Question 1

Which type of tax is a real property tax?

Accepted Answer

A) Income tax 
B) Consumption tax 
C) Wealth tax 
D) Use tax 
A) Income tax 
B) Consumption tax 
C) Wealth tax 
D) Use tax

Question 2

What is George's gross income if he has the following: Salary = $78,000; Dividends = $4,000; interest on city of San Francisco bonds = $2,000; a gain of $14,000 on a stock sale and a $4,000 loss on a small sole proprietorship that he owns.

Accepted Answer

A) $78,000 
B) $84,000 
C) $92,000 
D) $96,000 
A) $78,000 
B) $84,000 
C) $92,000 
D) $96,000

Question 3

Jerry and Matt decide to form a business.Jerry will contribute $4,200 for a 35% interest and Matt will contribute $7,800 for a 65% interest.The business will take out a $25,000 loan to cover the balance of their working capital needs.They expect that the business will have a loss of $38,000 for the first year.In the second year,the business will have a profit of $52,000 and it will distribute $5,200 to Matt and $2,800 to Jerry.Jerry is in the 33% marginal tax bracket and Matt is in the 28% marginal tax bracket.Their marginal tax brackets will not change as a result of profit or loss from this business.How much tax will Matt pay in the second year (rounded to the nearest dollar)due to this business if they organize the business as an S corporation?

Accepted Answer

A) $10,920 
B) $9,464 
C) $4,732 
D) $3,276 
E) $1,456 
A) $10,920 
B) $9,464 
C) $4,732 
D) $3,276 
E) $1,456

Question 4

Jerry and Matt decide to form a business.Jerry will contribute $4,200 for a 35% interest and Matt will contribute $7,800 for a 65% interest.The business will take out a $25,000 loan to cover the balance of their working capital needs.They expect that the business will have a loss of $38,000 for the first year.In the second year,the business will have a profit of $52,000 and it will distribute $5,200 to Matt and $2,800 to Jerry.Jerry is in the 33% marginal tax bracket and Matt is in the 28% marginal tax bracket.Their marginal tax brackets will not change as a result of profit or loss from this business.How much tax will Jerry pay in the second year (rounded to the nearest dollar)due to this business if they organize the business as an S corporation?

Accepted Answer

A) $6,930 
B) $6,006 
C) $3,927 
D) $3,003 
E) $0 
A) $6,930 
B) $6,006 
C) $3,927 
D) $3,003 
E) $0

Question 5

What uses are made of adjusted gross income (AGI)in the individual tax model?

Accepted Answer

The intermediate income concept of adjus

Question 6

Which of the following are included in Adam Smith's characteristics of a good tax?

Accepted Answer

A) Certainty 
B) Economy 
C) Convenience 
D) All are included 
E) None are included 
A) Certainty 
B) Economy 
C) Convenience 
D) All are included 
E) None are included

Question 7

Carlyle needs to borrow some money for some unexpected bills.He can get a home equity loan at 8 percent interest for which the interest is deductible.Alternatively,he can borrow on his life insurance at 5 percent,but the interest is not deductible.Which is his best alternative if his marginal tax rate is 35 percent?

Accepted Answer

Carlyle should borrow on his i

Question 8

What are Adam Smith's four canons of taxation? Briefly describe each.

Accepted Answer

Certainty-a taxpayer knows what the tax

Question 9

Which of the following best describes horizontal equity?

Accepted Answer

A) All taxpayers should pay some taxes on their incomes 
B) As income increases,taxes should increase 
C) Persons with equal incomes should pay the same amount of taxes 
D) A person with capital gains should pay less tax than a person with the same amount of salary income 
A) All taxpayers should pay some taxes on their incomes 
B) As income increases,taxes should increase 
C) Persons with equal incomes should pay the same amount of taxes 
D) A person with capital gains should pay less tax than a person with the same amount of salary income

Question 10

Ethan and Mia are married and file a joint tax return.Their taxable income is $200,000.What is their marginal tax rate?

Accepted Answer

A) 35% 
B) 33% 
C) 28% 
D) 25% 
A) 35% 
B) 33% 
C) 28% 
D) 25%

Question 11

Sylvester is single and has no dependents.His sole proprietorship averages net income of $125,000 annually.He needs $50,000 per year to live on.If he incorporates his business,would he pay more or less in total income taxes if he takes a salary of $50,000 for his living expenses? (Consider only income taxes.)

Accepted Answer

If he incorporates,Sylvester will save $

Question 12

Which is more advantageous,a deduction for or a deduction from adjusted gross income? Why?

Accepted Answer

A deduction for adjusted gross income is

Question 13

There are three basic taxable entities: the individual,the fiduciary,and the C corporation.

Accepted Answer

A) True 
 B)False

Question 14

Jerry and Matt decide to form a business.Jerry will contribute $4,200 for a 35% interest and Matt will contribute $7,800 for a 65% interest.The business will take out a $25,000 loan to cover the balance of their working capital needs.They expect that the business will have a loss of $38,000 for the first year.In the second year,the business will have a profit of $52,000 and it will distribute $5,200 to Matt and $2,800 to Jerry.Jerry is in the 33% marginal tax bracket and Matt is in the 28% marginal tax bracket.Their marginal tax brackets will not change as a result of profit or loss from this business.How much tax will Jerry pay in the second year (rounded to the nearest dollar)due to this business if they organize the business as a partnership?

Accepted Answer

A) $6,930 
B) $6,006 
C) $5,891 
D) $3,927 
E) $3,003 
A) $6,930 
B) $6,006 
C) $5,891 
D) $3,927 
E) $3,003

Question 15

Both sales and use taxes are collected in the state in which the sale takes place.

Accepted Answer

A) True 
 B)False

Question 16

All limited liability companies (LLCs)can file their tax returns as partnerships,or electively,as corporations.

Accepted Answer

A) True 
 B)False

Question 17

The alternative minimum tax is a tax determined on a broadened definition of income with no deductions permitted.

Accepted Answer

A) True 
 B)False

Question 18

Jerry and Matt decide to form a business.Jerry will contribute $4,200 for a 35% interest and Matt will contribute $7,800 for a 65% interest.The business will take out a $25,000 loan to cover the balance of their working capital needs.They expect that the business will have a loss of $38,000 for the first year.In the second year,the business will have a profit of $52,000 and it will distribute $5,200 to Matt and $2,800 to Jerry.Jerry is in the 33% marginal tax bracket and Matt is in the 28% marginal tax bracket.Their marginal tax brackets will not change as a result of profit or loss from this business.What is Jerry's income tax savings (rounded to the nearest dollar)for the first year if they organize the business as an S corporation?

Accepted Answer

A) $0 
B) $1,386 
C) $4,274 
D) $4,389 
E) $4,655 
A) $0 
B) $1,386 
C) $4,274 
D) $4,389 
E) $4,655

Question 19

Which of the following types of taxes is levied by almost all states on some or all goods purchased?

Accepted Answer

A) Sales tax 
B) Income tax 
C) Property tax 
D) Wealth transfer tax 
A) Sales tax 
B) Income tax 
C) Property tax 
D) Wealth transfer tax

Question 20

When appreciated property is transferred,the gift tax is based on

Accepted Answer

A) replacement cost of the property 
B) fair market value of the property on the date of the gift 
C) the donor's original cost of the property 
D) the donor's original cost increased by half of the appreciation 
A) replacement cost of the property 
B) fair market value of the property on the date of the gift 
C) the donor's original cost of the property 
D) the donor's original cost increased by half of the appreciation

Which type of tax is a real property tax?

What is George's gross income if he has the following: Salary = $78,000; Dividends = $4,000; interest on city of San Francisco bonds = $2,000; a gain of $14,000 on a stock sale and a $4,000 loss on a small sole proprietorship that he owns.

What uses are made of adjusted gross income (AGI)in the individual tax model?

Which of the following are included in Adam Smith's characteristics of a good tax?

What are Adam Smith's four canons of taxation? Briefly describe each.

Which of the following best describes horizontal equity?

Ethan and Mia are married and file a joint tax return.Their taxable income is $200,000.What is their marginal tax rate?

Which is more advantageous,a deduction for or a deduction from adjusted gross income? Why?

There are three basic taxable entities: the individual,the fiduciary,and the C corporation.

Both sales and use taxes are collected in the state in which the sale takes place.

All limited liability companies (LLCs)can file their tax returns as partnerships,or electively,as corporations.

The alternative minimum tax is a tax determined on a broadened definition of income with no deductions permitted.

Which of the following types of taxes is levied by almost all states on some or all goods purchased?

When appreciated property is transferred,the gift tax is based on

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Income Taxation of Individuals

Wealth Transfer Taxes

Filters

Exam 1: Introduction to Taxation

Which type of tax is a real property tax?

What is George's gross income if he has the following: Salary = $78,000; Dividends = $4,000; interest on city of San Francisco bonds = $2,000; a gain of $14,000 on a stock sale and a $4,000 loss on a small sole proprietorship that he owns.

What uses are made of adjusted gross income (AGI)in the individual tax model?

Which of the following are included in Adam Smith's characteristics of a good tax?

What are Adam Smith's four canons of taxation? Briefly describe each.

Which of the following best describes horizontal equity?

Ethan and Mia are married and file a joint tax return.Their taxable income is $200,000.What is their marginal tax rate?

Which is more advantageous,a deduction for or a deduction from adjusted gross income? Why?

There are three basic taxable entities: the individual,the fiduciary,and the C corporation.

Both sales and use taxes are collected in the state in which the sale takes place.

All limited liability companies (LLCs)can file their tax returns as partnerships,or electively,as corporations.

The alternative minimum tax is a tax determined on a broadened definition of income with no deductions permitted.

Which of the following types of taxes is levied by almost all states on some or all goods purchased?

When appreciated property is transferred,the gift tax is based on

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Income Taxation of Individuals

Wealth Transfer Taxes

Filters