Question 1

If a taxpayer's total tax liability is $30,000,taxable income is $100,000,and economic income is $120,000,the average tax rate is 30 percent.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is not a taxpaying entity?

Accepted Answer

A) C Corporation 
B) Partnership 
C) Individual 
D) All of the above are taxpayers. 
A) C Corporation 
B) Partnership 
C) Individual 
D) All of the above are taxpayers.

Question 3

Which of the following steps,related to a tax bill,occurs first?

Accepted Answer

A) signature or veto by the President of the United States 
B) consideration by the Senate 
C) consideration by the House Ways and Means Committee 
D) consideration by the Joint Conference Committee 
A) signature or veto by the President of the United States 
B) consideration by the Senate 
C) consideration by the House Ways and Means Committee 
D) consideration by the Joint Conference Committee

Question 4

While federal and state income taxes as well as the federal gift and estate taxes are generally progressive in nature,property taxes are proportional.

Accepted Answer

A) True 
 B)False

Question 5

Doug and Frank form a partnership,D and F Advertising,each contributing $50,000 to start the business.During the first year of operations,D and F earns $80,000,which is allocated $40,000 each to Doug and Frank.At the beginning of the second year,Doug sells his interest to Marcus for $90,000.What is the amount of Doug's taxable gain on the sale?

Accepted Answer

There is no gain on the sale.

Question 6

Charlie makes the following gifts in the current year: $40,000 to his spouse,$30,000 to his church,$18,000 to his nephew,and $25,000 to a friend.Assuming Charlie does not elect gift splitting with his wife,his taxable gifts in the current year will be

Accepted Answer

A) $13,000. 
B) $15,000. 
C) $25,000. 
D) $41,000. 
A) $13,000. 
B) $15,000. 
C) $25,000. 
D) $41,000.

Question 7

AB Partnership earns $500,000 in the current year.Partners A and B are equal partners who do not receive any distributions during the year.How much income does partner A report from the partnership?

Accepted Answer

A) $0 
B) $250,000 
C) $500,000 
D) None of the above. 
A) $0 
B) $250,000 
C) $500,000 
D) None of the above.

Question 8

The primary objective of the federal income tax law is to achieve various economic and social policy objectives.

Accepted Answer

A) True 
 B)False

Question 9

The marginal tax rate is useful in tax planning because it measures the tax effect of a proposed transaction.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following individuals is most likely to be audited?

Accepted Answer

A) Lola has AGI of $35,000 from wages and uses the standard deduction. 
B) Marvella has a $145,000 net loss from her unincorporated business (a horse farm).She also received $950,000 salary as a CEO of a corporation. 
C) Melvin is retired and receives Social Security benefits. 
D) Jerry is a school teacher with two children earning $55,000 a year.He also receives $200 in interest income on a bank account. 
A) Lola has AGI of $35,000 from wages and uses the standard deduction. 
B) Marvella has a $145,000 net loss from her unincorporated business (a horse farm).She also received $950,000 salary as a CEO of a corporation. 
C) Melvin is retired and receives Social Security benefits. 
D) Jerry is a school teacher with two children earning $55,000 a year.He also receives $200 in interest income on a bank account.

Question 11

Helen,who is single,is considering purchasing a residence that will provide a $28,000 tax deduction for property taxes and mortgage interest.If her marginal tax rate is 25% and her effective tax rate is 20%,what is the amount of Helen's tax savings from purchasing the residence?

Accepted Answer

A) $5,600 
B) $7,000 
C) $21,000 
D) $22,400 
A) $5,600 
B) $7,000 
C) $21,000 
D) $22,400

Question 12

Describe the steps in the legislative process for major tax reform.

Accepted Answer

1.Treasury studies are prepared on neede

Question 13

The terms "progressive tax" and "flat tax" are synonymous.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not an objective of the federal income tax law?

Accepted Answer

A) Stimulate private investment. 
B) Reduce employment. 
C) Encourage research and development activities. 
D) Prevent taxpayers from paying a higher percentage of their income in personal income taxes due to inflation. 
A) Stimulate private investment. 
B) Reduce employment. 
C) Encourage research and development activities. 
D) Prevent taxpayers from paying a higher percentage of their income in personal income taxes due to inflation.

Question 15

The largest source of revenues for the federal government comes from

Accepted Answer

A) individual income taxes. 
B) corporate income taxes. 
C) Social Security and Medicare taxes (FIC
A) . 
D) estate and gift taxes. 
A) individual income taxes. 
B) corporate income taxes. 
C) Social Security and Medicare taxes (FIC
A) . 
D) estate and gift taxes.

Question 16

A presidential candidate proposes replacing the income tax with a national sales tax.The sales tax would have a flat rate.Describe the impact of this change in terms of tax structure and equity.

Accepted Answer

The change would replace a progressive t

Question 17

When a change in the tax law is deemed necessary by Congress,the entire Internal Revenue Code must be revised.

Accepted Answer

A) True 
 B)False

Question 18

Vincent makes the following gifts during 2015:
$15,000 cash gift to wife
Gift of automobile valued at $35,000 to his adult son
Gift of golf clubs valued at $5,000 to a friend
$10,000 contribution to church
Although he is married,none of the gifts are considered joint gifts with his wife.What are the total taxable gifts subject to the unified transfer tax?

Accepted Answer

The answer of Vincent makes the following gifts during 2015:
$15,000...

Question 19

Limited liability companies may elect to be taxed as corporations.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following taxes is regressive?

Accepted Answer

A) Federal Insurance Contributions Act (FIC
A)  
B) excise tax 
C) property tax 
D) gift tax 
A) Federal Insurance Contributions Act (FIC
A)  
B) excise tax 
C) property tax 
D) gift tax

Exam 2: an Introduction to Taxation

If a taxpayer's total tax liability is $30,000,taxable income is $100,000,and economic income is $120,000,the average tax rate is 30 percent.

Which of the following is not a taxpaying entity?

Which of the following steps,related to a tax bill,occurs first?

While federal and state income taxes as well as the federal gift and estate taxes are generally progressive in nature,property taxes are proportional.

Charlie makes the following gifts in the current year: $40,000 to his spouse,$30,000 to his church,$18,000 to his nephew,and $25,000 to a friend.Assuming Charlie does not elect gift splitting with his wife,his taxable gifts in the current year will be

AB Partnership earns $500,000 in the current year.Partners A and B are equal partners who do not receive any distributions during the year.How much income does partner A report from the partnership?

The primary objective of the federal income tax law is to achieve various economic and social policy objectives.

The marginal tax rate is useful in tax planning because it measures the tax effect of a proposed transaction.

Which of the following individuals is most likely to be audited?

Helen,who is single,is considering purchasing a residence that will provide a $28,000 tax deduction for property taxes and mortgage interest.If her marginal tax rate is 25% and her effective tax rate is 20%,what is the amount of Helen's tax savings from purchasing the residence?

Describe the steps in the legislative process for major tax reform.

The terms "progressive tax" and "flat tax" are synonymous.

Which of the following is not an objective of the federal income tax law?

The largest source of revenues for the federal government comes from

A presidential candidate proposes replacing the income tax with a national sales tax.The sales tax would have a flat rate.Describe the impact of this change in terms of tax structure and equity.

When a change in the tax law is deemed necessary by Congress,the entire Internal Revenue Code must be revised.

Limited liability companies may elect to be taxed as corporations.

Which of the following taxes is regressive?

Tax Research

Corporate Formations and Capital Structure

Determination of Tax

The Corporate Income Tax

Gross Income: Inclusions

Corporate Nonliquidating Distributions

Gross Income: Exclusions

Other Corporate Tax Levies

Property Transactions: Capital Gains and Losses

Corporate Liquidating Distributions

Deductions and Losses

Corporate Acquisitions and Reorganizations

Itemized Deductions

Consolidated Tax Returns

Losses and Bad Debts

Partnership Formation and Operation

Employee Expenses and Deferred Compensation

Special Partnership Issues

Depreciation,cost Recovery,amortization,and Depletion

Corporations

Accounting Periods and Methods

The Gift Tax

Property Transactions: Nontaxable Exchanges

The Estate Tax

Property Transactions: Section 1231 and Recapture

Income Taxation of Trusts and Estates

Special Tax Computation Methods,tax Credits,and Payment of Tax

Administrative Procedures

Filters