Question 1

If a taxpayer's total tax liability is $4,000,taxable income is $20,000,and total economic income is $40,000,then the effective tax rate is 20 percent.

Accepted Answer

A) True 
 B)False

Question 2

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?

Accepted Answer

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

Question 3

Jillian,a single individual,earns $230,000 in 2019 through her job as an accounting manager.What is her FICA tax?

Accepted Answer

A) $11,845 
B) $11,575 
C) $17,595 
D) $10,167 
A) $11,845 
B) $11,575 
C) $17,595 
D) $10,167

Question 4

Peyton has adjusted gross income of $2,000,000 on his 2018 tax return,filed April 15,2019,the due date.He accidentally failed to include $200,000 that he received for a television advertisement.How long does the IRS have to audit Peyton's federal tax return?

Accepted Answer

A) until April 17,2021 
B) until April 17,2022 
C) until April 17,2025 
D) The IRS can audit Peyton's return at any future date. 
A) until April 17,2021 
B) until April 17,2022 
C) until April 17,2025 
D) The IRS can audit Peyton's return at any future date.

Question 5

Until about 100 years ago,attempts to impose a federal income tax were ruled unconstitutional.The amendment to the U.S.Constitution allowing the imposition of a federal income tax is the

Accepted Answer

A) Second Amendment. 
B) Thirteenth Amendment. 
C) Sixteenth Amendment. 
D) Nineteenth Amendment. 
A) Second Amendment. 
B) Thirteenth Amendment. 
C) Sixteenth Amendment. 
D) Nineteenth Amendment.

Question 6

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 7

Kate files her tax return 36 days after the due date.When she files the return,she sends a check for $2,000 which is the balance of the tax owed by her.Kate's penalty for failure to file a return will be

Accepted Answer

A) 0)5% per month (or factor thereof)up to a maximum of 25%. 
B) 5% per month (or factor thereof)up to a maximum of 25%. 
C) 20% per month (or factor thereof). 
D) 25%. 
A) 0)5% per month (or factor thereof)up to a maximum of 25%. 
B) 5% per month (or factor thereof)up to a maximum of 25%. 
C) 20% per month (or factor thereof). 
D) 25%.

Question 8

Generally,the statute of limitations is three years from the later of the date the tax return is filed or the due date.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following taxes is proportional?

Accepted Answer

A) gift tax 
B) income tax 
C) sales tax 
D) Federal Insurance Contributions Act (FIC
A)  
A) gift tax 
B) income tax 
C) sales tax 
D) Federal Insurance Contributions Act (FIC
A)

Question 10

Eric dies in the current year and has a gross estate valued at $16,500,000.The estate incurs funeral and administrative expenses of $100,000 and also pays off Eric's debts which amount to $250,000.Eric bequeaths $600,000 to his wife.Eric made no taxable transfers during his life.Eric's taxable estate will be

Accepted Answer

A) $4,250,000. 
B) $15,550,000. 
C) $4,150,000. 
D) $16,500,000. 
A) $4,250,000. 
B) $15,550,000. 
C) $4,150,000. 
D) $16,500,000.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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) $28,000. 
B) $13,000. 
C) $25,000. 
D) $43,000. 
A) $28,000. 
B) $13,000. 
C) $25,000. 
D) $43,000.

Question 13

Which of the following is not one of Adam Smith's canons of taxation?

Accepted Answer

A) equity 
B) convenience 
C) certainty 
D) economic stimulation 
A) equity 
B) convenience 
C) certainty 
D) economic stimulation

Question 14

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 15

Which of the following statements is incorrect?

Accepted Answer

A) Property taxes are levied on real estate. 
B) Excise taxes are assessed on items such as gasoline and telephone use. 
C) Gift taxes are imposed on the recipient of a gift. 
D) The estate tax is based on the fair market value of property at death or the alternate valuation date. 
A) Property taxes are levied on real estate. 
B) Excise taxes are assessed on items such as gasoline and telephone use. 
C) Gift taxes are imposed on the recipient of a gift. 
D) The estate tax is based on the fair market value of property at death or the alternate valuation date.

Question 16

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

Accepted Answer

A) True 
 B)False

Exam 17: an Introduction to Taxation

If a taxpayer's total tax liability is $4,000,taxable income is $20,000,and total economic income is $40,000,then the effective tax rate is 20 percent.

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?

Jillian,a single individual,earns $230,000 in 2019 through her job as an accounting manager.What is her FICA tax?

Peyton has adjusted gross income of $2,000,000 on his 2018 tax return,filed April 15,2019,the due date.He accidentally failed to include $200,000 that he received for a television advertisement.How long does the IRS have to audit Peyton's federal tax return?

Until about 100 years ago,attempts to impose a federal income tax were ruled unconstitutional.The amendment to the U.S.Constitution allowing the imposition of a federal income tax is the

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

Kate files her tax return 36 days after the due date.When she files the return,she sends a check for $2,000 which is the balance of the tax owed by her.Kate's penalty for failure to file a return will be

Generally,the statute of limitations is three years from the later of the date the tax return is filed or the due date.

Which of the following taxes is proportional?

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

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 of the following is not one of Adam Smith's canons of taxation?

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

Which of the following statements is incorrect?

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

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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