Question

Michelle converted her personal residence to rental property in 2017. She purchased the property in 2013 for $110,000, of which $10,000 was allocable to the land. Unfortunately, property values in her neighborhood have declined over the past few years. On the date of conversion, the fair market value of the property was $98,000; $10,000 was allocated to the land. Michelle's basis for depreciation in the property is:

Personal property that has no intrinsic value is called __________.

Quinton's modified adjusted gross income was $352,000 in 2017. He is single, and his income consisted of $299,000 in wages and $53,000 of dividend income. Quinton's net investment income tax is ___________.

The two factors that may limit the maximum Child Tax Credit of $1,000 per qualifying child are __________.

Answer 1

The two factors that limits the maximum child credit is:

1 Phase out limit: if your income exceeds the MAGI, then you Child tax credit is reduced by $50 per $1000 of income exceeding MAGI. The limit in 2017 for MFJ is $110,000, Married-Single $55,000, Head of household, single filer $75,000.

2 Low tax liability: If your tax liability is below the child tax credit, then your tax liability is reduced to 0 and any remaining child tax credit is lost.

Note: For 2018, Child tax credit is increased to $2000 per child with $1400 as refundable and $600 non refundable.