Question 1

A characteristic of FICA is that:

Accepted Answer

A)  It does not apply when one spouse works for the other spouse. 
B)  It is imposed only on the employer. 
C)  It provides a modest source of income in the event of loss of employment. 
D)  It is administered by both state and Federal governments. 
E)  None of these. 
A)  It does not apply when one spouse works for the other spouse. 
B)  It is imposed only on the employer. 
C)  It provides a modest source of income in the event of loss of employment. 
D)  It is administered by both state and Federal governments. 
E)  None of these.

Question 2

No state has offered an income tax amnesty program more than once.

Accepted Answer

A) True 
 B)False

Question 3

The tax law contains various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain additional education. On what grounds can these provisions be justified?

Accepted Answer

Social and economic considerat

Question 4

One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from being accumulated within the family unit.

Accepted Answer

A) True 
 B)False

Question 5

A landlord leases property upon which the tenant makes improvements. The improvements are significant and are not made in lieu of rent. At the end of the lease, the value of the improvements are not income to the landlord. This rule is an example of:

Accepted Answer

A)  A clear reflection of income result. 
B)  The tax benefit rule. 
C)  The arm's length concept. 
D)  The wherewithal to pay concept. 
E)  None of these. 
A)  A clear reflection of income result. 
B)  The tax benefit rule. 
C)  The arm's length concept. 
D)  The wherewithal to pay concept. 
E)  None of these.

Question 6

Characteristics of the "Fair Tax" i.e., national sales tax) include which, if any, of the following:

Accepted Answer

A)  Abolition of the Federal individual but not the corporate) income tax. 
B)  Abolition of all Federal income taxes but retention of payroll taxes including the self-employment tax). 
C)  Abolition of all Federal income taxes and payroll taxes but retention of the Federal estate and gift taxes. 
D)  Abolition of all Federal income and payroll taxes as well as the Federal estate and gift taxes. 
E)  None of these. 
A)  Abolition of the Federal individual but not the corporate) income tax. 
B)  Abolition of all Federal income taxes but retention of payroll taxes including the self-employment tax). 
C)  Abolition of all Federal income taxes and payroll taxes but retention of the Federal estate and gift taxes. 
D)  Abolition of all Federal income and payroll taxes as well as the Federal estate and gift taxes. 
E)  None of these.

Question 7

In preparing a tax return, all questions on the return must be answered.

Accepted Answer

A) True 
 B)False

Question 8

The formula for the Federal income tax on corporations is the same as that applicable to individuals.

Accepted Answer

A) True 
 B)False

Question 9

Indicate which, if any, statement is incorrect. State income taxes:

Accepted Answer

A)  Can piggyback to the Federal version. 
B)  Cannot apply to visiting nonresidents. 
C)  Can decouple from the Federal version. 
D)  Can provide occasional amnesty programs. 
E)  None of these. 
A)  Can piggyback to the Federal version. 
B)  Cannot apply to visiting nonresidents. 
C)  Can decouple from the Federal version. 
D)  Can provide occasional amnesty programs. 
E)  None of these.

Question 10

Burt and Lisa are married and live in a common law state. Burt wants to make gifts to their four children in 2018. What is the maximum amount of the annual exclusion they will be allowed for these gifts?

Accepted Answer

A)  $15,000. 
B)  $30,000. 
C)  $60,000. 
D)  $120,000. 
E)  None of these. 
A)  $15,000. 
B)  $30,000. 
C)  $60,000. 
D)  $120,000. 
E)  None of these.

Question 11

Melinda has been referred to you by one of your clients. In the past, she has prepared her own income tax returns, but she has become overwhelmed by the increased complexity of the tax law. Consequently, Melinda wants you to prepare her return for calendar year 2018. In reviewing her 2017 return, you note that she has claimed as a deduction the entire cost of a business building that should have been capitalized and depreciated. What course of action should you follow?

Accepted Answer

You should recommend to Melinda that an

Question 12

The objective of pay-as-you-go paygo) is to improve administrative feasibility.

Accepted Answer

A) True 
 B)False

Question 13

How do the net operating loss provisions in the tax law mitigate the effect of the annual accounting concept?

Accepted Answer

Without the allowance of a loss carryfor

Question 14

Logan dies with an estate worth $20 million. Under his will, $10 million passes to his wife while $10 million goes to his church. What is Logan's Federal estate tax result?

Accepted Answer

None. After a marital deductio

Question 15

Under Clint's will, all of his property passes to either the Lutheran Church or to his wife. No Federal estate tax will be due on Clint's death in 2018.

Accepted Answer

A) True 
 B)False

Question 16

In preparing an income tax return, the use of a client's estimates is not permitted.

Accepted Answer

A) True 
 B)False

Question 17

Which, if any, of the following provisions cannot be justified as mitigating the effect of the annual accounting period concept?

Accepted Answer

A)  Nonrecognition of gain allowed for involuntary conversions. 
B)  Net operating loss carryover provisions. 
C)  Carry over of excess charitable contributions. 
D)  Use of the installment method to recognize gain. 
E)  Carry over of excess capital losses. 
A)  Nonrecognition of gain allowed for involuntary conversions. 
B)  Net operating loss carryover provisions. 
C)  Carry over of excess charitable contributions. 
D)  Use of the installment method to recognize gain. 
E)  Carry over of excess capital losses.

Question 18

Even if property tax rates are not changed, the amount of ad valorem taxes imposed on realty may not remain the same.

Accepted Answer

A) True 
 B)False

Question 19

Can a taxpayer start the 3-year statute of limitations on additional assessments by the IRS by filing his income tax return early i.e., before the due date)? Can the period be shortened by filing late i.e., after the due date)?

Accepted Answer

The answer is no in both cases

Question 20

For state income tax purposes, a majority of states allow a deduction for Federal income taxes.

Accepted Answer

A) True 
 B)False

A characteristic of FICA is that:

No state has offered an income tax amnesty program more than once.

The tax law contains various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain additional education. On what grounds can these provisions be justified?

One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from being accumulated within the family unit.

A landlord leases property upon which the tenant makes improvements. The improvements are significant and are not made in lieu of rent. At the end of the lease, the value of the improvements are not income to the landlord. This rule is an example of:

Characteristics of the "Fair Tax" i.e., national sales tax) include which, if any, of the following:

In preparing a tax return, all questions on the return must be answered.

The formula for the Federal income tax on corporations is the same as that applicable to individuals.

Indicate which, if any, statement is incorrect. State income taxes:

Burt and Lisa are married and live in a common law state. Burt wants to make gifts to their four children in 2018. What is the maximum amount of the annual exclusion they will be allowed for these gifts?

The objective of pay-as-you-go paygo) is to improve administrative feasibility.

How do the net operating loss provisions in the tax law mitigate the effect of the annual accounting concept?

Logan dies with an estate worth $20 million. Under his will, $10 million passes to his wife while $10 million goes to his church. What is Logan's Federal estate tax result?

Under Clint's will, all of his property passes to either the Lutheran Church or to his wife. No Federal estate tax will be due on Clint's death in 2018.

In preparing an income tax return, the use of a client's estimates is not permitted.

Which, if any, of the following provisions cannot be justified as mitigating the effect of the annual accounting period concept?

Even if property tax rates are not changed, the amount of ad valorem taxes imposed on realty may not remain the same.

Can a taxpayer start the 3-year statute of limitations on additional assessments by the IRS by filing his income tax return early i.e., before the due date)? Can the period be shortened by filing late i.e., after the due date)?

For state income tax purposes, a majority of states allow a deduction for Federal income taxes.

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Filters

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

A characteristic of FICA is that:

No state has offered an income tax amnesty program more than once.

The tax law contains various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain additional education. On what grounds can these provisions be justified?

One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from being accumulated within the family unit.

A landlord leases property upon which the tenant makes improvements. The improvements are significant and are not made in lieu of rent. At the end of the lease, the value of the improvements are not income to the landlord. This rule is an example of:

Characteristics of the "Fair Tax" i.e., national sales tax) include which, if any, of the following:

In preparing a tax return, all questions on the return must be answered.

The formula for the Federal income tax on corporations is the same as that applicable to individuals.

Indicate which, if any, statement is incorrect. State income taxes:

Burt and Lisa are married and live in a common law state. Burt wants to make gifts to their four children in 2018. What is the maximum amount of the annual exclusion they will be allowed for these gifts?

The objective of pay-as-you-go paygo) is to improve administrative feasibility.

How do the net operating loss provisions in the tax law mitigate the effect of the annual accounting concept?

Logan dies with an estate worth $20 million. Under his will, $10 million passes to his wife while $10 million goes to his church. What is Logan's Federal estate tax result?

Under Clint's will, all of his property passes to either the Lutheran Church or to his wife. No Federal estate tax will be due on Clint's death in 2018.

In preparing an income tax return, the use of a client's estimates is not permitted.

Which, if any, of the following provisions cannot be justified as mitigating the effect of the annual accounting period concept?

Even if property tax rates are not changed, the amount of ad valorem taxes imposed on realty may not remain the same.

Can a taxpayer start the 3-year statute of limitations on additional assessments by the IRS by filing his income tax return early i.e., before the due date)? Can the period be shortened by filing late i.e., after the due date)?

For state income tax purposes, a majority of states allow a deduction for Federal income taxes.

Working With the Tax Law

Tax Formula and Tax Determination an Overview of Property Transactions

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, Cost Recovery, Amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Filters