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Exam 12: Tax Credits and Payments

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Question 31

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The disabled access credit was enacted to encourage small businesses to make their businesses more accessible to disabled individuals.

A) True
B) False

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Question 32

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

A) True
B) False

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Question 33

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Amber is in the process this year of renovating the office building (placed in service in 1976) used by her business. Because of current Federal Regulations that require the structure to be accessible to handicapped individuals, she incurs an additional $11,000 for various features, such as ramps and widened doorways, to make her office building more accessible. The $11,000 incurred will produce a disabled access credit of what amount?

An employer calculates the amount of income tax withheld from salary or wages based on the information an employee provides on the following form:

Any unused general business credit must be carried back 3 years and then forward for 20 years.

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

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:

An employer's tax deduction for wages is affected by the work opportunity tax credit.

Juan refuses to give the bank where he maintains a savings account his Social Security number. Juan is subject to backup withholding for the interest earned on the savings account.

Qualified rehabilitation expenditures include the cost of acquiring the building, but not the cost of acquiring the land.

Which of the following statements regarding the adoption expenses credit is not true?

In describing FICA taxes, which (if any) of the following statements is incorrect?

John owns and operates a real estate agency as a sole proprietor. On a full-time basis, he employs his 17-year old daughter as a receptionist and his 22-year old son as a bookkeeper. Both children are subject to FICA withholding.

During 2018, Barry (who is single and has no children) earned a salary of $13,100. He is age 30. His earned income credit for the year is:

Qualifying tuition expenses paid from the proceeds of a tax-exempt scholarship do not give rise to an education tax credit.

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

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

The education tax credits (i.e., the American Opportunity credit and the lifetime learning credit) are available to help defray the cost of higher education regardless of the income level of the taxpayer.

Bob and Sally are married, file a joint tax return, report AGI of $118,000, and have two children. Del is beginning her freshman year at State College during Fall 2018, and Owen is beginning his senior year at Southwest University during Fall 2018. Owen completed his junior year during the Spring semester of 2017 (i.e., he took a "leave of absence" during the 2017-2018 school year) . Both Del and Owen are claimed as dependents on their parents' tax return. Del's qualifying tuition expenses and fees total $5,000 for the Fall semester, while Owen's qualifying tuition expenses were $6,100 for the Fall 2018 semester. Del's room and board costs were $3,200 for the Fall semester. Owen did not incur room and board costs, as he lived with his aunt and uncle during the year. Full payment is made for the tuition and related expenses for both children at the beginning of each semester. In addition to the children's college expenses, Bob also spent $3,000 on professional education seminars during the year in order to maintain his license as a practicing dentist. Bob attended the seminars during July and August 2018. Compute the available education tax credits for Bob and Sally for 2018.

BlueCo incurs $900,000 during the year to construct a facility that will be used exclusively for the care of its employees' pre-school age children during normal working hours. The credit for employer-provided child care available to BlueCo this year is $225,000.