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Exam 13: Tax Credits and Payment Procedures

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Question 41

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If a taxpayer is required to recapture any tax credit for rehabilitation expenditures, the recapture amount need not be added to the adjusted basis of the rehabilitation expenditures.

A) True
B) False

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Question 42

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In terms of the withholding procedures, which statement does not reflect current rules?

A) Penalties can be imposed for filing false information with respect to wage withholding.
B) An employer need not verify the number of exemptions claimed by an employee on Form W-4 (Employee's Withholding Allowance Certificate) .
C) An employee may claim fewer than the number of withholding allowances allowed, but not more.
D) In preparing the income tax return for the year, the employee is bound by the number of exemptions claimed for withholding purposes.

E) All of the above
F) B) and C)

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Question 43

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Employers are encouraged by the work opportunity tax credit to hire individuals who have been long-term recipients of family assistance welfare benefits.

Steve records a tentative general business credit of $110,000 for the current year. His net regular tax liability before the general business credit is $125,000, and his tentative minimum tax is $100,000. Compute Steve's allowable general business credit for the year.

During the year, Purple Corporation (a U.S. Corporation) has U.S.-source income of $1,800,000 and foreign income of $600,000. The foreign-source income generates foreign income taxes of $150,000. The U.S. income tax before the foreign tax credit is $816,000. Purple Corporation's foreign tax credit is:

The tax credit for rehabilitation expenditures for certified historic structures differs from that for qualifying structures that are not certified historic structures.

Qualified research and experimentation expenditures are not only eligible for the 20% tax credit, but also can be expensed in the year incurred.

During 2017, Barry (who is single and has no children) earned a salary of $13,000. He is age 30. His earned income credit for the year is:

During the year, Green Corporation (a U.S. corporation) has U.S.-source income of $750,000 and foreign income of $500,000. The foreign-source income generates foreign income taxes of $240,000. The U.S. income tax before the foreign tax credit is $425,000. Green Corporation's foreign tax credit is:

The base amount for the Social Security portion (old age, survivors, and disability insurance) is different from that for the Medicare portion of FICA.

Child and dependent care expenses include amounts paid for general household services.

The incremental research activities credit is 20% of the qualified research expenses that exceed the base amount.

The tax benefits resulting from tax credits and tax deductions are affected by the tax rate bracket of the taxpayer.

The work opportunity tax credit is available only for wages paid to qualifying individuals during their first year of employment.

Explain the purpose of the tax credit for rehabilitation expenditures and describe the general characteristics of its computation.

Only self-employed individuals are required to make estimated tax payments.

Some (or all) of the tax credit for rehabilitation expenditures will have to be recaptured if the rehabilitated property is disposed of prematurely or if it ceases to be qualifying property.

Describe the withholding requirements applicable to employers.

Green Company, in the renovation of its building, incurs $9,000 of expenditures that qualify for the disabled access credit. The disabled access credit is:

Refundable tax credits include the: