Question 1

If a special agent becomes involved in the audit of a return, this indicates that the IRS suspects that fraud is involved.

Accepted Answer

A) True 
 B)False

Question 2

Match the statements that relate to each other.Note: Some choices may be used more than once.
-Interest due on refund

Accepted Answer

A)  Three years from date return is filed
B)  Three years from due date of return
C)  20% of underpayment
D)  5% per month (25% limit) 
E)  0.5% per month (25% limit) F) Conducted at IRS officeG) Conducted at taxpayer's officeH) Six yearsI) 45-day grace period allowed to IRSJ) No statute of limitations (period remains open) K) 75% of underpaymentL) No correct match providedM) B) and C)
N) D) and H)

Question 3

A VAT (value added tax) :

Accepted Answer

A)  Is regressive in its effect.
B)  Has not proved popular outside of the United States.
C)  Is not a tax on consumption.
D)  Is used exclusively by third world (less developed)  countries.
E)  None of these.F) A) and E)
G) All of the above

Question 4

The Federal estate and gift taxes are examples of progressive taxes.

Accepted Answer

A) True 
 B)False

Question 5

When a state decouples from a Federal tax provision, it means that this provision will not apply for state income tax purposes.

Accepted Answer

A) True 
 B)False

Question 6

Two years ago, State Y enacted a new income tax credit for college prep materials.The credit is available to individuals and is equal to 40% of the cost of the items.The credit may not exceed $50 in any year.State Y's director of finance has discovered this year that the amount of credit claimed is far higher than expected.Which principle of good tax policy might not have been considered in designing this tax that caused the original cost estimate to be too low?

Accepted Answer

A)  Equity.
B)  Simplicity.
C)  Economy in collection.
D)  Minimum tax gap.E) C) and D)
F) None of the above

Question 7

There is a Federal excise tax on hotel occupancy.

Accepted Answer

A) True 
 B)False

Question 8

Which, if any, of the following transactions will decrease a taxing jurisdiction's ad valorem tax revenue imposed on real estate?

Accepted Answer

A)  A tax holiday is granted to an out-of-state business that is searching for a new factory site.
B)  An abandoned church is converted to a restaurant.
C)  A public school is razed and turned into a city park.
D)  A local university sells a dormitory that will be converted for use as an apartment building.
E)  None of these.F) B) and D)
G) C) and D)

Question 9

During any month in which both the failure to file penalty and the failure to pay penalty apply, the failure to file penalty is increased by the amount of the failure to pay penalty.

Accepted Answer

A) True 
 B)False

Question 10

Burt and Lisa are married and live in a common law state.Burt wants to make gifts to their four children in 2019. What is the maximum amount of the annual exclusion they will be allowed for these gifts?

Accepted Answer

A)  $15,000.
B)  $30,000.
C)  $60,000.
D)  $120,000.
E)  None of these.F) A) and B)
G) C) and D)

Question 11

Using the following choices, show the justification for each provision of the tax law listed.
a. Economic considerations 
b. Social considerations
c. Equity considerations 
d. Both a. and b.
-A bribe to the local sheriff, although business related, is not deductible.

Accepted Answer

A)  Deferral of gains from involuntary conversions
B)  Carryforward of net operating losses
C)  "No change" is a possible result
D)  State income tax applied to a 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) E) and I)
N) K) and L)

Question 12

Allowing a tax credit for certain solar energy property can be justified:

Accepted Answer

A)  As helping small businesses.
B)  As promoting administrative feasibility.
C)  As promoting a government policy to use alternative energy sources.
D)  Based on the wherewithal to pay concept.
E)  None of these.F) A) and E)
G) B) and D)

Question 13

One of the motivations for making a gift is to save on income taxes.

Accepted Answer

A) True 
 B)False

Question 14

Social considerations can be used to justify:

Accepted Answer

A)  Allowance of a credit for child care expenses.
B)  Allowing excess capital losses to be carried over to other years.
C)  Allowing accelerated amortization for the cost of installing pollution control facilities.
D)  Allowing a Federal income tax deduction for state and local sales taxes.
E)  None of these.F) A) and E)
G) None of the above

Question 15

Which of the following taxes is paid only by the employer?

Accepted Answer

A)  FICA
B)  FUTA
C)  Social Security tax
D)  Medicare taxE) A) and B)
F) B) and C)

Question 16

Match the statements that relate to each other.Note: Some choices may be used more than once.
-Failure to pay penalty

Accepted Answer

A)  Three years from date return is filed
B)  Three years from due date of return
C)  20% of underpayment
D)  5% per month (25% limit) 
E)  0.5% per month (25% limit) F) Conducted at IRS officeG) Conducted at taxpayer's officeH) Six yearsI) 45-day grace period allowed to IRSJ) No statute of limitations (period remains open) K) 75% of underpaymentL) No correct match providedM) B) and I)
N) E) and F)

Question 17

In preparing a tax return, all questions on the return must be answered.

Accepted Answer

A) True 
 B)False

Question 18

Which, if any, of the following taxes are proportional (rather than progressive) ?

Accepted Answer

A)  State general sales tax
B)  Federal individual income tax
C)  Federal estate tax
D)  Federal gift tax
E)  All of theseF) A) and D)
G) None of the above

Question 19

A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no such taxes.

Accepted Answer

A) True 
 B)False

Question 20

Using the following choices, show the justification for each provision of the tax law listed.
a. Economic considerations 
b. Social considerations
c. Equity considerations 
d. Both a. and b.
-"Pay as you go" (paygo)

Accepted Answer

A)  Deferral of gains from involuntary conversions
B)  Carryforward of net operating losses
C)  "No change" is a possible result
D)  State income tax applied to a 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) E) and J)
N) A) and I)

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

Correct Answer
verified

When a state decouples from a Federal tax provision, it means that this provision will not apply for state income tax purposes.

Correct Answer
verified

Match the statements that relate to each other.Note: Some choices may be used more than once. -Interest due on refund

Correct Answer
verified

Which, if any, of the following taxes are proportional (rather than progressive) ?

Correct Answer
verified

A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no such taxes.

Correct Answer
verified

Which of the following taxes is paid only by the employer?

Correct Answer
verified

Match the statements that relate to each other.Note: Some choices may be used more than once. -Failure to pay penalty

Correct Answer
verified

Using the following choices, show the justification for each provision of the tax law listed. a. Economic considerations b. Social considerations c. Equity considerations d. Both a. and b. -"Pay as you go" (paygo)

Correct Answer
verified

In preparing a tax return, all questions on the return must be answered.

Correct Answer
verified

If a special agent becomes involved in the audit of a return, this indicates that the IRS suspects that fraud is involved.

Correct Answer
verified

During any month in which both the failure to file penalty and the failure to pay penalty apply, the failure to file penalty is increased by the amount of the failure to pay penalty.

Correct Answer
verified

Using the following choices, show the justification for each provision of the tax law listed. a. Economic considerations b. Social considerations c. Equity considerations d. Both a. and b. -A bribe to the local sheriff, although business related, is not deductible.

Correct Answer
verified

One of the motivations for making a gift is to save on income taxes.

Correct Answer
verified

Allowing a tax credit for certain solar energy property can be justified:

Correct Answer
verified

A VAT (value added tax) :

Correct Answer
verified

There is a Federal excise tax on hotel occupancy.

Correct Answer
verified

Burt and Lisa are married and live in a common law state.Burt wants to make gifts to their four children in 2019. What is the maximum amount of the annual exclusion they will be allowed for these gifts?

Correct Answer
verified

Social considerations can be used to justify:

Correct Answer
verified

The Federal estate and gift taxes are examples of progressive taxes.

Correct Answer
verified

Which, if any, of the following transactions will decrease a taxing jurisdiction's ad valorem tax revenue imposed on real estate?

Correct Answer
verified

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

Correct AnswerverifiedShow Answer

When a state decouples from a Federal tax provision, it means that this provision will not apply for state income tax purposes.

Correct AnswerverifiedShow Answer

Match the statements that relate to each other.Note: Some choices may be used more than once. -Interest due on refund

Correct AnswerverifiedShow Answer

Which, if any, of the following taxes are proportional (rather than progressive) ?

Correct AnswerverifiedShow Answer

A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no such taxes.

Correct AnswerverifiedShow Answer

Which of the following taxes is paid only by the employer?

Correct AnswerverifiedShow Answer

Match the statements that relate to each other.Note: Some choices may be used more than once. -Failure to pay penalty

Correct AnswerverifiedShow Answer

Using the following choices, show the justification for each provision of the tax law listed. a. Economic considerations b. Social considerations c. Equity considerations d. Both a. and b. -"Pay as you go" (paygo)

Correct AnswerverifiedShow Answer

In preparing a tax return, all questions on the return must be answered.

Correct AnswerverifiedShow Answer

If a special agent becomes involved in the audit of a return, this indicates that the IRS suspects that fraud is involved.

Correct AnswerverifiedShow Answer

During any month in which both the failure to file penalty and the failure to pay penalty apply, the failure to file penalty is increased by the amount of the failure to pay penalty.

Correct AnswerverifiedShow Answer

Using the following choices, show the justification for each provision of the tax law listed. a. Economic considerations b. Social considerations c. Equity considerations d. Both a. and b. -A bribe to the local sheriff, although business related, is not deductible.

Correct AnswerverifiedShow Answer

One of the motivations for making a gift is to save on income taxes.

Correct AnswerverifiedShow Answer

Allowing a tax credit for certain solar energy property can be justified:

Correct AnswerverifiedShow Answer

A VAT (value added tax) :

Correct AnswerverifiedShow Answer

There is a Federal excise tax on hotel occupancy.

Correct AnswerverifiedShow Answer

Burt and Lisa are married and live in a common law state.Burt wants to make gifts to their four children in 2019. What is the maximum amount of the annual exclusion they will be allowed for these gifts?

Correct AnswerverifiedShow Answer

Social considerations can be used to justify:

Correct AnswerverifiedShow Answer

The Federal estate and gift taxes are examples of progressive taxes.

Correct AnswerverifiedShow Answer

Which, if any, of the following transactions will decrease a taxing jurisdiction's ad valorem tax revenue imposed on real estate?

Correct AnswerverifiedShow Answer

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