $45,153 (LO 1.5)
16. 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 pers on 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 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)
17. a. Because their income exceeds $100,000, the tax rate schedules must be used.
b. $13,935 = $10,294 + 22% x ($106,000 – $89,450). (LO 1.5)
18. Jonas needs to meet the requirements to be a qualified person. Both depend on classification as a dependent
as either a qualified child or qualified 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?
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 a qualifying relative by living in the taxpayer’s household is not a qualifying
person for purposes of the head of household test.Solutions for Questions and Problems – Chapter 1 1-3
