25. Which of the following tax credits is fully refundable? a. American opportun

Question

25. Which of the following tax credits is fully refundable? a. American opportunity credit b. Dependent care credit c. Earned income credit d. Foreign tax credit e. None of the choices are correct 26 Curly started a calendar year business on October 1't of this year by paying 12 months rent on his shop at $1,000 per month. What is the maximum amount of rent that Curly can deduct this year under each type of accounting a. $12,000 under the cash method and $3,000 under the accrual method . $3,000 under the cash method and $12,000 under the accrual method C. 512,000 under the cash method and $12,000 under the accrual method d. $3,000 under the cash method and $3,000 under the accrual method e. $3,000 under the cash method and zero under the accrual method 27. Jemima is a self-employed musician who performs for a variety of events. This year Jemima was fined $250 by the city for violating the city's noise ordinance with a relatively loud performance. As a consequence, Jemima contributed $1,000 to a campaign committee formed to recall the city's mayor. Jemima normally hires a part time employee to help her schedule events and transport equipment. Jemima paid a total of $35,000 to her part time employee through June of this year. In June Jemima fired her part-time employee and hired her sister instead. However, Jemima paid her sister $55,000 (July- December) rather than $35,000 for working the remainder of the year. Jemima is on the cash method and calendar year, and she wants to know what total amount of these expenditures is deductible as business expenses this year. a. $90,000 b. $36,250 c. $70,000 d. $35,000 e. $0. None of these expenses are deductible

Explanation / Answer

25. Earned income credit is fully refundable.

26. option - 300 under cash basis and 12,000 under accrual basis.

27.Answer is option a - 90,000

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