Question

13) Bill takes 8 credits in the quarter system. He is 25 years old and lives with his mother. He made $3,900 from a Hearthstone video game tournament. Yes, he is that good.

I.                    Bill’s mother can claim him as a dependent as a qualifying child. II.                  Bill’s mother can claim him as a dependent as a qualifying relative.

A)     Only I is correct B)      Only II is correct C)      Both are correct D)     Neither is correct

14) Gwen and Blake haven’t sold records in two years. As a result, they got real jobs, got married, and had one child. Their child is two years old and goes to daycare while they work. Their qualified child care expenses for the year total $4,000 and their AGI is $35,000. What is the amount of the tax credit for dependent care they will take? ​

​

	A)	​$0
	B)	​$600
	C)	​$750
	D)	​$800
	E)	​$1,000
	F)	​$1,050
	G)	​$1,400
	H)	​$3,000

15) Donald Trump has an AGI of $40,000. He made a donation to a charity for $20,000 worth of securities that he purchased for $10,000 2 years ago. How much can he deduct in the current year and carry forward?

A)     Current = 20,000, Carryforward = 0

B)      Current = 8,000, Carryforward = 12,000

C)      Current = 10,000, Carryforward = 10,000

D)     Current = 12,000, Carryforward = 8,000

E)      Current = 12,000, Carryforward = 0

16) Doug has the following interest expenses:

1)       Interest on mortgage of business building.

2)       Interest on personal credit cards.

3)       Student loan interest.

Q17 ; Which interest expense(s) is/are considered deductible?

A)     Statements I and III

B)      Statements I and II

C)      All Statements

D)     None of the statements

Answer 1

Question 13. Bill takes 8 credits in the quarter system. He is 25 years old and lives with his mother. He made $3,900 from a Hearthstone video game tournament. Yes, he is that good.

Answer: These are the IRS Qualifying Child Requirements-

1. Relationship: The person must be your daughter, son, stepdaughter, stepson, foster child, sister, brother, half-sister, half-brother, stepsister, stepbrother, or a descendant of any of these, such as a niece or nephew.

In this case the Bill is Son. So, first requirement is qualified.

2. Residency: They must have lived with you for more than half of the year, except for temporary absences.

In this case the Bill is lives with mother. So, second requirement is qualified.

3. Age: They must be one of the following:

Under the age of 19 on the last day of the year and younger than you (and your spouse if filing jointly) but in this case age of Bill is 25, means more than 19 years.

If not then,

A full-time student under the age of 24 on the last day of the year and younger than you (and your spouse if filing jointly) but in this case age of Bill is 25, more than 24 years.

If not then,

Permanently disabled at any time during the year, regardless of their age. But in this case Bill is not a permanently disabled child.

So, based on these condition, bill is not a Qualifying Child. Bill's mother cannot claim them as a dependent unless they are a Qualifying Relative.

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Let's find if the Bill is a Qualifying Relative or not.

1. Not a Qualifying Child: The individual cannot be your Qualifying Child and cannot be someone else's Qualifying Child. They are a Qualifying Child if they meet all the requirements, whether they are claimed as a dependent.

2. Relationship: The person must either have lived with you for the entire year as a member of the household (a person who is not actually related to you may meet the requirements in this way), or be related to you in one of the following ways: your child, stepchild, grandchild or other descendant of one of your children (or stepchildren or foster children), son-in-law, daughter-in-law, brother, sister, half-brother, half-sister, stepbrother, stepsister, brother-in-law, sister-in-law, parent, stepfather, stepmother, father-in-law, mother-in-law, grandparent, and, if related by blood, aunt, uncle, niece, or nephew. Remember that a child whom you legally adopted is always considered to be your child. Also note that, for the purposes of this requirement, divorce or death does not change any relationship which was established by marriage (e.g. son-in-law, daughter-in-law, etc.)

3. Gross Income: The person must have made less than $4,050 in gross income during 2017.

4. Support: You must have provided more than half of the individual's total support during the year.

So, based on these conditions let's find out if Bill can be a qualifying relative or not.

1	If Bill's mother is the taxpayer, then bill is	Son
2	Did the Bill have a gross income of less than $4050?	Yes
3	Did Bill's mother provide over 50% (more than half) of the total support for the Bill?	Yes
4	Is Bill being a Qualifying Child for you or anyone else?	No
5	Is Bill being a Qualifying Child for Bill's mother or anyone else?	No
6	Are Bill's mother, the taxpayer, a dependent of another taxpayer?	No
7	Is the Bill married, and did Bill file a joint return with his spouse?	No
8	Is the Bill a U.S. Citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico	Yes

Based on these condition, Bill's mother can claim Bill as a dependent. They are considered a Qualifying Relative. So, the second option is correct, only the second statement is correct.