Question 1

Sales made by mail order are not exempt from the application of a general sales (or use) tax.

Accepted Answer

A) True 
 B)False

Question 2

Brayden files his Federal income tax return by April 15, but does not pay the tax.Although he expects to pay interest on the large amount of tax he still owes, he feels that the timely filing has avoided any penalties.Is Brayden's assumption correct?

Accepted Answer

Although Brayden has avoided t...

Question 3

Ava, an estate planner, is advising her wealthier clients to make any large gifts to family members before 2013.Why?

Accepted Answer

Under existing law, the exemption equiva...

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) C) and D)
G) B) and E)

Question 5

A characteristic of FICA is that:

Accepted Answer

A)  It applies when one spouse works for the other spouse.
B)  It is imposed only on the employer.
C)  It provides a modest source of income in the event of loss of employment.
D)  It is administered by both state and Federal governments.
E)  None of the above.F) B) and C)
G) A) and E)

Question 6

In cases of doubt, courts have held that tax relief provisions should be narrowly construed in favor of taxpayers.

Accepted Answer

A) True 
 B)False

Question 7

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 8

The civil fraud penalty can entail large fines and possible incarceration.

Accepted Answer

A) True 
 B)False

Question 9

States impose either a state income tax or a general sales tax, but not both types of taxes.

Accepted Answer

A) True 
 B)False

Question 10

The tax law allows, under certain conditions, deferral of gain recognition for involuntary conversions.

Accepted Answer

The answer of The tax law allows, under certain conditions,...

Question 11

Stealth taxes have the effect of generating additional taxes from all taxpayers.

Accepted Answer

A) True 
 B)False

Question 12

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 the above.F) B) and D)
G) D) and E)

Question 13

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

Accepted Answer

A)  Federal corporate income tax.
B)  Federal employment taxes (i.e., FICA, FUT
A)  .
C)  Federal estate tax.
D)  Federal gift tax.
E)  All of the above.F) All of the above
G) D) and E)

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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 16

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 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 social grounds.

Accepted Answer

A) True 
 B)False

Question 18

Can a taxpayer start the 3-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 19

The tax law allows an income tax deduction for state and local income taxes.Explain why.

Accepted Answer

The deduction for state and lo...

Question 20

In 2012, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000.José has made a taxable gift of $50,000.

Accepted Answer

A) True 
 B)False

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

Ava, an estate planner, is advising her wealthier clients to make any large gifts to family members before 2013.Why?

Correct AnswerverifiedUnder existing law, the exemption equiva...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Brayden files his Federal income tax return by April 15, but does not pay the tax.Although he expects to pay interest on the large amount of tax he still owes, he feels that the timely filing has avoided any penalties.Is Brayden's assumption correct?

Correct AnswerverifiedAlthough Brayden has avoided t...View AnswerShow 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

The civil fraud penalty can entail large fines and possible incarceration.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Sales made by mail order are not exempt from the application of a general sales (or 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 social grounds.

Correct AnswerverifiedShow Answer

In cases of doubt, courts have held that tax relief provisions should be narrowly construed in favor of taxpayers.

Correct AnswerverifiedShow Answer

The tax law allows, under certain conditions, deferral of gain recognition for involuntary conversions.

Correct AnswerverifiedShow Answer

A characteristic of FICA is that:

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

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

Correct AnswerverifiedShow Answer

States impose either a state income tax or a general sales tax, but not both types of taxes.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Stealth taxes have the effect of generating additional taxes from all taxpayers.

Correct AnswerverifiedShow Answer

Can a taxpayer start the 3-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

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

The tax law allows an income tax deduction for state and local income taxes.Explain why.

Correct AnswerverifiedThe deduction for state and lo...View AnswerShow Answer

In 2012, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000.José has made a taxable gift of $50,000.

Correct AnswerverifiedShow Answer

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Under existing law, the exemption equiva...
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Although Brayden has avoided t...
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The answer is no in both cases...
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The deduction for state and lo...
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Correct Answer
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