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Exam 13: Tax Credits and Payment Procedures

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Question 41

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The purpose of the work opportunity tax credit is to encourage employers to hire individuals from specified target groups traditionally subject to high rates of unemployment.

A) True
B) False

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Question 42

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If a taxpayer chooses to claim a foreign tax credit,part of the foreign income taxes paid can also be claimed as a deduction.

A) True
B) False

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Question 43

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

Pat generated self-employment income in 2014 of $76,000.The self-employment tax is:

The purpose of the tax credit for rehabilitation expenditures is to encourage the relocation of businesses from older,economically distressed areas (i.e. ,inner city)to newer locations.

Explain the purpose of the disabled access credit and describe the general characteristics of its computation.

Both education tax credits are available for qualified tuition expenses,and in certain instances,also may be available for room and board.

All foreign taxes qualify for the foreign tax credit.

Realizing that providing for a comfortable retirement is up to them,Jim and Julie commit to making regular contributions to their IRAs,beginning this year.Consequently,they each make a $2,000 contribution to their traditional IRA.If their AGI is $35,000 on their joint return,what is the amount of their credit for certain retirement plan contributions?

Which of the following best describes the treatment applicable to unused business credits?

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

The components of the general business credit include all of the following except:

A LIFO method is applied to general business credit carryovers,carrybacks,and utilization of credits earned during a particular year.

Dabney and Nancy are married,both gainfully employed,and have two children who are 3 and 6 years old.Dabney's salary is $35,000 while Nancy's salary is $40,000.During the year,they spend $7,000 for child care expenses that are required so both of them can work outside of the home.Calculate the credit for child and dependent care expenses.

A taxpayer who meets the age requirement and receives no Social Security benefits will be entitled to the full tax credit for the elderly.

The maximum child tax credit under current law is $1,500 per qualifying child.

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

Several years ago,Tom purchased a structure for $300,000 that was originally placed in service in 1929.Three and one-half years ago he incurred qualifying rehabilitation expenditures of $600,000.In the current year,Tom sold the property in a taxable transaction.Calculate the amount of the recapture of the tax credit for rehabilitation expenditures.

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

In May 2014,Blue Corporation hired Camilla,Jolene,and Tyrone,all of whom are certified as long-term family assistance recipients.Each employee is paid $12,000 during 2014.Camilla and Tyrone continued to work for Blue Corporation in 2015,earning $14,000 each.Blue hired no additional employees during 2015. a.Compute Blue Corporation's work opportunity tax credits for 2014 and 2015. b.Assume Blue Corporation pays total wages of $500,000 to its employees during 2014 and $560,000 during 2015.How much may Blue Corporation claim as a wage deduction for 2014 and 2015 if the work opportunity tax credit is claimed in both years?