For Each of the Following Independent Cases,indicate the Total Number

question 37

Essay

For each of the following independent cases,indicate the total number of exemptions (personal and dependents)that may be claimed by the taxpayer in 2013.
a.Cassie is a single mother providing the sole support of her three children,who all live with her.Her 16 year-old daughter,Tammy,earned $15,200 modeling during the year and her two sons,R.J.and Will,ages 10 and 8,have no income.
b.Olivia,35 years old,provided eighty percent of the support of her grandmother who lived in another state.Her grandmother's only income was from non-taxable social security of $6,500.
c.Vanessa and Matt Reardon are married and under 65 years of age.During 2013,they furnish more than half of the support of their 25 year-old son,Bill,who lives with them.Bill earns $2,000 from a part-time job,most of which he sets aside for future college expenses.Bill is not currently a student.Vanessa's father,Henry,who died on January 3,2013,at age 80,had for many years qualified as their dependent.
d.Douglas and Marjorie are husband and wife and file a joint return.Both are under 65 years of age.They provide more than half of the support of their daughter,Ellen (age 23),who is a full-time medical student.Ellen receives a $3,400 taxable scholarship covering her room and board at college.They furnish all of the support of Henry (Douglas's grandfather),who is age 70 and lives in a nursing home.They also support Meg (age 69),who is a friend of the family and lives with them.
e.Blair,who is divorced,maintains a home in which she,her twin sons,and her baby daughter live all year.The children's father,Ross,provides over half their support.No special arrangements exist between Blair and Ross.

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Definitions:

Internal Rate of Return

A financial metric used to gauge the profitability of potential investments.

NPV

An evaluation metric used to estimate the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Capital Budgeting Analysis

The process of evaluating and selecting long-term investments that are in line with the goal of shareholder wealth maximization.

Payback

A capital budgeting method that calculates the length of time required to recoup the original investment.