chapter 8 Part II

1.

1 point

Which of the following is not true of the lifetime learning credit?

It is a nonrefundable credit.

The credit can be claimed by taxpayers who have graduated from college and are taking professional training courses to improve their job skills.

A taxpayer with multiple dependents can claim a credit for each dependent's qualifying expenses.

The credit is subject to phase out based on the taxpayer's AGI.

2.

1 point

Which of the following is not a true statement about the American opportunity credit (AOC) and lifetime learning credits?

A taxpayer may not report both an AOC and a lifetime learning credit on the same tax return

Certain educational expenses qualify for both credits but taxpayers must claim one credit or the other for the expenditures (the taxpayer cannot claim both credits for the same expenditures)

Taxpayers may choose to either (1) deduct qualifying education expenses of an individual as for AGI deductions or claim educational credits for the individual's expenses (but not both)

The AGI phase-out threshold for phasing out the AOC is higher than the AGI phase-out threshold for the lifetime learning credit.

3.

1 point

Which of the following statements regarding the earned income credit is true?

It is a nonrefundable credit

It is possible that a taxpayer with more earned income may receive more credit than a taxpayer with less earned income

A 70-year-old taxpayer with no dependents can qualify for the credit in certain circumstances

A taxpayer whose only source of income is interest from corporate bonds is eligible for the credit

4.

1 point

Which of the following does not affect the amount of the earned income credit?

Filing status

Amount of credit taken in previous years

Number of qualifying children

Taxpayer's AGI

5.

1 point

Carolyn has an AGI of $38,000 (all from earned income), two qualifying children, and is filing as a head of household. What amount of earned income credit is she entitled to?

$0

$1,212

$3,305

$4,248

$5,460

6.

1 point

Which of the following statements regarding credits is correct?

Business expenses are generally refundable credits

Business credits that are generated in one year but are not utilized in that year expire

Business credits that are generated in one year but are not utilized in that year may be carried forward to future years but not back to a prior year

Business credits that are generated in one year but are not utilized in that year may be carried back to the previous year and then forward to future years

7.

1 point

If there is not enough gross tax liability to use the foreign tax credit, __________.

it expires unused

it is carried back 2 years or forward 20 years

it is carried back 3 years or forward 5 years

it is carried back 1 year or forward 10 years

8.

1 point

Which of the following tax credits is fully refundable?

American opportunity credit

Dependent care credit

Earned income credit

None of these

9.

1 point

How could an individual obtain a business tax credit?

Through self-employment activities

Through flow-through from a partnership or S corporation

By working overseas and obtaining a foreign tax credit

All of these

10.

1 point

Which of the following represents the correct order in which credits are applied to gross tax liability (from first to last)?

Nonrefundable personal, business, refundable

Business, nonrefundable personal, refundable

Refundable, nonrefundable personal, business

Refundable, business, nonrefundable personal

11.

1 point

Cassy reports a gross tax liability of $1,000. She also claims $400 of nonrefundable personal credits, $700 of refundable personal credits, and $200 of business credits. What is Cassy's tax refund or tax liability due after applying the credits?

$1,000 taxes payable

$0 refund or taxes payable

$700 refund

$300 refund