Question 1

Which of the following is considered a tax?

Accepted Answer

A) Tolls 
B) Parking meter fees 
C) Annual licensing fees 
D) A local surcharge paid on retail sales to fund public schools 
E) Entrance fees paid at national parks 
A) Tolls 
B) Parking meter fees 
C) Annual licensing fees 
D) A local surcharge paid on retail sales to fund public schools 
E) Entrance fees paid at national parks

Question 2

Curtis invests $250,000 in a city of Athens bond that pays 7 percent interest. Alternatively, Curtis could have invested the $250,000 in a bond recently issued by Initech, Inc. that pays 9 percent interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 24 percent. How much implicit tax would Curtis pay on the city of Athens bond?

Accepted Answer

A) $17,500 
B) $1,400 
C) $1,300 
D) $5,000 
E) None of the choices are correct 
A) $17,500 
B) $1,400 
C) $1,300 
D) $5,000 
E) None of the choices are correct

Question 3

George recently paid $50 to renew his driver's license. The $50 payment is considered a tax.

Accepted Answer

A) True 
 B)False

Question 4

Leonardo, who is married but files separately, earns $80,000 of taxable income. He also has $15,000 in city of Tulsa bonds. His wife, Theresa, earns $50,000 of taxable income. How much money would Leonardo and Theresa save if they file jointly instead of separately for 2019? (Use tax rate schedule.)

Accepted Answer

A) Nothing 
B) $103.50 
C) $309.75 
D) $5,932.50 
E) None of the choices are correct. 
A) Nothing 
B) $103.50 
C) $309.75 
D) $5,932.50 
E) None of the choices are correct.

Question 5

Leonardo, who is married but files separately, earns $80,000 of taxable income. He also has $15,000 in city of Tulsa bonds. His wife, Theresa, earns $50,000 of taxable income. If Leonardo earned an additional $30,000 of taxable income this year, what would be the marginal tax rate (rounded)on the extra income for 2019? (Use tax rate schedule.)

Accepted Answer

A) 22.00 percent 
B) 18.81 percent 
C) 24.00 percent 
D) 23.72 percent 
E) None of the choices are correct 
A) 22.00 percent 
B) 18.81 percent 
C) 24.00 percent 
D) 23.72 percent 
E) None of the choices are correct

Question 6

Horizontal equity is defined in terms of taxpayers in similar situations whereas vertical equity is defined in terms of taxpayers in different situations.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following principles encourages a vertically equitable tax system?

Accepted Answer

A) Pay-as-you-go 
B) Economy 
C) Income effects 
D) Ability to pay principle 
E) None of the choices are correct 
A) Pay-as-you-go 
B) Economy 
C) Income effects 
D) Ability to pay principle 
E) None of the choices are correct

Question 8

A common example of an employment-related tax is the Medicare tax.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is true regarding use taxes?

Accepted Answer

A) A use tax is relatively easy to enforce compared to a sales tax. 
B) Use taxes attempt to eliminate any tax advantage of purchasing goods out of state. 
C) Use taxes encourage taxpayers to buy goods out of state to avoid paying sales tax in their home state. 
D) A use tax is generally a progressive tax. 
E) None of the choices are correct. 
A) A use tax is relatively easy to enforce compared to a sales tax. 
B) Use taxes attempt to eliminate any tax advantage of purchasing goods out of state. 
C) Use taxes encourage taxpayers to buy goods out of state to avoid paying sales tax in their home state. 
D) A use tax is generally a progressive tax. 
E) None of the choices are correct.

Question 10

Jed Clampett is expanding his family-run beer distributorship into Georgia or Tennessee. His parents began the business many years ago and now three generations of Clampetts work in the family business. Jed will relocate the entire family (his parents, spouse, children, etc.)to either state after the move. What types of taxes may influence his decision of where to locate his business? What nontax factors may influence the decision?

Accepted Answer

Taxes will affect several aspects of Jed

Question 11

The substitution effect:

Accepted Answer

A) predicts that taxpayers will work harder to pay for consumer products when tax rates increase. 
B) is one of the effects considered in static forecasting. 
C) results in the government collecting more aggregate tax revenue than under the income effect. 
D) is typically more descriptive for taxpayers with lower disposable income. 
E) None of the choices are correct. 
A) predicts that taxpayers will work harder to pay for consumer products when tax rates increase. 
B) is one of the effects considered in static forecasting. 
C) results in the government collecting more aggregate tax revenue than under the income effect. 
D) is typically more descriptive for taxpayers with lower disposable income. 
E) None of the choices are correct.

Question 12

Estimated tax payments are one way the federal income tax system addresses the "certainty" criterion in evaluating tax systems.

Accepted Answer

A) True 
 B)False

Question 13

The ultimate economic burden of a tax is best captured by:

Accepted Answer

A) the marginal tax rate. 
B) the effective tax rate. 
C) the average tax rate. 
D) the proportional tax rate. 
E) None of the choices are correct. 
A) the marginal tax rate. 
B) the effective tax rate. 
C) the average tax rate. 
D) the proportional tax rate. 
E) None of the choices are correct.

Question 14

Leonardo, who is married but files separately, earns $80,000 of taxable income. He also has $15,000 in city of Tulsa bonds. His wife, Theresa, earns $50,000 of taxable income. If Leonardo instead had $30,000 of additional tax deductions for 2019, his marginal tax rate (rounded)on the deductions would be: (Use tax rate schedule.)

Accepted Answer

A) 12.00 percent 
B) 13.88 percent 
C) 22.00 percent 
D) 24.00 percent 
E) None of the choices are correct 
A) 12.00 percent 
B) 13.88 percent 
C) 22.00 percent 
D) 24.00 percent 
E) None of the choices are correct

Question 15

If Susie earns $750,000 in taxable income, how much tax will she pay as a single taxpayer for 2019? (Use tax rate schedule.)

Accepted Answer

A) $215,640 
B) $277,500 
C) $242,488 
D) $247,189 
E) None of the choices are correct 
A) $215,640 
B) $277,500 
C) $242,488 
D) $247,189 
E) None of the choices are correct

Question 16

Excise taxes are typically levied on the value of a good purchased.

Accepted Answer

A) True 
 B)False

Question 17

A sales tax is a common example of a progressive tax rate structure.

Accepted Answer

A) True 
 B)False

Question 18

One key characteristic of a tax is that it is a required payment to a governmental agency.

Accepted Answer

A) True 
 B)False

Question 19

Curtis invests $250,000 in a city of Athens bond that pays 7 percent interest. Alternatively, Curtis could have invested the $250,000 in a bond recently issued by Initech, Inc. that pays 9 percent interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 24 percent. What is Curtis's after-tax rate of return on the city of Athens bond?

Accepted Answer

A) 5)32 percent 
B) 6)84 percent 
C) 7)00 percent 
D) 9)00 percent 
E) None of the choices are correct 
A) 5)32 percent 
B) 6)84 percent 
C) 7)00 percent 
D) 9)00 percent 
E) None of the choices are correct

Question 20

The state of Georgia recently increased its tax on a carton of cigarettes by $2.00. What type of tax is this?

Accepted Answer

A) A sin tax 
B) An excise tax 
C) It is not a tax; it is a fine 
D) A sin tax and an excise tax are correct 
E) None of the choices are correct 
A) A sin tax 
B) An excise tax 
C) It is not a tax; it is a fine 
D) A sin tax and an excise tax are correct 
E) None of the choices are correct

Which of the following is considered a tax?

George recently paid $50 to renew his driver's license. The $50 payment is considered a tax.

Leonardo, who is married but files separately, earns $80,000 of taxable income. He also has $15,000 in city of Tulsa bonds. His wife, Theresa, earns $50,000 of taxable income. How much money would Leonardo and Theresa save if they file jointly instead of separately for 2019? (Use tax rate schedule.)

Horizontal equity is defined in terms of taxpayers in similar situations whereas vertical equity is defined in terms of taxpayers in different situations.

Which of the following principles encourages a vertically equitable tax system?

A common example of an employment-related tax is the Medicare tax.

Which of the following is true regarding use taxes?

The substitution effect:

Estimated tax payments are one way the federal income tax system addresses the "certainty" criterion in evaluating tax systems.

The ultimate economic burden of a tax is best captured by:

If Susie earns $750,000 in taxable income, how much tax will she pay as a single taxpayer for 2019? (Use tax rate schedule.)

Excise taxes are typically levied on the value of a good purchased.

A sales tax is a common example of a progressive tax rate structure.

One key characteristic of a tax is that it is a required payment to a governmental agency.

The state of Georgia recently increased its tax on a carton of cigarettes by $2.00. What type of tax is this?

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Filters

Exam 1: An Introduction to Tax

Which of the following is considered a tax?

George recently paid $50 to renew his driver's license. The $50 payment is considered a tax.

Horizontal equity is defined in terms of taxpayers in similar situations whereas vertical equity is defined in terms of taxpayers in different situations.

Which of the following principles encourages a vertically equitable tax system?

A common example of an employment-related tax is the Medicare tax.

Which of the following is true regarding use taxes?

The substitution effect:

Estimated tax payments are one way the federal income tax system addresses the "certainty" criterion in evaluating tax systems.

The ultimate economic burden of a tax is best captured by:

If Susie earns $750,000 in taxable income, how much tax will she pay as a single taxpayer for 2019? (Use tax rate schedule.)

Excise taxes are typically levied on the value of a good purchased.

A sales tax is a common example of a progressive tax rate structure.

One key characteristic of a tax is that it is a required payment to a governmental agency.

The state of Georgia recently increased its tax on a carton of cigarettes by $2.00. What type of tax is this?

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Filters