Exam 2: an Introduction to Taxation

Eric dies in the current year and has a gross estate valued at $6,500,000.The estate incurs funeral and administrative expenses of $100,000 and also pays off Eric's debts which amount to $250,000.Eric bequeaths $600,000 to his wife.Eric made no taxable transfers during his life.Eric's taxable estate will be

If a taxpayer's total tax liability is $4,000,taxable income is $20,000,and total economic income is $40,000,then the effective tax rate is 20 percent.

Which of the following statements is incorrect?

Charlotte pays $16,000 in tax deductible property taxes.Charlotte's marginal tax rate is 28%,effective tax rate is 22% and average rate is 25%.Charlotte's tax savings from paying the property tax is

Sarah contributes $25,000 to a church.Sarah's marginal tax rate is 35% while her average tax rate is 25%.After considering her tax savings,Sarah's contribution costs

Jillian,a single individual,earns $230,000 in 2015 through her job as an accounting manager.What is her FICA tax?

Gifts between spouses are generally exempt from transfer taxes.

Regressive tax rates decrease as the tax base increases.

All of the following are classified as flow-through entities for tax purposes except

Which of the following is not a social objective of the tax law?

The unified transfer tax system,comprised of the gift and estate taxes,is based upon the total property transfers an individual makes during lifetime and at death.

When property is transferred,the gift tax is based on

Property transferred to the decedent's spouse is exempt from the estate tax because of the estate tax marital deduction provision.

Rocky and Charlie form RC Partnership as equal partners.Rocky contributes $100,000 into RC while Charlie contributes real estate with a cost and fair market value of $100,000.During the current year,RC earned net income of $600,000.The partnership distributes $200,000 to each partner.The amount that Rocky should report on his individual tax return is

The tax law encompasses administrative and judicial interpretations,such as Treasury regulations,revenue rulings,revenue procedures,and court decisions,as well as statutes.

Property is generally included on an estate tax return at its historical cost basis.

Generally,the statute of limitations is three years from the later of the date the tax return is filed or the due date.

Vertical equity means that

When new tax legislation is being considered by Congress,

Shaquille buys new cars for five of his friends.Each car cost $70,000.What is the amount of Shaquille's taxable gifts?