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Exam 12: Tax Credits and Payments

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Question 41

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BlueCo incurs $700,000 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 $175,000.

A) True
B) False

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Question 42

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In January 2011,Tammy acquired an office building in downtown Syracuse,New York for $400,000.The building was originally constructed in 1932.Of the $400,000 cost,$40,000 was allocated to the land.Tammy immediately placed the building into service,but quickly realized that substantial renovation would be required to keep and attract new tenants.The renovations,costing $600,000,were of the type that qualifies for the rehabilitation credit.The improvements were completed in October 2011.

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Question 43

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Bob and Sally are married,file a joint tax return,have AGI of $108,000,and have two children.Del is beginning her freshman year at State College during Fall 2011,and Owen is beginning his senior year at Southwest University during Fall 2011.Owen completed his junior year during the Spring semester of 2009 (i.e.,he took a "leave of absence" during the 2010-2011 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 2011 semester.Del's room and board costs were $3,200 for the Fall semester.Owen did not incur room and board costs since 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 2011.Compute the available education tax credits for Bob and Sally for 2011.

Bradley has two college-age children,Clint,a freshman at State University,and Abigail,a junior at Northwest University.Both Clint and Abigail are full-time students.Clint's expenses during the 2011 fall semester are as follows: $2,400 tuition,$250 books and course materials,and $1,600 room and board.Abigail's expenses for the 2011 calendar year are as follows: $10,200 tuition,$1,200 books and course materials,and $3,600 room and board.Tuition and the applicable room and board costs are paid at the beginning of each semester.Bradley is married,files a joint tax return,claims both children as dependents,and has a combined AGI with his wife of $114,000 for 2011.Determine Bradley's available education tax credit for 2011.

During 2011,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:

If the cost of a building constructed and placed into service by an eligible small business in the current year includes the cost of a wheelchair ramp,the cost of the ramp qualifies for the disabled access credit.

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

The tax benefit received from a tax credit is never affected by the tax rate of the taxpayer.

The disabled access credit is computed at the rate of 50% of all access expenditures incurred by the taxpayer during the year.

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

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.

In 2010,Juan and Juanita incur $9,800 in legal and adoption fees directly related to the adoption of an infant son born in a nearby state.Over the next year,they incur another $4,500 of adoption expenses.The adoption becomes final in 2011.Which of the following choices properly reflects the amounts and years in which the adoption expenses credit is available. 2010 2011

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

Unused foreign tax credits can be carried back three years and forward fifteen years.

Which of the following correctly describes the tax credit for rehabilitation expenditures?

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

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

Black Company paid wages of $360,000,of which $80,000 was qualified wages for the work opportunity tax credit under the general rules.Black Company's deduction for wages for the year is:

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

During the year,Green,Inc.,incurs the following research expenditures: Green's qualifying research expenditures for the year are: