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50% 10:30 Take Test: X t . Facebook × http://proc × https://classes.alastc· QUESTION 20 2.3 points Save Answer Clark, a 12-year-old child, lives with his parents. During the current year, Clark earned $2,400 delivering newspapers This was his only income. Clark's parents file a joint return and claim Clark as a dependent. Considering this information, which of the following statements is correct? The parents must report Clark's income on their tax return Clark must use his parents' tax rate to compute his tax liability Clark's taxable income is $1,350 Clark's taxable income is $O None of the above QUESTION 21 2.3 points Save Answer A taxpayer reported the following items for the year: Salary Gain on sale of ABC stock Gambling winnings Gambling losses Door prize $50,000 3,000 5,000 8,000 1,000 What is the taxpayer's adjusted gross income? $57,000 $54,000 $51,000 $53,000 $59,000 QUESTION 22 2.3 points Save Answer A 10-vear-old who lives with her parents has $5.300 in Click Save and Submit to save and submit. Click Save All Answers to save all

Explanation / Answer

Question 20.

Clark must use his parents tax rate to compute his tax.

Question 21.

Since Gambling loss is deductible till the extent of earnings from the gambling only. Here in this case he earns $5,000 in gamblings first and then loses entire $8,000. So it is deductible to the extent of $5,000 only.

His taxable income is:

Salary $50,000

Add: Gain on sale of stock $3,000

Add: Winning from Gambling $5,000

Less: Loss from Gambling $5,000 (subject to a max deduction till the earnings from gambling of $5000)

Add: Door Prize $1,000

Taxable income is $ 54,000

Question 22

The child can have a net unearned income of $3,200

Question 23

Amount to be included in the gross income:

11000 - (5720/260 * 5 months) = $10,890

So the correct answer is $10,890

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