Chapter 3, Problem 10DQ

Ella, Emma, Erin, and Emily are all siblings. Between them they provide 100% of the support for their father. Each of them contributes the following amounts: Ella: 46%, $14,720. Emma: 39%, $12,480. Erin: 8%, $2,560. Emily: 7%, $2,240. Who may claim the dependent exemption for their father on their return? Either Ella or Emma may claim the dependent exemption. The one who does not claim their father must sign Form 2120, Multiple Support Declaration, or a statement waiving their right to claim their father. Ella and Emma may split the dependent exemption. Only Ella may claim the dependent exemption, as she paid the most toward their father's support. They must decide between the four of them who will claim the dependent exemption. The others must sign a statement agreeing not to take an exemption for their father.

Bill is in the process of selling his house to Lisa. Which role best describes each party?   Bill is the remainderman and Lisa is the grantee.   Bill is the grantor and Lisa is the grantee.   Bill is the grantee and Lisa is the grantor.   Bill is the lessor and Lisa is the lessee.

Determine the number of dependents in each of the following independent situations: (for example, 1, 2, 3, and so on). Determine whether the individuals will qualify as the taxpayer's dependent in each of the following independent scenarios. Specify whether the dependent would come under the qualifying child category, the qualifying relative category, or "not applicable" (if the individual does not qualify as a dependent).   a.  Andy maintains a household that includes a cousin (age 12), a niece (age 18), and a son (age 26). All are full-time students. Andy furnishes all of their support, and all are “members of the household.” Cousin     Niece     Son         b.  Mandeep provides all of the support of a family friend's son (age 20), who lives with her. She also furnishes most of the support of her stepmother, who does not live with her. Family friend's son     Stepmother         c.  Raul, a U.S. citizen,…

Jamie Lee and Ross were stunned to find that their family of two has grown to a family of five! They were expecting twins, but when the babies were born, they discovered that they were actually the parents of triplets!    Ross immediately had worries of being able to provide for the growing family: diapers, formula, college expenses times three! What if something happened to him or Jamie Lee? How would the surviving parent be able to provide for such a large family?   Jamie Lee and Ross decided to purchase life insurance for Ross because his is the higher income at this time and because it would be more devastating if his income was lost due to his death. They have allowed $9,600 for funeral costs.    I really need help in calculate their living expenses for 6 months to include all monthly expenses, excluding credit card debt and entertainment. Note that Ross's mother lives close and will be providing childcare to their triplets once Jamie Lee goes back to work at the bakery for half…

Sam and Abby are dependents of their parents, and each has income of 2,100 for the year. Sams standard deduction for the year is 1,100, and Abbys is 2,450. Because their income is the same, what causes the difference in the amount of the standard deduction?

Sandy purchased a life insurance policy on her own life and made her revocable living trust the owner and beneficiary of the policy. Sandy will continue to pay the premiums on the life insurance policy. Sandy has a moderate estate, but is not concerned about owing estate tax at her death. She is married and has two children, who are both named as beneficiaries under her revocable living trust. Which of the following statements correctly identify advantages or disadvantages of Sandy's life insurance transfer? I. Sandy will not owe gift tax on the premium payments she will be making on the life insurance policy because they are not considered to be completed gifts. II. At Sandy's death, the life insurance policy will avoid probate. III. Sandy will owe gift tax for transferring the ownership of the life insurance policy to the revocable living trust. IV. Sandy has made a completed gift of the life insurance policy by placing it in the revocable living trust.     A) II and III     B)…

A married couple have written a will that leaves part of their money to a trust fund. The income from this trust will benefit the surviving spouse until death, with the principal then going to their children. Why was the trust fund created? Choose the correct.a. To reduce the estate of the surviving spouse and, thus, decrease the total amount of estate taxes to be paid by the couple.b. To ensure that the surviving spouse is protected from lawsuits filed by the couple’s children.c. To give the surviving spouse discretion over the ultimate use of these funds.d. To maximize the earning potential of the money because trust funds generate more income than other investments.

Husband and Wife have two biological children and one adopted child. Now that the adoption is finalized, Husband and Wife believe they should update their estate plan. Which of the following statements is NOT correct concerning the adopted child? A)An adopted child will automatically inherit from both an adoptive parent and a non-adoptive step-parent.   B)An adopted child cannot automatically inherit from his or her biological parent(s) and also from his or her adoptive parent(s).   C)An adoptive parent may disinherit an adopted child.   D)An adopted child will receive an equal share as a biological child under the intestate statutes.