I need help with the questions below please 1 Jesse has his

I need help with the questions below, please

1. Jesse has his retired father-in-law, Vick, living with him and his wife Sue for the past three years and they provide approximately 90% of Vick’s support each year. Vick has $2,400 of gross income. Which of the following statements is accurate regarding Vick’s dependency status?

a)     Vick cannot be claimed as a dependent based on his gross income

b)    Vick fails the relationship test and is not a qualifying relative

c)     Jesse and Sue only provide 90% of Vick’s support and in order to meet the qualifying relative test they must provide 100%

d)    Since Vick lives with Jesse and Sue full time, they provide more than half his support, and his income is less than $4,000, he can be claimed as a dependent based on the qualifying relative test

2. A group of business associates comes from out of town to Greg’s place of business to hold a substantial business discussion. Greg takes his associates out to dinner the evening before the business discussion and spends $400. What amount can Greg deduct as a cost of business entertainment expense?

a) $0

b) $100

c) $200

d) $300

3. Lucia received $2,000 cash under her employer’s dependent care plan for 2016. The $2,000 is shown in box 10 of her Form W-2. She incurred $900 of qualified expenses in 2016 for the care of her 3-year-old dependent child. When claiming the Credit for Child and Dependent Care Expenses what amount should she report for dependent care benefits on Line 13 of her Form 3506?

a) $0

b) $900

c) $1,100

d) $2,000

4. Audrey claimed $2,100 on her Federal tax return for her Child and Dependent Care Expenses Credit. Her Federal AGI was $32,750 and she meets all other requirements. What amount can she claim for the California Child and Dependent Care Expenses (CDC) Credit?

a) $0

b) $700

c) $1,050

d) $1,400

Solution

1.

Answer is D

Since Vick lives with Jesse and Sue full time, they provide more than half his support, and his income is less than $4,000, he can be claimed as a dependent based on the qualifying relative test.

As they have income less than $3650 as per IRS,

Support test which is more than 50% in this case it is 90%

Relationship test as they are parent

2.

Answer is C $200

Entertainment expenses which includes (meals, office catering and other expenses related to entertain the associates, customers) are deductible at 50%. That is, you can only deduct half of the cost of that office party. Business meals are also deductible at 50%.

3.

Answer is (C) $1100

$2000-900=$1100 carry forwarded to 2017

If you had an employer-provided dependent care plan, your employer may have permitted you to carry forward any unused amount from 2016 to use during a grace period in 2017. Enter on line 13 the amount you carried forward and used in 2017 during the grace period.

4.

Answer is $1050 (c)

$2100*50% = $1050

A taxpayer, who qualified for the federal CDC Credit and whose federal adjusted gross income (AGI) is not over $100,000, can claim a percentage of the federal CDC Credit on his or her California tax return. Listed below

-Federal AGI California Credit $40,000 or less 50% of federal credit

-More than $40,000, but not over $70,000 43% of federal credit

-More than $70,000 but not over $100,000 34% of federal credit

-Over $100,000 No California credit