Eugene and Velma Are Married

question 116

Multiple Choice

Eugene and Velma are married. For 2016, Eugene earned $25,000 and Velma earned $30,000. They have decided to file separate returns and are each entitled to claim one personal exemption. They have no deductions for adjusted gross income. Eugene's itemized deductions are $11,200 so he is going to itemize. Velma's itemized deductions are $4,000. Assuming Eugene and Velma do not live in a community property state, what is Velma's taxable income?

• A)$19,700
• B)$20,400
• C)$21,950
• D)$26,000
• E)None of the above

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Definitions:

Deferred Exploration Expenditure

Costs incurred in the exploration of resources which are not immediately expensed but are capitalized and amortized over time.

Accumulated Depreciation

The total amount of a tangible asset's cost that has been allocated as depreciation expense since the asset was put into use.

Sundry Liabilities

Various small or infrequent debts and liabilities not classified in the main liabilities categories on a company's balance sheet.

One-Line Method

A consolidation technique, often used in accounting for investments, where only the net income and not the detailed financial activities of an affiliate are included in the parent company's financial statements.