Concept explainers
Introduction: The Internal Revenue Service (IRS) has a wide range of functions and responsibilities such as look after of administration of federal taxes, and to perform duties like estimating, determining, and collecting taxes in the form of revenue to the government, it also performs tax return audits and imposes penal provisions. It is the office within the revenue department. The task of the department is to provide the taxpayers with quality service by assisting them in proving knowledge content so the taxpayers understand their tax responsibility and pay taxes timely. It is important in maintaining and establishing tax laws.
To choose: For paying taxes in joint return both are responsible except which option.
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Chapter 12 Solutions
Income Tax Fundamentals 2020
- Lavinia incurs various legal fees in obtaining a divorce. Which types of expenses associated with the divorce are deductible by Lavinia, and which are not?arrow_forwardWhich one of the following statements describes the consequences of using the filing status 'married filing jointly'? A spouse may not be held responsible for tax if that spouse had no income. The tax rates are generally more favorable than that of two single individuals if one has high income and the other has low income. If it is elected on an original return, it may be changed on an amended return.arrow_forwardOf the following statements regarding the estate tax, which is true? O A decedent's taxable estate is never greater than the probate estate. 4 O The taxable estate is reduced by deductions for decedent liabilities, funeral costs, and administrative costs of settling the estate. O The estate tax is not reduced by transfers to the decedent's spouse. O The estate tax exclusion is not reduced by any lifetime gift tax exclusion used by the decedent.arrow_forward
- Which of the following statement is correct? Statement I – The renunciation by the surviving spouse of his/her share in the estate of the deceased spouse in favor of all their legitimate children shall be exempt from the donor’s tax. Statement II – Donations made between spouses are void except when they were made on the occasion of a family rejoicing and the amount is moderate. True Both statements are true. Only Statement II is true. Both statements are false. Only Statement I is true.arrow_forwardWhich of the following is an accurate statement regarding the filing of a joint tax return for military families? One spouse can prepare and sign the return and then send it to the other spouse to sign and file. The spouse of a member of the military may never sign for the service member on a joint return. The spouse of a member of the military may sign a join return if the service member is serving overseas and the spouse is still stateside. The spouse of a member of the military never needs a power of attorney in ore to file an MFJ tax return.arrow_forwardWhich is FALSE in partial disposition of estate? O The taxpayer is required to execute an undertaking that the proceeds shall be exclusively used for the payment of estate tax O In case of failure to pay, total estate tax due shall be immediately due and demandable without penalties if taxpayer has justifiable reason O The estate is still required to file the estate tax return within the prescriptive period The BIR may allow the sale of a portion of property without payment of estate tax provided the proceeds shall be used for the payment of estate taxarrow_forward
- Sebastian and Sunny are married. They are currently contemplating filing as married filing separately. Under current law, spouses filing separately must A) use the standard deduction if the other spouse uses the itemized deductions or vice versa. B) both use standard deduction. C) both use itemized deductions. D) either both use itemized deductions, or both use standard deduction.arrow_forwardWhich of the following statements is CORRECT regarding the effect of the generation-skipping transfer tax (GSTT) and the transferor's spouse? A)Only an individual who is currently married to the transferor will always be deemed to be in the same generation as the transferor regardless of the difference in their ages. B)Any individual who has been married at any time to the transferor is always deemed to be in the same generation as the transferor regardless of the difference in their ages or whether they are married or have been divorced at the time of the transfer. C)A transferor may make a generation-skipping transfer to any individual who has been married at any time to the transferor without restriction. D)Only an individual who is currently married to the transferor at the time of the transfer will always be deemed to be in the same generation as the transferor.arrow_forwardJackie derives its sole income from Zhakie. Said income is normally subject to withholding taxes. Jackie found out that there is a statute providing tax exemption. Knowing he is within the scope of the exemption, Jackie asked Zhakie to return the previously withheld amount. Zhakie refuses to do so since the related expense might be disallowed if it fails to withhold. Who has the responsibility to prove that Jackie is exempted? Zhakie BIR Congress Jackiearrow_forward
- Which of the following is true with respect to the related party rules? a.A disallowed loss on a related party transaction can be used to offset any future gain when the property is sold to an unrelated party. b.Bill sells stock to his sister for a $3,000 loss. Bill can deduct the loss on his tax return. c.A taxpayer's uncle is a related party for purposes of Section 267. d.Under the constructive ownership rules of Section 267, a shareholder owns 10 percent of the stock owned by a corporation in which he or she is a shareholder. e.None of these choices are correct.arrow_forwardWhich of the following is not true? Taxpayers must file a federal income tax return if their gross income exceeds the standard deduction amount set for their filing status If Tony's wife died on January 1, 2020 and he remarried on December 31, 2020, he can only file either married filing jointly or married filing separately with his new wife. The 16th Amendment to the US Constitution legalized the direct taxation of individuals' income. For US tax purposes, the tax rate on individuals' income is a flat ratearrow_forwardA married couple, both of whom are under 65 years old, decided to file as married filing separately. One of the spouses is going to itemize deductions instead of taking the standard deduction. What is the standard deduction permitted to the other spouse when she files her tax return?arrow_forward