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Self-Emplayment Tax . Anita, a single taxpayer, reports the
following items for 2019:
a. What is the amount of Anita’s self-employment tax?
b. How would your answer to Part a change if Anita’s salary
were $140,000?

Child and Dependent Care Credit. In each of the following
independent situations, determine the amount of the child and dependent care
tax credit. (Assume that both taxpayers are employed and the year is 2019 .)
a. Brad and Bonnie are married and file a joint return, with
earned income of $40,000 and $14,000, respectively. The ir combined AGI is
$52,000 . They have two children, ages 10 and 12, and employ a live-in nanny at
an annual cost of $9,000 .
b. Assume the same facts as in Part a, except chat Brad and
Bonnie employ Bonnie’s mother, who is nor their dependent, as the live-in nanny
.
c. Bruce is divorced and has two children, ages 10 and 16.
He has AGI and earned income of $35,000 . Bruce incurs qua lifying child care
expenses of $8,000 during the year, incurred equa lly for both children .
Bruce’s employer maintains an emp loyee dependent care assistance program .
$1,000 was paid to Bruce from this program and excluded from Bruce’s gross
income .
d. Buddy and Candice are married and file a joint return .
Their combined AGI is $50,000. Buddy earns $46,000, and Cand ice’s salary from
a part -time job is $4,000 . They incur $5,000 of qua lifying child care
expenses for a day-care facility for their two children, ages 2 and 4.
e. Ben and Bunny are marr ied and file a joint return .
Their AGI is $75,000, all earned by Bunny. Ben was a full-time student for two
semesters (10 months) at Stare University during the year. They incur $7,000 of
qualifying child care expenses for their two children, ages 6 and 4.

Adoption Credit. Brad and Valerie decided to adopt a child
and contacted an adoption agency in August 2018. After extensive interviews and
other requirements (such as financia l status, etc.), Brad and Valerie were
approved as eligible parents to adopt a child. The agency indicated chat it
might rake up to two years to find a proper march . In March 2019, the adoption
became final, and Brad and Valerie adopted an infant daug hter (not a special
needs child). Below is a list of expenses chat they incurred:
Brad and Valerie’s AGI in 2018 was $70,000, and in 2019 was
$90,000.
a. Compute Brad and Valerie’s qualified adoption expenses
for each year.
b. Compute Brad and Valerie’s adoption credit. In which
year(s) may the credit be taken?
c. Would your answer to Part b change if the adopted child
was a special needs child and if a grant covered all adoption cost except for
legal fees?

American Opportunity Tax Credit and Lifetime Leaming Credit.
Lou and Stella North are married, file a joint return, and have two dependent
children in college, Phil and Jaci. Phil attends a State University in a
neighboring state, and Jaci attends a State University in their home state.
Neither receives any type of financial assistance. The Norths’ modified AGI in
2019 is $122,000. The children’s classifications and expenses are as follows:
a. Compute any education credits that the Norths may claim
in 2019.
b. How would your answer in Part a change if Phil received
an academic scholarship of $3,000 (excluded from gross income) for each
semester?
c. How would your answer in Part a change if Lou and
Stella’s modified AGI was $175,000?
d. How would your answer in Part a change if Phil had been a
junior during Spring semester and a senior during Fall semester?

Tax Credit for the Elderly. Caroline, age 66 and filing
single as a dependent of another, received the following income items for the
current year:
Caroline’s tax liability (before credits) is $540. $3,000
6,450 2,050 $11,500
a. What is Caroline’s tentative tax credit for the elderly
(before the tax liability limitation is applied)?
b. What is Caroline’s allowable tax credit?

General Business Tax Credit Limitation. During the current
year, Joule Company, a sole proprietorship, earned general business tax credits
of $30,000 for energy conservation and rehabilitation expenditures. The owner,
Mark Joule, knows that the overall credit will be limited. He provides you with
the following information for the current year: regular tax (before credits)=
$37,500; tentative minimum tax= $20,200; alternative minimum tax= $0; foreign
tax credit= $4,500; other nonrefundable credits= $6,100. Mark also has a $3,000
carryforward of general business credit from the prior year.
a. What is the current year limitation on Mark’s genera l
business credit?
b. What is Mark ‘s allowable general business credit in the
current year and where does it come from?
c. What is Mark’s general business credit carryover?

Foreign Tax Credit. Laser Corporation, a U.S. corporation,
has a foreign office that conducts business in France. Laser pays foreign taxes
of $74,000 on foreign-source taxable income of $185,000. lts U.S.-source
taxable income is $320,000, total U.S. taxable income (worldwide) of $505,000,
and U.S. tax liability (before reductions for the foreign tax credit) is
$106,050. What is Laser’s foreign tax credit? What is Laser’s foreign tax
credit carryback or carryover?