1. A person whose spouse died in 2011 may qualify as a surviving spouse only in 2011 and 2012, if all other requirements are met.
2. The sole proprietorship business of an individual taxpayer is treated as a separate entity for tax purposes.
3. F operates his computer repair business as a sole proprietorship. His sole proprietorship's taxable income is subject to tax using the corporate tax rates since it is a business.
4. V is single for tax purposes, has itemized deductions totaling $5,500, and is entitled to one $3,700 exemption deduction for 2011. V should itemize her deductions in 2011.
5. The general rule for children of divorced or separated parents who together provide over one-half the support and together have custody more than one-half the year is that the exemption goes to the custodial parent.
6. Warm-a-Home, an accrual basis calendar year taxpayer, sells furnaces. With each sale, the corporation also sells a one-, two-, or three-year contract to turn the furnaces on and off and do routine maintenance. Assuming the corporation sold a one-year contract on November 1 at a price of $120, it will report income for this year of $20.
7. A single taxpayer will pay the same amount of tax (or less) as a head of household when their taxable incomes are equal.
8. A taxpayer who files late and fails to get the proper extension must pay a penalty of 0.5 percent per month (up to a maximum of 25%), beginning with the due date of the tax return (usually April 15 for calendar year individuals) and ending with the date the return is filed.
9. Healthy Pools Incorporated, an S corporation, operates a swimming pool business. It has successfully acquired many of the hotels and motels in the area as customers. It bills monthly for its services. Assuming the corporation wishes to use the accrual method to account for its billings, it must also use the accrual method to account for all other receipts and disbursements.
10. A single woman whose only income is taxable interest of $2,900 and Social Security benefits of $7,300 for 2011 cannot qualify as a dependent