Question 1

A tax bill introduced in the House of Representatives is then

Accepted Answer

A) referred to the House Ways and Means Committee for hearings and approval. 
B) referred to the full House for hearings. 
C) forwarded to the Senate Finance Committee for consideration. 
D) voted upon by the full House. 
A) referred to the House Ways and Means Committee for hearings and approval. 
B) referred to the full House for hearings. 
C) forwarded to the Senate Finance Committee for consideration. 
D) voted upon by the full House. A

Question 2

Vincent makes the following gifts during 2019:
$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

$\begin{array}{|l|c|c|c|} 
\hline& \text { Gift Value} & \text { Adjustment } & \text { Taxable Gift } \
\hline \text { Cash to wife } & \$ 15,000 &\text { spousal gifts excluded } & \$0 \
\hline \text { Auto to son }&35,000&\text { Less } \$ 15,000\text { exclusion }&20,000\
\hline\text { Clubs to friend }&5,000&\text { Less } \$ 15,000\text { exclusion }&0\
\hline\text { Church donation }&10,000&\text { charity gifts excluded }&0\
\hline\text { Taxable gifts }&&&\$20,000\
\hline
\end{array}$

Question 3

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 B

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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

Question 6

Limited liability company members (owners)are responsible for the liabilities of their limited liability company.

Accepted Answer

A) True 
 B)False

Question 7

Vertical equity means that

Accepted Answer

A) taxpayers with the same amount of income should pay the same amount of tax. 
B) taxpayers with larger amounts of income should pay more tax than taxpayers with lower amounts of income. 
C) all taxpayers should pay the same tax. 
D) None of the above. 
A) taxpayers with the same amount of income should pay the same amount of tax. 
B) taxpayers with larger amounts of income should pay more tax than taxpayers with lower amounts of income. 
C) all taxpayers should pay the same tax. 
D) None of the above.

Question 8

What is an important aspect of a limited liability partnership?

Accepted Answer

A) It is the same as a limited partnership where the general partner has unlimited liability. 
B) A partner has unlimited liability arising from his or her own acts of negligence or misconduct or similar acts of any person under his or her direct supervision,but does not have unlimited liability in other matters. 
C) All partners have limited liability regarding all partnership activities. 
D) All partners have unlimited liability. 
A) It is the same as a limited partnership where the general partner has unlimited liability. 
B) A partner has unlimited liability arising from his or her own acts of negligence or misconduct or similar acts of any person under his or her direct supervision,but does not have unlimited liability in other matters. 
C) All partners have limited liability regarding all partnership activities. 
D) All partners have unlimited liability.

Question 9

Latashia reports $100,000 of gross income on her 2018 tax return,filed on the April 15,2019 due date.She omits $30,000 of income,but the error was not fraudulent.When does the statute of limitations for examining her tax return expire?

Accepted Answer

A) April 15,2021 
B) April 15,2022 
C) April 15,2025 
D) It never expires. 
A) April 15,2021 
B) April 15,2022 
C) April 15,2025 
D) It never expires.

Question 10

When property is transferred,the gift tax is based on

Accepted Answer

A) replacement cost of the transferred property. 
B) fair market value on the date of transfer. 
C) the transferor's original cost of the transferred property. 
D) the transferor's depreciated cost of the transferred property. 
A) replacement cost of the transferred property. 
B) fair market value on the date of transfer. 
C) the transferor's original cost of the transferred property. 
D) the transferor's depreciated cost of the transferred property.

Question 11

The term "tax law" includes

Accepted Answer

A) Internal Revenue Code. 
B) Treasury Regulations. 
C) judicial decisions. 
D) All of the above. 
A) Internal Revenue Code. 
B) Treasury Regulations. 
C) judicial decisions. 
D) All of the above.

Question 12

Martha is self-employed in 2019.Her self employment income is $140,000.What is her self-employment tax?

Accepted Answer

A) $20,334 
B) $20,540 
C) $21,420 
D) None of the above 
A) $20,334 
B) $20,540 
C) $21,420 
D) None of the above

Question 13

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 14

Fireball Corporation is an S corporation.Leyla owns all of the stock.During the current year,Fireball earned taxable income of $500,000 and paid a $300,000 distribution to Leyla.Which of the following statements is correct?

Accepted Answer

A) Fireball will pay corporate income tax on its earnings,and Leyla will pay individual income tax on the distribution. 
B) Only Fireball will pay taxes.Leyla will not pay any taxes due to her holdings in Fireball. 
C) Fireball's income will flow through to Leyla's tax return,and she will pay the taxes on the $500,000 of corporate income. 
D) Fireball will not pay any taxes,but Leyla will pay taxes on the distribution received. 
A) Fireball will pay corporate income tax on its earnings,and Leyla will pay individual income tax on the distribution. 
B) Only Fireball will pay taxes.Leyla will not pay any taxes due to her holdings in Fireball. 
C) Fireball's income will flow through to Leyla's tax return,and she will pay the taxes on the $500,000 of corporate income. 
D) Fireball will not pay any taxes,but Leyla will pay taxes on the distribution received.

Question 15

The corporate tax rate is

Accepted Answer

A) progressive. 
B) regressive. 
C) proportional. 
D) none of the above. 
A) progressive. 
B) regressive. 
C) proportional. 
D) none of the above.

Question 16

Gifts between spouses are generally exempt from transfer taxes.

Accepted Answer

A) True 
 B)False

Question 17

For gift tax purposes,a $15,000 annual exclusion per donee is permitted.

Accepted Answer

A) True 
 B)False

Question 18

Arthur pays tax of $5,000 on taxable income of $50,000 while taxpayer Barbara pays tax of $12,000 on $120,000.The tax is a

Accepted Answer

A) progressive tax. 
B) proportional tax. 
C) regressive tax. 
D) None of the above. 
A) progressive tax. 
B) proportional tax. 
C) regressive tax. 
D) None of the above.

Question 19

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

Accepted Answer

A) limited liability for all members of a LLC 
B) ability to choose between taxation as a partnership or corporation 
C) default tax treatment as a corporation,unless otherwise elected 
D) All of the above are advantages of an LLC. 
A) limited liability for all members of a LLC 
B) ability to choose between taxation as a partnership or corporation 
C) default tax treatment as a corporation,unless otherwise elected 
D) All of the above are advantages of an LLC.

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 17: an Introduction to Taxation

A tax bill introduced in the House of Representatives is then

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?

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

Which of the following taxes is regressive?

Limited liability company members (owners)are responsible for the liabilities of their limited liability company.

Vertical equity means that

What is an important aspect of a limited liability partnership?

Latashia reports $100,000 of gross income on her 2018 tax return,filed on the April 15,2019 due date.She omits $30,000 of income,but the error was not fraudulent.When does the statute of limitations for examining her tax return expire?

When property is transferred,the gift tax is based on

The term "tax law" includes

Martha is self-employed in 2019.Her self employment income is $140,000.What is her self-employment tax?

The largest source of revenues for the federal government comes from

Fireball Corporation is an S corporation.Leyla owns all of the stock.During the current year,Fireball earned taxable income of $500,000 and paid a $300,000 distribution to Leyla.Which of the following statements is correct?

The corporate tax rate is

Gifts between spouses are generally exempt from transfer taxes.

For gift tax purposes,a $15,000 annual exclusion per donee is permitted.

Arthur pays tax of $5,000 on taxable income of $50,000 while taxpayer Barbara pays tax of $12,000 on $120,000.The tax is a

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

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

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

U.S. Taxation of Foreign-Related Transactions

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Business Expenses and Deferred Compensation

Itemized Deductions

Losses and Bad Debts

Depreciation,cost Recovery,amortization,and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Sec1231 and Recapture

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

Tax Research

Corporations

Partnerships and S Corporations

Taxes and Investment Planning

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