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

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 interest on student loans.

The proposed flat tax:

In cases of doubt, courts have held that tax relief provisions should be broadly construed in favor of 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. -A deduction for certain expenses (interest and taxes) incident to home ownership.

Julius, a married taxpayer, makes gifts to each of his six children.A maximum of twelve annual exclusions could be allowed as to these gifts.

The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the United States.

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. -Tax fraud suspected

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

Sales made by mail order are not exempt from the application of a general sales (or use) tax.

The IRS agent auditing the return will issue an RAR even if the taxpayer owes no additional taxes.

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

Tax functions that accounting and finance professionals may assist clients with include all but the following:

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

Which of the following is a characteristic of the audit process?

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. -Use tax

A major advantage of a flat tax type of income tax is its simplicity.

Match the statements that relate to each other.Note: Some choices may be used more than once. -More than 25% gross income omission and statute of limitations

Which, if any, of the following provisions of the tax law cannot be justified as promoting administrative feasibility (simplifying the task of the IRS)?

A calendar year taxpayer files his 2018 Federal income tax return on March 4, 2019.The return reflects an overpayment of $6,000, and the taxpayer requests a refund of this amount.The refund is paid on May 16, 2019.The refund need not include interest.

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. -Additional depreciation deduction allowed for the year the asset is acquired.