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Assignment 2: Questions And Answers

Decent Essays

Answer each of the following as indicated. Unless the instructions say to “quote”, then you should explain in your own words.
A taxpayer is required under a divorce decree to make certain payments that consist of alimony of $12,000 per year and child support of $15,000. Due to financial difficulties, however, the taxpayer made equal monthly payments that totaled $9,000. The taxpayer is trying to determine what portion of the amount paid will be considered child support.

Which (Internal Revenue) Code section, subsection, and paragraph indicates if the payments made will be considered child support? How would you answer the client?

The information I would convey to the client is that as referenced in their divorce decree the child …show more content…

Publication 17 advises students that while receiving scholarships if work is performed such as teaching or research, then the amount received as scholarship is taxable. Internal Revenue code 501( c )(3) also proves information on determining if scholarship received s taxable.

A taxpayer is providing 100% of the support for a niece, who resided with him for the entire year. He is trying to determine if he may deduct an exemption for her as a qualifying relative.
Which Code section, subsection, and paragraph will provide him with information about what constitutes a qualifying relationship for the purpose of deducting a personal exemption?

When determining a qualifying relationship for deduction personal exemption based on information in Publication 17 the person has to be a relative. Additionally, once determined that there the person is related to you they are expected to be a member of the household and the taxpayer that is filing the return to claim the exemption had to have provided more than half of living support to this family member. Furthermore, the income earned by the relative cannot exceed $4000 which is dictate by Publication 17 for tax year 2015. The exemption amount for each person for the year 2015 is $4000 which changes on an annual

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