1. Peter, age 25, is single. He lives with his

1. Peter, age 25, is single. He lives with his disabled and dependent mother, for whom he provides more than a half of support. Peter earned a $75,000 salary. His other income consisted of $2,000 interest from a bank account and $400 interest on municipal bonds that he previously had received as a graduation gift. In addition, he sustained a deductible capital loss of $5,000 from the sale of stock. His itemized deductions amount to $12,650. What is Peter’s taxable income?

a. $62,200

b. $55,350

c. $61,600

$55,950

2. In 2020, Luke and Sandra are married and file a joint tax return. They have two dependent children, ages 11 and 15. Their AGI is $407,500. Since 2016, Luke and Sandra have been taking care of Luke’s elderly father Walter (age 79) for whom they provide more than half of support. How much child and dependent tax credit can Sandra and Luke take on their 2020 joint tax return?

a. $4,100

b. $4,000

c. $4,500

d. $4,400