ACCT 3221 Chapter : Ch4
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Use the provided Excel spreadsheet for the Critical ThinkingAssignment for this week. In column A, you will find a list oftransactions that may (or may not be deductible). Columns B throughH have options from which you are to select the appropriate taxtreatment of the transaction. Once you have made all of yourselections, upload the completed spreadsheet for grading.
In eachindependent item below, assume that a single taxpayer earned$30,000 in W-2 income. Show the appropriate amount that shouldappear under each heading. More than one option may beselected | ||||||||
Item | Amount | Include in Gross Income | Exclude form Gross Income | Deduction for AGI | Deduction from AGI | Appears on Schedule A | Appears on Schedule B | Appears on Schedule D |
Interest from Savings Account | $60 | |||||||
Dividends from stock investment | $500 | |||||||
Bad Debt from an Unpaid Loan | $6,000 | |||||||
Donation of automobile to charity | $600 | |||||||
Cash donation to church | $500 | |||||||
Cash donation to charity | $3,000 | |||||||
Student loan interest | $1,200 | |||||||
Alimony | $12,000 | |||||||
Loss on the sale of stock purchased 5years ago | $900 | |||||||
Gain of the sale of stock purchased 6years ago | $1,200 | |||||||
Traditional IRA contributions | $4,500 | |||||||
Net loss on real estate rentalproperties | $6,000 | |||||||
Home business (sole proprietorship)profit | $12,000 | |||||||
Moving expenses | $2,500 |
nstructions : Choose the best multiple choice answer and explain why you chose the answer. MUST provide 2-3 sentence brief explanation and show all work. All sources must be noted.
____ 19. Which of the following statements is true regarding the education tax credits?
a. | The lifetime learning credit is available for qualifying tuition and related expenses incurred by students pursuing only graduate degrees. |
b. | The American Opportunity credit permits a maximum credit of 20% of qualified expenses up to $10,000 per year. |
c. | The American Opportunity credit is calculated per taxpayer, while the lifetime learning credit is available per eligible student. |
d. | Continuing education expenses do not qualify for either education credit. |
e. | None of the above statements is true. |