Question 1

What is the difference between an inheritance tax and an estate tax? Who imposes these taxes?

Accepted Answer

An inheritance tax is a tax on the right...

Question 2

The ratification of the Sixteenth Amendment to the U.S. Constitution was necessary to validate the Federal income tax on corporations.

Accepted Answer

A) True 
 B)False

Question 3

The principal objective of the FUTA tax is to provide some measure of retirement security.

Accepted Answer

A) True 
 B)False

Question 4

To lessen or eliminate the effect of multiple taxation, a taxpayer who is subject to both foreign and U.S. income taxes on the same income is allowed either a deduction or a credit for the foreign tax paid.

Accepted Answer

A) True 
 B)False

Question 5

Indicate which, if any, statement is incorrect. State income taxes:

Accepted Answer

A)   Can piggyback to the Federal version.
B)   Cannot apply to visiting nonresidents.
C)   Can decouple from the Federal version.
D)   Can provide occasional amnesty programs.
E)   None of these.F) C) and E)
G) A) and C) B

Question 6

Using the following choices, show the justification for each provision of the tax law listed.
-Contributions to charitable organizations are deductible.

Accepted Answer

A)  Economic considerations
B)  Social considerations
C)  Equity considerations
D)  Both a. and b.E) B) and D)
F) A) and D)

Question 7

If a tax deficiency is attributable to fraud, the negligence penalty will not be imposed.

Accepted Answer

A) True 
 B)False  True

Question 8

Ultimately, most taxes are paid by individuals. Explain what this means in terms of income and payroll taxes paid by a corporation.

Accepted Answer

A corporation pays many types of taxes, ...

Question 9

Using the following choices, show the justification for each provision of the tax law listed.
-A deduction for interest on student loans.

Accepted Answer

A)  Economic considerations
B)  Social considerations
C)  Equity considerations
D)  Both a. and b.E) All of the above
F) A) and D)

Question 10

Under Clint's will, all of his property passes to either the Lutheran Church or to his wife. No Federal estate tax will be due on Clint's death in 2019.

Accepted Answer

A) True 
 B)False

Question 11

A characteristic of the fraud penalties is:

Accepted Answer

A)   When negligence and civil fraud apply to a deficiency, the negligence penalty predominates.
B)   When criminal fraud can result in a fine and a prison sentence.
C)   When the criminal fraud penalty is 75% of the deficiency attributable to the fraud.
D)   When the IRS has the same burden of proof in the case of criminal fraud as with civil fraud.
E)   None of these.F) A) and D)
G) A) and C)

Question 12

If more IRS audits are producing a higher number of no change results, this indicates increased compliance on the part of taxpayers.

Accepted Answer

A) True 
 B)False

Question 13

Tracy has just been audited and the IRS agent has issued an RAR that assesses a large deficiency. Since Tracy disagrees with the result, her next step is to go to court. Do you agree?

Accepted Answer

Tracy might save herself time and expens...

Question 14

Can a taxpayer start the three-year statute of limitations on additional assessments by the IRS by filing his income tax return early (i.e., before the due date)? Can the period be shortened by filing late (i.e., after the due date)?

Accepted Answer

The answer is no in both cases...

Question 15

Using the following choices, show the justification for each provision of the tax law listed.
-Tax credits available for the purchase of a vehicle that uses alternative (nonfossil)  fuels.

Accepted Answer

A)  Economic considerations
B)  Social considerations
C)  Equity considerations
D)  Both a. and b.E) B) and D)
F) All of the above

Question 16

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

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) D) and K)
N) F) and K)

Question 17

The tax law provides various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain additional education. These provisions can be justified on both economic and equity grounds.

Accepted Answer

A) True 
 B)False  False

Question 18

Like the Federal counterpart, the amount of the state excise taxes on gasoline varies from state to state.

Accepted Answer

A) True 
 B)False

Question 19

Under state amnesty programs, all delinquent and unpaid income taxes are forgiven.

Accepted Answer

A) True 
 B)False

Question 20

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

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) A) and B)
N) J) and L)

Exam 1: Understanding and Working With the Federal Tax Law

What is the difference between an inheritance tax and an estate tax? Who imposes these taxes?

Correct AnswerverifiedAn inheritance tax is a tax on the right...View AnswerShow Answer

The ratification of the Sixteenth Amendment to the U.S. Constitution was necessary to validate the Federal income tax on corporations.

Correct AnswerverifiedShow Answer

The principal objective of the FUTA tax is to provide some measure of retirement security.

Correct AnswerverifiedShow Answer

To lessen or eliminate the effect of multiple taxation, a taxpayer who is subject to both foreign and U.S. income taxes on the same income is allowed either a deduction or a credit for the foreign tax paid.

Correct AnswerverifiedShow Answer

Indicate which, if any, statement is incorrect. State income taxes:

Correct AnswerverifiedB

Using the following choices, show the justification for each provision of the tax law listed. -Contributions to charitable organizations are deductible.

Correct AnswerverifiedShow Answer

If a tax deficiency is attributable to fraud, the negligence penalty will not be imposed.

Correct AnswerverifiedTrue

Ultimately, most taxes are paid by individuals. Explain what this means in terms of income and payroll taxes paid by a corporation.

Correct AnswerverifiedA corporation pays many types of taxes, ...View AnswerShow Answer

Using the following choices, show the justification for each provision of the tax law listed. -A deduction for interest on student loans.

Correct AnswerverifiedShow Answer

Under Clint's will, all of his property passes to either the Lutheran Church or to his wife. No Federal estate tax will be due on Clint's death in 2019.

Correct AnswerverifiedShow Answer

A characteristic of the fraud penalties is:

Correct AnswerverifiedShow Answer

If more IRS audits are producing a higher number of no change results, this indicates increased compliance on the part of taxpayers.

Correct AnswerverifiedShow Answer

Tracy has just been audited and the IRS agent has issued an RAR that assesses a large deficiency. Since Tracy disagrees with the result, her next step is to go to court. Do you agree?

Correct AnswerverifiedTracy might save herself time and expens...View AnswerShow Answer

Can a taxpayer start the three-year statute of limitations on additional assessments by the IRS by filing his income tax return early (i.e., before the due date)? Can the period be shortened by filing late (i.e., after the due date)?

Correct AnswerverifiedThe answer is no in both cases...View AnswerShow Answer

Using the following choices, show the justification for each provision of the tax law listed. -Tax credits available for the purchase of a vehicle that uses alternative (nonfossil) fuels.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The tax law provides various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain additional education. These provisions can be justified on both economic and equity grounds.

Correct AnswerverifiedFalse

Like the Federal counterpart, the amount of the state excise taxes on gasoline varies from state to state.

Correct AnswerverifiedShow Answer

Under state amnesty programs, all delinquent and unpaid income taxes are forgiven.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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An inheritance tax is a tax on the right...
View Answer

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B

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True

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A corporation pays many types of taxes, ...
View Answer

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Tracy might save herself time and expens...
View Answer

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The answer is no in both cases...
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False

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