Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

All of the following statements are true except

Accepted Answer

A) the net income earned by a sole proprietorship is reported on the owner's individual income tax return. 
B) the net income of an S corporation is subject to double taxation because it is taxed at the entity level and dividends paid from the S corporation to individual shareholders are also taxed. 
C) the net income of C corporation is subject to double taxation because it is taxed at the entity level and dividends paid from the C corporation to individual shareholders is also taxed. 
D) LLCs are generally taxed as partnerships. 
A) the net income earned by a sole proprietorship is reported on the owner's individual income tax return. 
B) the net income of an S corporation is subject to double taxation because it is taxed at the entity level and dividends paid from the S corporation to individual shareholders are also taxed. 
C) the net income of C corporation is subject to double taxation because it is taxed at the entity level and dividends paid from the C corporation to individual shareholders is also taxed. 
D) LLCs are generally taxed as partnerships.

Question 3

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

Accepted Answer

A) $0. 
B) $100,000. 
C) $200,000. 
D) $300,000. 
A) $0. 
B) $100,000. 
C) $200,000. 
D) $300,000.

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

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

Accepted Answer

A) tax planning for clients. 
B) tax research for client questions. 
C) investment purchases on behalf of clients. 
D) tax return preparation. 
A) tax planning for clients. 
B) tax research for client questions. 
C) investment purchases on behalf of clients. 
D) tax return preparation.

Question 6

In an S corporation,shareholders

Accepted Answer

A) are taxed on their proportionate share of earnings. 
B) are taxed only on dividends. 
C) may allocate income among themselves in order to consider special contributions. 
D) are only taxed on salaries. 
A) are taxed on their proportionate share of earnings. 
B) are taxed only on dividends. 
C) may allocate income among themselves in order to consider special contributions. 
D) are only taxed on salaries.

Question 7

In a limited liability partnership,a partner is not liable for his partner's acts of negligence or misconduct.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

What are the correct monthly rates for calculating failure to file and failure to pay penalties?

Accepted Answer

A)  $$\begin{array} { | l | l | } 
\hline \text { Failure to file } & \text { Failure to pay } \
\hline 5.0 \% & 5.0 \% \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | l | } 
\hline \text { Failure to file } & \text { Failure to pay } \
\hline 0.5 \% & 0.5 \% \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | l | } 
\hline \text { Failure to file } & \text { Failure to pay } \
\hline 5.0 \% & 0.5 \% \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | l | } 
\hline \text { Failure to file } & \text { Failure to pay } \
\hline 0.5 \% & 5.0 \% \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | l | } 
\hline \text { Failure to file } & \text { Failure to pay } \
\hline 5.0 \% & 5.0 \% \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | l | } 
\hline \text { Failure to file } & \text { Failure to pay } \
\hline 0.5 \% & 0.5 \% \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | l | } 
\hline \text { Failure to file } & \text { Failure to pay } \
\hline 5.0 \% & 0.5 \% \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | l | } 
\hline \text { Failure to file } & \text { Failure to pay } \
\hline 0.5 \% & 5.0 \% \
\hline
\end{array}$$

Question 10

When returns are processed,they are scored to determine their potential for yielding additional tax revenues.This program is called

Accepted Answer

A) Taxpayer Compliance Measurement Program. 
B) Discriminant Function System. 
C) Standard Audit Program. 
D) Field Audit Program. 
A) Taxpayer Compliance Measurement Program. 
B) Discriminant Function System. 
C) Standard Audit Program. 
D) Field Audit Program.

Question 11

Paul makes the following property transfers in the current year: • $22,000 cash to his wife
• $34,000 cash to a qualified charity
• $220,000 house to his son
• $3,000 computer to an unrelated friend
The total of Paul's taxable gifts,assuming he does not elect gift splitting with his spouse,subject to the unified transfer tax is

Accepted Answer

A) $205,000. 
B) $212,000. 
C) $245,000. 
D) $279,000. 
A) $205,000. 
B) $212,000. 
C) $245,000. 
D) $279,000.

Question 12

The Sixteenth Amendment to the U.S.Constitution permits the passage of a federal income tax law.

Accepted Answer

A) True 
 B)False

Question 13

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 14

In 2019,an estate is not taxable unless the sum of the taxable estate and taxable gifts made after 1976 exceeds

Accepted Answer

A) $4,505,800. 
B) $10,000,000. 
C) $5,000,000. 
D) $11,400,000. 
A) $4,505,800. 
B) $10,000,000. 
C) $5,000,000. 
D) $11,400,000.

Question 15

The primary liability for payment of the gift tax is imposed upon the donee.

Accepted Answer

A) True 
 B)False

Question 16

Individuals are the principal taxpaying entities in the federal income tax system.

Accepted Answer

A) True 
 B)False

Question 17

Limited liability companies may elect to be taxed as corporations.

Accepted Answer

A) True 
 B)False

Question 18

Organizing a corporation as an S Corporation results in a single level of taxation.

Accepted Answer

A) True 
 B)False

Question 19

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.

Accepted Answer

A) True 
 B)False

Question 20

Helen,who is single,is considering purchasing a residence that will provide an $18,000 tax deduction for property taxes and mortgage interest.If her marginal tax rate is 24% and her effective tax rate is 20%,what is the amount of Helen's tax savings from purchasing the residence?

Accepted Answer

A) $3,600 
B) $4,320 
C) $3,200 
D) $18,000 
A) $3,600 
B) $4,320 
C) $3,200 
D) $18,000

Exam 17: an Introduction to Taxation

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

All of the following statements are true except

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

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

In an S corporation,shareholders

In a limited liability partnership,a partner is not liable for his partner's acts of negligence or misconduct.

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

What are the correct monthly rates for calculating failure to file and failure to pay penalties?

When returns are processed,they are scored to determine their potential for yielding additional tax revenues.This program is called

The Sixteenth Amendment to the U.S.Constitution permits the passage of a federal income tax law.

Which of the following is not a taxpaying entity?

In 2019,an estate is not taxable unless the sum of the taxable estate and taxable gifts made after 1976 exceeds

The primary liability for payment of the gift tax is imposed upon the donee.

Individuals are the principal taxpaying entities in the federal income tax system.

Limited liability companies may elect to be taxed as corporations.

Organizing a corporation as an S Corporation results in a single level of taxation.

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.

Helen,who is single,is considering purchasing a residence that will provide an $18,000 tax deduction for property taxes and mortgage interest.If her marginal tax rate is 24% and her effective tax rate is 20%,what is the amount of Helen's tax savings from purchasing the residence?

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

Filters