Question 1

Under the usual state inheritance tax, two heirs, a cousin and a son of the deceased, would not be taxed at the same rate.

Accepted Answer

A) True 
 B)False

Question 2

Using the choices provided below, show the justification for each provision of the tax law listed.
-A deduction for contributions by an employee to certain retirement plans.

Accepted Answer

A)  Economic considerations
B)  Social considerations
C)  Equity considerationsD) B) and C)
E) A) and C)

Question 3

Which, if any, of the following provisions cannot be justified as mitigating the effect of the annual accounting period concept?

Accepted Answer

A)   Nonrecognition of gain allowed for involuntary conversions.
B)   Net operating loss carryback and carryover provisions.
C)   Carryover of excess charitable contributions.
D)   Use of the installment method to recognize gain.
E)   Carryover of excess capital losses.F) B) and E)
G) A) and D)

Question 4

Not all of the states that impose a general sales tax also have a use tax.

Accepted Answer

A) True 
 B)False

Question 5

State income taxes generally can be characterized by:

Accepted Answer

A)   The same date for filing as the Federal income tax.
B)   No provision for withholding procedures.
C)   Allowance of a deduction for Federal income taxes paid.
D)   Applying only to individuals and not applying to corporations.
E)   None of the above.F) B) and E)
G) None of the above

Question 6

The IRS is required to redetermine the interest rate on underpayments and overpayments once a year.

Accepted Answer

A) True 
 B)False

Question 7

Taxes levied by all states include:

Accepted Answer

A)   Tobacco excise tax.
B)   Individual income tax.
C)   Inheritance tax.
D)   General sales tax.
E)   None of the above.F) A) and C)
G) B) and E)

Question 8

Without obtaining an extension, Pam files her income tax return 55 days after the due date. With her return, she pays an additional tax of $60,000. Disregarding any interest element, what is Pam's penalty for failure to pay and to file?

Accepted Answer

$6,000. Disregarding...

Question 9

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-Wherewithal to pay concept

Accepted Answer

A)  Deferral of gains from involuntary conversions
B)  Carryback and carryforward of net operating losses
C)  "No change" is one possible result
D)  State income tax applied to visiting nonresident
E)  IRS special agentF) Undoing the "piggyback" resultG) Ideal budget goal as to new tax legislationH) Every state that has a general sales tax has oneI) Imposed by all states and the Federal governmentJ) Imposed by some states but not the Federal governmentK) Imposed only by the Federal governmentL) No correct match providedM) F) and J)
N) D) and I)

Question 10

Characteristics of the "Fair Tax" (i.e., national sales tax)  include which, if any, of the following:

Accepted Answer

A)   Abolition of the Federal individual (but not the corporate)  income tax.
B)   Abolition of all Federal income taxes but retention of payroll taxes (including the self-employment tax) .
C)   Abolition of all Federal income taxes and payroll taxes but retention of the Federal estate and gift taxes.
D)   Abolition of all Federal income and payroll taxes as well as the Federal estate and gift taxes.
E)   None of the above.F) C) and E)
G) A) and B)

Question 11

In terms of probability, which of the following taxpayers would be least likely to be audited by the IRS?

Accepted Answer

A)   Taxpayer owns and operates a check-cashing service.
B)   Taxpayer is an employed electrician.
C)   Taxpayer just received a $3 million personal injury award as a result of a lawsuit.
D)   Taxpayer just won a $1 million slot machine jackpot at a Las Vegas casino.
E)   Taxpayer has been audited several times before.F) None of the above
G) A) and B)

Question 12

Which, if any, of the following provisions of the tax law cannot be justified as promoting administrative feasibility (simplifying the task of the IRS) ?

Accepted Answer

A)   Penalties are imposed for failure to file a return or pay a tax on time.
B)   Prepaid income is taxed in the year received and not in the year earned.
C)   Annual adjustments for indexation increases the amount of the standard deduction allowed.
D)   Casualty losses must exceed 10% of AGI to be deductible.
E)   A deduction is allowed for charitable contributions.F) C) and E)
G) A) and E)

Question 13

Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals.

Accepted Answer

A) True 
 B)False

Question 14

In 2014, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has not made a taxable gift.

Accepted Answer

A) True 
 B)False

Question 15

A provision in the law that compels accrual basis taxpayers to pay a tax on prepaid income in the year received and not when earned is consistent with generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Exam 1: An Introduction to Taxation and Understanding the Federal Tax Law

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -Wherewithal to pay concept

Correct Answer
verified

Under the usual state inheritance tax, two heirs, a cousin and a son of the deceased, would not be taxed at the same rate.

Correct Answer
verified

Not all of the states that impose a general sales tax also have a use tax.

Correct Answer
verified

A provision in the law that compels accrual basis taxpayers to pay a tax on prepaid income in the year received and not when earned is consistent with generally accepted accounting principles.

Correct Answer
verified

Using the choices provided below, show the justification for each provision of the tax law listed. -A deduction for contributions by an employee to certain retirement plans.

Correct Answer
verified

Characteristics of the "Fair Tax" (i.e., national sales tax) include which, if any, of the following:

Correct Answer
verified

State income taxes generally can be characterized by:

Correct Answer
verified

In terms of probability, which of the following taxpayers would be least likely to be audited by the IRS?

Correct Answer
verified

The IRS is required to redetermine the interest rate on underpayments and overpayments once a year.

Correct Answer
verified

In 2014, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has not made a taxable gift.

Correct Answer
verified

Without obtaining an extension, Pam files her income tax return 55 days after the due date. With her return, she pays an additional tax of $60,000. Disregarding any interest element, what is Pam's penalty for failure to pay and to file?

Correct Answer
verified
$6,000. Disregarding...
View Answer

Taxes levied by all states include:

Correct Answer
verified

Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals.

Correct Answer
verified

Which, if any, of the following provisions cannot be justified as mitigating the effect of the annual accounting period concept?

Correct Answer
verified

Which, if any, of the following provisions of the tax law cannot be justified as promoting administrative feasibility (simplifying the task of the IRS) ?

Correct Answer
verified

Exam 1: An Introduction to Taxation and Understanding the Federal Tax Law

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -Wherewithal to pay concept

Correct AnswerverifiedShow Answer

Under the usual state inheritance tax, two heirs, a cousin and a son of the deceased, would not be taxed at the same rate.

Correct AnswerverifiedShow Answer

Not all of the states that impose a general sales tax also have a use tax.

Correct AnswerverifiedShow Answer

A provision in the law that compels accrual basis taxpayers to pay a tax on prepaid income in the year received and not when earned is consistent with generally accepted accounting principles.

Correct AnswerverifiedShow Answer

Using the choices provided below, show the justification for each provision of the tax law listed. -A deduction for contributions by an employee to certain retirement plans.

Correct AnswerverifiedShow Answer

Characteristics of the "Fair Tax" (i.e., national sales tax) include which, if any, of the following:

Correct AnswerverifiedShow Answer

State income taxes generally can be characterized by:

Correct AnswerverifiedShow Answer

In terms of probability, which of the following taxpayers would be least likely to be audited by the IRS?

Correct AnswerverifiedShow Answer

The IRS is required to redetermine the interest rate on underpayments and overpayments once a year.

Correct AnswerverifiedShow Answer

In 2014, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has not made a taxable gift.

Correct AnswerverifiedShow Answer

Without obtaining an extension, Pam files her income tax return 55 days after the due date. With her return, she pays an additional tax of $60,000. Disregarding any interest element, what is Pam's penalty for failure to pay and to file?

Correct Answerverified$6,000. Disregarding...View AnswerShow Answer

Taxes levied by all states include:

Correct AnswerverifiedShow Answer

Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals.

Correct AnswerverifiedShow Answer

Which, if any, of the following provisions cannot be justified as mitigating the effect of the annual accounting period concept?

Correct AnswerverifiedShow Answer

Which, if any, of the following provisions of the tax law cannot be justified as promoting administrative feasibility (simplifying the task of the IRS) ?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
$6,000. Disregarding...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified