A couple of nights a go in the chartroom I mentioned that I will be receiving a masters in accounting soon. I am also studying for the CPA exam. Since we are in the middle of tax season I thought I would modify one of my CPA exam prep questions for you guys to answer!
Hank and Peggy Hill contributed to the support of their child, Bobby, Peggy’s niece Luanne, their dog, Ladybird, and Hank’s parent, Cotton. For 2006, Bobby, a 19-year old full-time college student, earned $4,500 as a stand up comic. Luanne, a 25-year old cosmetologist, earned $12,000. Cotton received $5,000 in tax exempt state interest income and $4,000 in nontaxable Social Security benefits. Bobby, Luanne, and Cotton are U.S. citizens and were over one-half supported by Hank and Peggy, but only Bobby, Luanne, and Ladybird reside with Hank and Peggy. How many exemptions can Hank and Peggy claim on their 2006 joint income tax return?
To make it more fun list out the names of the exemptions.
