Exam 1: An Introduction to Taxation

What does the statute of limitations mean? Describe the different statutes of limitations that apply to tax returns.

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

Which of the following is not an advantage of a limited liability company (LLC)?

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

Mia is self-employed as a consultant. During 2015, Mia earned $180,000 in self-employment income. What is Mia's self-employment tax?

Martha is self-employed in 2015. Her business profits are $140,000. What is her self-employment tax?

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

The Internal Revenue Service is the branch of the Treasury Department responsible for administering the federal tax law.

Larry and Ally are married and file a joint return. They are considering purchasing a personal residence that will generate two deductions: $10,000 in home mortgage interest and $8,000 in real estate taxes. Their marginal tax rate is 25%. What is the total tax savings if Larry and Ally purchase the residence?

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?

Denzel earns $130,000 in 2015 through his job as a sales manager. What is his FICA tax?

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

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?

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

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.

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

Which is not a component of tax practice?

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

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

In 2015, an estate is not taxable unless the sum of the taxable estate and taxable gifts made after 1976 exceeds