Question

I wanted to know if the answer I marked is correct

Question 56 of 75. Carlie (28) is the beneficiary of her deceased grandmother's traditional IRA. She received a Form 1099-R reporting the $10,000 gross distribution. The form had a distribution code "4" in box 7, indicating that the distribution is due to death. What is the tax consequence of this distribution? The entire amount is tax-free and penalty-free. The only tax to which Carlie is subject is the 10% additional tax on early distributions. o The gross distribution is taxable income, but Carlie may claim an exemption from the 10% additional tax on early distributions. The gross distribution is taxable income, and in addition, Carlie is subject to a 10% additional tax on early distributions.

Answer 1

Question 1:-

The correct answer for the question is Option C - The Gross distribtion is taxable income, but Carlie may claim an exemption from the 10% additional tax on early distributions. Per IRS, the distribution from IRA to the beneficiary is taxable and hence is included in income. However, the 10% distribution penalty is generally not applicable in such cases. Hence, this is the correct answer.

Option A is incorrect as as there are taxes applicable on income.

Opiton B is incorrect as this distribution is included in income of Carlie and fully taxable.

Option D is incorrect as Carlie is not subject to 10% additional tax.

Question 2:-

The correct answer is Option C - $6,000 as the maximum available child and dependent care credit is $3,000 for one qualifying dependent and $6,000 for two qualifying dependent. Hence, this is the correct answer.

Option A, Option B and Option D are incorrect per the above explanations.