Exam 2: an Introduction to Taxation

Which of the following taxes is progressive?

The computer is the primary tool of the tax professional.The tax professional uses the computer for all of the following client services except

Describe the components of tax practice.

A tax bill introduced in the House of Representatives is then

The term "tax law" includes

The federal income tax is the dominant form of taxation by the federal government.

Explain how returns are selected for audit.

Frederick failed to file his 2015 tax return on a timely basis.In fact,he filed his 2015 income tax return on October 31,2016,(the due date was April 15,2015)and paid the amount due at that time.He failed to make timely extensions.Below are amounts from his 2015 return: Frederick sent a check for $1,671 in payment of his liability.He thinks that he has met all of his financial obligations to the government for 2015.For what additional amounts may Frederick be liable assuming any applicable interest rate is 6%?

Generally,tax legislation is introduced first in the Senate and referred to the Senate Finance Committee.

Thomas dies in the current year and has a gross estate valued at $3,000,000.During his lifetime (but after 1976)Thomas had made taxable gifts of $400,000.The estate incurs funeral and administrative expenses of $100,000 and also pays off Thomas' debts which amount to $300,000.Thomas bequeaths $500,000 to his wife.What is the amount of Thomas' tax base,the amount on which the estate tax is computed?

The unified transfer tax system

A progressive tax rate structure is one where the rate of tax increases as the tax base increases.

Gifts made during a taxpayer's lifetime may affect the amount of estate tax paid by the taxpayer's estate.

Horizontal equity means that

Paul makes the following property transfers in the current year: The total of Paul's taxable gifts,assuming he does not elect gift splitting with his spouse,subject to the unified transfer tax is

Brad and Angie had the following income and deductions during 2015: Calculate Brad and Angie's tax liability due or refund,assuming that they have 2 personal exemptions.They file a joint tax return.

Firefly Corporation is a C corporation.Freya owns all of the stock.During the current year Firefly earned taxable income of $500,000 and paid a $300,000 dividend to Freya.Which of the following statements is correct?

A proportional tax rate is one where the rate of the tax is the same for all taxpayers,regardless of income levels.

Flow-through entities do not have to file tax returns since they are not taxable entities.

During the current tax year,Charlie Corporation generated gross income of $1,800,000 and had ordinary and necessary deductions of $1,300,000,resulting in taxable income of $500,000.If Charlie Corporation paid qualifying dividends of $200,000 to shareholders,all of whom are in the 25% marginal tax bracket,what is the total tax paid on both corporate income and the corporate dividends?