Question

Tab and Sharon are married and under 65 years of age. During 2015, they furnish more than half of the support of Sean, Carla, and Cheryl. Sean is Tab’s 25-year old son by PRIOR MARRIAGE and is a full time student in law school. Sean earned $10,000 as a law clerk. This is Sean’s only source of income. Carl’s gross income is $1,500 and Cheryl’s gross income is $1,800. Sean is a member of Tab’s household. Carla is TB’S former mother-in-law and lives in another state. Cheryl is unrelated and a close friend of Sharon’s family. She lives with Tab and Sharon. How many personal and dependency exemptions should Tab and Sharon clam?

2

3

4

5

None of the above

Belle, age 65 is claimed as a dependent on her son’s tax return. During 2017, she had interest income of $2000 and $750 of earned income from baby-sitting. Belle’s taxable income is??

50

100

1350

1550

None of the above.

During the current year, Freda was entirely supported by her three children, Michelle, Brian, and John, who provided support in the following percentages.   

Michelle          43%

Brian                 48%

John                   9%

Which of the following children is entitled to claim their mother as a dependent assuming a multiple supporting agreement exists?

Michelle or Brain

Michelle or john

Brian or John

Michelle, Brain or John

None of above

Which choice is correct and true with respect to the personal and dependency exemption phaseout rules for high-income taxpayers:

a) Phaseout rules only apply to personal exemption.

b) Phaseout rules only apply to dependency exemption.

c) Both Personal exemption and dependency exemption.

D) A maximum of 85% of the personal and dependency exemption can be phaseout.

e) None of the above.

Answer 1

Part 1 :

Answer : 3

Tab and Sharon can clain two personal exemption of their own. Please find below explanation.

Sean is not a qualifyng child as his age is more then 24 years and he is nof disabled.

Calra is not a qualifying relative as she is Tab's formar mother in law so the relationship which is crerated through marriage is ended so she is not treated a qualified relative.

Cheryl is not trated a qualified relative as he is not coming in the list of relative which is as below :

• Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). (A legally adopted child is considered your child.)
• Your brother, sister, half brother, half sister, stepbrother, or stepsister.
• Your father, mother, grandparent, or other direct ancestor, but not foster parent.
• Your stepfather or stepmother.
• A son or daughter of your brother or sister.
• A son or daughter of your half brother or half sister.
• A brother or sister of your father or mother.
• Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.

Part 3

Answer : Michelle or Brian

Feedback: If a dependent is supported by two or more and a multiple support agreement is filed, any one member of the support group with over 10% support may claim to support the dependent.

Part 4

Answer : Both Personal exemption and dependency exemption.

Since 1989 Congress has reduced the benefits that high-income taxpayers receive from their personal and dependency exemptions. Under § 151(d), taxpayers must reduce their deduction for personal and dependency exemptions by 2 percent for each $2,500 or fraction thereof ($1,250 for married persons filing separate returns) by which a taxpayer’s A.G.I. exceeds the applicable threshold. These thresholds depend on the taxpayer’s filing status, and the amounts are adjusted for inflation annually.

Part 2 :

Answer : 100

Calculation = Gross Income = 2750 - grater of 1050 or (750+350)-1550 (addditional deduction of dependents aged 65 or above)