Answered Essay: The Samsons are trying to determine whether they can claim their 22-year-old adopted son, Jason, as a dependent. Jason is current

5. The Samsons are trying to determine whether they can claim their 22-year-old adopted son, Jason, as a dependent. Jason is currently a full-time student at an out-of-state university. Jason lived in his parents’ home for three months of the year and he was away at school for the rest of the year. He received $9,500 in scholarships this year for his outstanding academic performance and earned $4,800 of income working a part-time job during the year. The Samsons paid a total of $5,000 to support Jason while he was away at college. Jason used the scholarship, the earnings from the part-time job, and the money from the Samsons as his only sources of support.

d. Assume the original facts except that Jason earned $5,500 while working part-time and used this amount for his support. Can the Samsons claim Jason as their dependent?

yes or no?

6. [The following information applies to the questions displayed below.]

Jasper and Crewella Dahvill were married in year 0. They filed joint tax returns in years 1 and 2. In year 3, their relationship was strained and Jasper insisted on filing a separate tax return. In year 4, the couple divorced. Both Jasper and Crewella filed single tax returns in year 4. In year 5, the IRS audited the couple’s joint year 2 tax return and each spouse’s separate year 3 tax returns. The IRS determined that the year 2 joint return and Crewella’s separate year 3 tax return understated Crewella’s self-employment income, causing the joint return year 2 tax liability to be understated by $9,800 and Crewella’s year 3 separate return tax liability to be understated by $9,500. The IRS also assessed penalties and interest on both of these tax returns. Try as it might, the IRS has not been able to locate Crewella, but they have been able to find Jasper. (Leave no cells blank – be certain to enter “0” wherever required.)

a. What amount of tax can the IRS require Jasper to pay for the Dahvill’s year 2 joint return?

Amount of tax: ?

7. Jasper and Crewella Dahvill were married in year 0. They filed joint tax returns in years 1 and 2. In year 3, their relationship was strained and Jasper insisted on filing a separate tax return. In year 4, the couple divorced. Both Jasper and Crewella filed single tax returns in year 4. In year 5, the IRS audited the couple’s joint year 2 tax return and each spouse’s separate year 3 tax returns. The IRS determined that the year 2 joint return and Crewella’s separate year 3 tax return understated Crewella’s self-employment income, causing the joint return year 2 tax liability to be understated by $9,800 and Crewella’s year 3 separate return tax liability to be understated by $9,500. The IRS also assessed penalties and interest on both of these tax returns. Try as it might, the IRS has not been able to locate Crewella, but they have been able to find Jasper. (Leave no cells blank – be certain to enter “0” wherever required.)

b. What amount of tax can the IRS require Jasper to pay for Crewella’s year 3 separate tax return?

Amount of tax: ?

8. Camille Sikorski was divorced last year. She currently provides a home for her 15-year-old daughter, Kaly, and 18-year-old son, Parker. Both children lived in Camille’s home, which she owns, for the entire year, and Camille paid for all the costs of maintaining the home. She received a salary of   $80,000 and contributed $5,200 of it to a qualified retirement account (a for AGI deduction). She also received $11,000 of alimony from her former husband. Finally, Camille paid $3,700 of expenditures that qualified as itemized deductions.

a. What is Camille’s taxable income?

Description Amount
(1) Gross income ?
(2) For AGI deductions ?
(3) Adjusted gross income $0
(4) Standard deduction ?
(5) Itemized deductions ?
(6) ? ?
(7) Personal and dependency exemptions ?
(8) Total deductions from AGI $0
Taxable income ?

9. Camille Sikorski was divorced last year. She currently provides a home for her 15-year-old daughter, Kaly, and 18-year-old son, Parker. Both children lived in Camille’s home, which she owns, for the entire year, and Camille paid for all the costs of maintaining the home. She received a salary of   $80,000 and contributed $5,200 of it to a qualified retirement account (a for AGI deduction). She also received $11,000 of alimony from her former husband. Finally, Camille paid $3,700 of expenditures that qualified as itemized deductions.

b. What would Camille’s taxable income be if she incurred $11,300 of itemized deductions instead of $3,700?

cription Amount
(1) Gross income ?
(2) For AGI deductions ?
(3) Adjusted gross income $0
(4) Standard deduction ?
(5) Itemized deductions ?
(6) ? ?
(7) Personal and dependency exemptions ?
(8) Total deductions from AGI $0
Taxable income ?

10. Camille Sikorski was divorced last year. She currently provides a home for her 15-year-old daughter, Kaly, and 18-year-old son, Parker. Both children lived in Camille’s home, which she owns, for the entire year, and Camille paid for all the costs of maintaining the home. She received a salary of   $80,000 and contributed $5,200 of it to a qualified retirement account (a for AGI deduction). She also received $11,000 of alimony from her former husband. Finally, Camille paid $3,700 of expenditures that qualified as itemized deductions.

c. Assume the original facts but now suppose Camille’s daughter, Kaly, is 25 years old and a full-time student. Kaly’s gross income for the year was $6,300. Kaly provided $3,780 of her own support, and Camille provided $6,300 of support. What is Camille’s taxable income?

Description Amount
(1) Gross income ?
(2) For AGI deductions ?
(3) Adjusted gross income $0
(4) Standard deduction ?
(5) Itemized deductions ?
(6) ? ?
(7) Personal and dependency exemptions ?
(8) Total deductions from AGI $0
Taxable income ?

Expert Answer

 

5d. No. Jason is no longer a qualifying child because he provides over ½ of his own support. He is not a qualifying relative because his income is too high.

See the following analysis:

Test Jason
Relationship Yes, adopted son qualifies
Age Yes, under age 24 and a full-time student (and younger than his parents).
Residence Yes, temporary absences away at school count as time in the parents’ home.
Support No, the Samsons provided $5,000 of support for Jason. Jason provided $5,500 of his own support. Jason also received $9,500 of scholarship money, but this does not count as support provided for himself because he is an actual child of the Samsons. Nevertheless, because Jason provided more than half of his own support, he is neither a qualifying child nor a qualifying relative to his parents.

 

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