Question 1

Under what conditions is it permissible, from an ethical standpoint, for a CPA firm to outsource tax return preparation to a third party?

Accepted Answer

First, the clients' confidenti...

Question 2

One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from being accumulated within the family unit.

Accepted Answer

A) True 
 B)False

Question 3

A calendar year taxpayer files his 2011 Federal income tax return on March 5, 2012.The return reflects an overpayment of $6,000, and the taxpayer requests a refund of this amount.The refund is paid on May 18, 2012.The refund need not include interest.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is a characteristic of the audit process?

Accepted Answer

A)  Most taxpayer audits involve "special" agents.
B)  Self-employed taxpayers are less likely to be selected for audit than employed taxpayers.
C)  Less important issues are handled by means of a correspondence audit.
D)  If a taxpayer disagrees with the IRS auditor's finding, the only resort is to the courts.
E)  None of the above.F) A) and E)
G) None of the above

Question 5

Congress reacts to judicial decisions that interpret the tax law in different ways.When it approves of a decision, Congress may act to amend the Code to incorporate the holding.When it disapproves, Congress may amend the Code to nullify its effect.Give an example of each one of these congressional reactions.

Accepted Answer

Congress approved of the judicial conclu...

Question 6

Federal excise taxes that are no longer imposed include:

Accepted Answer

A)  Tax on air travel.
B)  Tax on wagering.
C)  Tax on the manufacture of sporting equipment.
D)  Tax on theatre admissions.
E)  None of the above.F) C) and D)
G) A) and D)

Question 7

In preparing an income tax return, the use of a client's estimates is not permitted.

Accepted Answer

A) True 
 B)False

Question 8

A parent employs his twin daughters, age 18, in his sole proprietorship.The daughters are not subject to FICA coverage.

Accepted Answer

A) True 
 B)False

Question 9

Mona inherits her mother's personal residence, which she converts to a furnished rent house.These changes should not affect the amount of ad valorem property taxes levied on the properties.

Accepted Answer

A) True 
 B)False

Question 10

No state has offered an income tax amnesty program more than once.

Accepted Answer

A) True 
 B)False

Question 11

Timothy recently converted a warehouse into apartment lofts, which he is renting to single professionals.In making the conversion, he emphasized improvements that were portable in nature.Thus, the sprinkler system, heating and cooling units, and room dividers are all removable from the building.In terms of ad valorem property taxes, what was Timothy trying to accomplish?

Accepted Answer

When personalty is permanently attached ...

Question 12

The tax law contains various provisions that encourage home ownership.

Accepted Answer

The answer of The tax law contains various provisions that...

Question 13

State income taxes generally can be characterized by:

Accepted Answer

A)  A different date for filing than 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) A) and B)
G) A) and C)

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

A use tax is imposed by:

Accepted Answer

A)  The Federal government and all states.
B)  The Federal government and a majority of the states.
C)  All states and not the Federal government.
D)  Most of the states and not the Federal government.
E)  None of the above.F) A) and D)
G) A) and E)

Question 16

Regarding proper ethical guidelines, which (if any)  of the following is correct?

Accepted Answer

A)  The use of client estimates in preparing a return is not acceptable.
B)  Under no circumstances should a question on a tax return be left unanswered.
C)  If a client has made a mistake in a prior year's return and refuses to correct it, you should withdraw from the engagement.
D)  If the exact amount of a deduction is not certain so as to increase the appearance of greater certainty.
E)  None of the above.F) A) and B)
G) B) and E)

Question 17

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) None of the above
G) A) and B)

Question 18

For the negligence penalty to apply, the underpayment must be caused by intentional disregard of rules and regulations without intent to defraud.

Accepted Answer

A) True 
 B)False

Question 19

If fraud is involved, there is no time limit on the assessment of a deficiency by the IRS.

Accepted Answer

A) True 
 B)False

Question 20

The Federal income tax is based on a pay-as-you-go system and has become a "mass tax." Explain this statement.

Accepted Answer

The pay-as-you-go system is present in t...

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

The Federal income tax is based on a pay-as-you-go system and has become a "mass tax." Explain this statement.

Correct Answer
verified
The pay-as-you-go system is present in t...
View Answer

Under what conditions is it permissible, from an ethical standpoint, for a CPA firm to outsource tax return preparation to a third party?

Correct Answer
verified
First, the clients' confidenti...
View Answer

Correct Answer
verified
When personalty is permanently attached ...
View Answer

For the negligence penalty to apply, the underpayment must be caused by intentional disregard of rules and regulations without intent to defraud.

Correct Answer
verified

Mona inherits her mother's personal residence, which she converts to a furnished rent house.These changes should not affect the amount of ad valorem property taxes levied on the properties.

Correct Answer
verified

The tax law contains various provisions that encourage home ownership.

Correct Answer
verified

Taxes levied by all states include:

Correct Answer
verified

State income taxes generally can be characterized by:

Correct Answer
verified

In preparing an income tax return, the use of a client's estimates is not permitted.

Correct Answer
verified

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

Correct Answer
verified

One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from being accumulated within the family unit.

Correct Answer
verified

Correct Answer
verified
Congress approved of the judicial conclu...
View Answer

If fraud is involved, there is no time limit on the assessment of a deficiency by the IRS.

Correct Answer
verified

A calendar year taxpayer files his 2011 Federal income tax return on March 5, 2012.The return reflects an overpayment of $6,000, and the taxpayer requests a refund of this amount.The refund is paid on May 18, 2012.The refund need not include interest.

Correct Answer
verified

A use tax is imposed by:

Correct Answer
verified

A parent employs his twin daughters, age 18, in his sole proprietorship.The daughters are not subject to FICA coverage.

Correct Answer
verified

Federal excise taxes that are no longer imposed include:

Correct Answer
verified

Which of the following is a characteristic of the audit process?

Correct Answer
verified

Regarding proper ethical guidelines, which (if any) of the following is correct?

Correct Answer
verified

No state has offered an income tax amnesty program more than once.

Correct Answer
verified

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

The Federal income tax is based on a pay-as-you-go system and has become a "mass tax." Explain this statement.

Correct AnswerverifiedThe pay-as-you-go system is present in t...View AnswerShow Answer

Under what conditions is it permissible, from an ethical standpoint, for a CPA firm to outsource tax return preparation to a third party?

Correct AnswerverifiedFirst, the clients' confidenti...View AnswerShow Answer

Correct AnswerverifiedWhen personalty is permanently attached ...View AnswerShow Answer

For the negligence penalty to apply, the underpayment must be caused by intentional disregard of rules and regulations without intent to defraud.

Correct AnswerverifiedShow Answer

Mona inherits her mother's personal residence, which she converts to a furnished rent house.These changes should not affect the amount of ad valorem property taxes levied on the properties.

Correct AnswerverifiedShow Answer

The tax law contains various provisions that encourage home ownership.

Correct AnswerverifiedShow Answer

Taxes levied by all states include:

Correct AnswerverifiedShow Answer

State income taxes generally can be characterized by:

Correct AnswerverifiedShow Answer

In preparing an income tax return, the use of a client's estimates is not permitted.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from being accumulated within the family unit.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedCongress approved of the judicial conclu...View AnswerShow Answer

If fraud is involved, there is no time limit on the assessment of a deficiency by the IRS.

Correct AnswerverifiedShow Answer

A calendar year taxpayer files his 2011 Federal income tax return on March 5, 2012.The return reflects an overpayment of $6,000, and the taxpayer requests a refund of this amount.The refund is paid on May 18, 2012.The refund need not include interest.

Correct AnswerverifiedShow Answer

A use tax is imposed by:

Correct AnswerverifiedShow Answer

A parent employs his twin daughters, age 18, in his sole proprietorship.The daughters are not subject to FICA coverage.

Correct AnswerverifiedShow Answer

Federal excise taxes that are no longer imposed include:

Correct AnswerverifiedShow Answer

Which of the following is a characteristic of the audit process?

Correct AnswerverifiedShow Answer

Regarding proper ethical guidelines, which (if any) of the following is correct?

Correct AnswerverifiedShow Answer

No state has offered an income tax amnesty program more than once.

Correct AnswerverifiedShow Answer

Correct Answer
verified
The pay-as-you-go system is present in t...
View Answer

Correct Answer
verified
First, the clients' confidenti...
View Answer

Correct Answer
verified
When personalty is permanently attached ...
View 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
Congress approved of the judicial conclu...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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