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

The tax law provides various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain additional education.These provisions can be justified on both economic and equity grounds.

The principal objective of the FUTA tax is to provide some measure of retirement security.

Taxes levied by both states and the Federal government include:

Because the law is complicated, most individual taxpayers are not able to complete their Federal income tax returns without outside assistance.

Using the following choices, show the justification for each provision of the tax law listed. a. Economic considerations b. Social considerations c. Equity considerations d. Both a. and b. -Employee temporarily working in another state for two months

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

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

Using the following choices, show the justification for each provision of the tax law listed. a. Economic considerations b. Social considerations c. Equity considerations d. Both a. and b. -A tax credit for amounts spent to furnish care for children while the parent is at work.

A use tax is imposed by:

Like the Federal counterpart, the amount of the state excise taxes on gasoline varies from state to state.

The FICA tax (Medicare component) on wages is progressive since the tax due increases as wages increase.

Using the following choices, show the justification for each provision of the tax law listed. a. Economic considerations b. Social considerations c. Equity considerations d. Both a. and b. -A Federal deduction for state and local income taxes paid.

Stealth taxes have the effect of generating additional taxes from all taxpayers.

Using the following choices, show the justification for each provision of the tax law listed. a. Economic considerations b. Social considerations c. Equity considerations d. Both a. and b. -Contributions to charitable organizations are deductible.

Using the following choices, show the justification for each provision of the tax law listed. a. Economic considerations b. Social considerations c. Equity considerations d. Both a. and b. -A deduction for qualified tuition paid to obtain higher education.

Not all of the states that impose a general sales tax also have a use tax.

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:

If an income tax return is not filed by a taxpayer, there is no statute of limitations on assessments of tax by the IRS.

Which, if any, of the following is a typical characteristic of an ad valorem tax on personalty?

Using the following choices, show the justification for each provision of the tax law listed. a. Economic considerations b. Social considerations c. Equity considerations d. Both a. and b. -Import taxes (customs duties)