Bob and Sally Are Married,file a Joint Tax Return,have AGI

question 71

Multiple Choice

Bob and Sally are married,file a joint tax return,have AGI of $108,000,and have two children.Del is beginning her freshman year at State College during Fall 2011,and Owen is beginning his senior year at Southwest University during Fall 2011.Owen completed his junior year during the Spring semester of 2009 (i.e.,he took a "leave of absence" during the 2010-2011 school year) .Both Del and Owen are claimed as dependents on their parents' tax return.Del's qualifying tuition expenses and fees total $5,000 for the Fall semester,while Owen's qualifying tuition expenses were $6,100 for the Fall 2011 semester.Del's room and board costs were $3,200 for the Fall semester.Owen did not incur room and board costs since he lived with his aunt and uncle during the year.Full payment is made for the tuition and related expenses for both children at the beginning of each semester.In addition to the children's college expenses,Bob also spent $3,000 on professional education seminars during the year in order to maintain his license as a practicing dentist.Bob attended the seminars during July and August 2011.Compute the available education tax credits for Bob and Sally for 2011.

• A) $3,100.
• B) $5,000.
• C) $5,420.
• D) $5,600.
• E) None of the above.

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Definitions:

Book Value

The net value of an asset as recorded on a company's balance sheet, calculated as the original cost minus depreciation.

Asset Retirement Obligations

Liabilities recognized for the future costs of disposing of an asset and restoring the site, typically relevant for companies with significant fixed assets.

GAAP

Commonly followed accounting rules and standards for financial reporting, referred to as Generally Accepted Accounting Principles.

Fair Value

The compensation received for an asset's sale or the expenditure for a liability's reassignment in an organized engagement with market participants on the valuation date.