John and Tara Smith are married and have lived in the same home for over 20...

John and Tara Smith are married and have lived in the same home for over 20 years. John's uncle Tim, who is 64 years old, has lived with the Smiths since March of this year. Tim is searching for employment but has been unable to find any—his gross income for the year is $2,000. Tim used all $2,000 toward his own support. The Smiths provided the rest of Tim's support by providing him with lodging valued at $5,000 and food valued at $2,200. Assume the original facts except that Tim earned $10,000 and used all the funds for his own support. Assume the original facts except that Tim is a friend of the family and not John's uncle

Expert Solution

a.In the Original situation - Yes. The Smiths may claim Tim as a dependent as a qualifying relative as analyzed below

Test	Tim
Relationship	Yes, Tim meets qualifying relative test
Age	Not applicable to qualifying relative
Residence	Not applicable to qualifying relative
Support	Yes. The Smiths provided more than half of Tim’s support ($7,200/$9,200)
Gross Income	Yes, Tim’s gross income is less than the exemption amount.

b. Assume the original facts except that Tim earned $10,000 and used all the funds for his own support

No. The Smiths may not claim Tim as a dependent because he is not a qualifying relative as analyzed below

Test	Tim
Relationship	Yes, Tim meets qualifying relative test
Age	Not applicable to qualifying relative
Residence	Not applicable to qualifying relative
Support	No, the Smiths did not provide more than half of Tim’s support ($7,200/$17,200)
Gross Income	No, Tim’s gross income ($10,000) is more than the exemption amount.

c. Assume the original facts except that Tim is a friend of the family and not John's uncle

No. The Smiths may not claim Tim as a dependent because he is not a qualifying relative as analyzed below

Test	Tim
Relationship	No. No family qualifying relationship, and Tim did not live with the Smiths for the entire year.
Age	Not applicable to qualifying relative
Residence	Not applicable to qualifying relative
Support	Yes, the Smiths provided more than half of Tim’s support ($7,200/$9,200)
Gross Income	Yes, Tim’s gross income is less than the exemption amount.

ekkarill92 answered 1 year ago

The Pratts (a married couple) purchased their home for $400,000. They have lived in the home,...

The Pratts (a married couple) purchased their home for $400,000. They have lived in the home, as their main residence, for six years. While they lived at the house, the installed a new roof costing $15,000 and added a small addition costing $25,000. At the end of the sixth year, they sold the home for $700,000 and paid a 10% commission to the real estate agent who listed and sold the home for them. Based on this information, answer the...

Lydia and John were a couple in their nineties who lived in their own home and...

Lydia and John were a couple in their nineties who lived in their own home and had been married over sixty years. Both were confused and forgetful. They had two sons who were in their seventies and lived in nearby towns. One son was estranged from them. The other was somewhat involved in their lives, but he had a mentally ill wife and health problems of his own to deal with. The couple first came to the attention of a...

John and Jenifer are a married couple, and they jointly own a home insured for $200,000...

John and Jenifer are a married couple, and they jointly own a home insured for $200,000 under an unendorsed HO-3 policy. The replacement cost of the home is $275,000. Personal property is insured for $90,000. Jenifer has jewelry valued at $20,000. John has a coin collection valued at $15,000 and a motorboat valued at $20,000. Assume you are a financial planner who is asked to evaluate the couple’s HO-3 policy. a) A burglar broke into the home and stole a...

joel and Kato are a married couple who have lived comfortably in a country in the...

joel and Kato are a married couple who have lived comfortably in a country in the Gulf Region for the past twenty-five years; they have accumulated some life-savings and other investments from which they are earning good savings income and dividend income; this income will put them well within the higher rate band of taxation in the UK. They are considering returning to the UK, which they left in their mid-twenties. They are both professionals and should not have any...

John Smith, with 20 years of experience as general foreman in the U.S., is sent as...

John Smith, with 20 years of experience as general foreman in the U.S., is sent as production superintendent to his firm’s new plant in Qatar. He was chosen because of his outstanding success in handling workers. Smith uses participative/democratic leadership style. Compare the cultures of US and Qatar using Hofstede’s cultural dimensions, and explain if you foresee John having any problems on this new job?

Ted and Marge Dean are married and always have lived in a community property state. Ted...

Ted and Marge Dean are married and always have lived in a community property state. Ted (age 92) suffers from numerous disorders and is frequently ill, while Marge (age 70) is in good health. The Deans currently need $500,000 to meet living expenses, make debt payments, and pay Ted's backlog of medical expenses. They are willing to sell any one of the following assets. Adjusted Basis FairMarket Value a. Wren Corporation Stock 200,000 500,000 b. Gull Corporation Stock 600,000 500,000...

introduction to sociology Kyle and Pam Smith have been married for eight years. They have two...

introduction to sociology Kyle and Pam Smith have been married for eight years. They have two young boys—Ryan, age four, and Zach, age two. Both Kyle and Pam work at full-time jobs. Kyle is in construction, and Pam works in a construction company's office. Pam would like to go back to school and get an M.B.A. to advance within her company. Explain what societal factors might lead to a gender gap in the performance of housework and child care. minimum...

Maria and John have been married for 2 years and just learned that they are pregnant....

Maria and John have been married for 2 years and just learned that they are pregnant. They have been renting a small apartment but decide to purchase a house. They find one that is selling for $525,000. They decide to make a 15% down payment. Maria and Jon are considering 2 financing options: Option 1: a 4.0% interest 30-year mortgage Option 2: a 3.25% interest 15-year mortgage Answer the following questions showing all your work to reach each answer. A....

"Dual-Residency Dilemma" Your clients, Holly and Jim, are considering buying a home. They have lived in...

"Dual-Residency Dilemma" Your clients, Holly and Jim, are considering buying a home. They have lived in an apartment to save money for two years and want to own their own home. In addition, they are eyeing a possible purchase of a beach house as a rental property within the next five years. They have come to you for advice about the benefits of home ownership. Choose a topic from the chapter related to home ownership or owning a rental home...

John and Jenn are a married couple in their mid-forties. They have two teenaged children, one...

John and Jenn are a married couple in their mid-forties. They have two teenaged children, one of whom is going to be starting university in the fall. They have been life-long savers, started contributing to registered educational savings plans (RESPs) when each of their children were born, and have a small mortgage remaining on their home. During their annual review, what changes to their asset allocation would be beneficial? 1. Increase in bond and money market funds to increase interest...

Question