Exam 1: An Introduction to Taxation and Understanding the Federal Tax Law

To mitigate the effect of the annual accounting period concept, the tax law permits the carryforward to other years of the excess charitable contributions of a particular year.

An inheritance tax is a tax on a decedent's right to pass property at death.

The AICPA Statements on Standards for Tax Services are:

Which of the following taxes is only paid by the employer?

During any month in which both the failure to file penalty and the failure to pay penalty apply, the failure to file penalty is increased by the amount of the failure to pay penalty.

Currently, the tax base for the Social Security component of the FICA is not limited to a dollar amount.

States impose either a state income tax or a general sales tax, but not both types of taxes.

Provisions in the tax law that promote energy conservation and more use of alternative non-fossil) fuels can be justified by:

Which, if any, of the following taxes are proportional rather than progressive)?

To lessen, or eliminate, the effect of multiple taxation, a taxpayer who is subject to both foreign and U.S. income taxes on the same income is allowed either a deduction or a credit for the foreign tax paid.

A characteristic of the fraud penalties is:

Morgan inherits her father's personal residence including all of the furnishings. She plans to add a swimming pool and sauna to the property and rent it as a furnished house. What are some of the ad valorem property tax issues Morgan can anticipate?

A CPA firm in California sends many of its less complex tax returns to be prepared by a group of accountants in India. If certain procedures are followed, this outsourcing of tax return preparation is proper.

The proposed flat tax:

The value added tax VAT) has not had wide acceptance in the international community.

"Bracket creep" will not exist if there is only a single flat) tax rate for the income tax.

If a "special agent" becomes involved in the audit of a return, this indicates that the IRS suspects that fraud is involved.

If the tax deficiency is attributable to fraud, the negligence penalty will not be imposed.

The majority of IRS audits are handled by correspondence.

Unlike FICA, FUTA requires that employers comply with state as well as Federal rules.