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

If a taxpayer files early (i.e., before the due date of the return), the statute of limitations on assessments begins on the date the return is filed.

For Federal income tax purposes, there never has been a general amnesty period.

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 sales taxes paid.

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. -More rapid expensing for tax purposes of the costs of installing pollution control devices.

A provision in the law that compels accrual basis taxpayers to pay a tax on prepaid income in the year received and not when earned is consistent with generally accepted accounting principles.

Match the statements that relate to each other.Note: Some choices may be used more than once. -Office audit

Ultimately, most taxes are paid by individuals.

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 small business corporation can elect to avoid the corporate income tax.

For the negligence penalty to apply, the underpayment must be caused by intentional disregard of rules and regulations without intent to defraud.

Both economic and social considerations can be used to justify:

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. -Export taxes

David files his tax return 45 days after the due date.Along with the return, David remits a check for $40,000.which is the balance of the tax owed.Disregarding the interest element, David's total failure to file and to pay penalties are:

A state income tax can be imposed on nonresident taxpayers who earn income within the state on an itinerant basis.

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. -Wherewithal to pay concept

Even though a client refuses to correct an error on a past return, it may be possible for a practitioner to continue to prepare returns for the client.

The ratification of the Sixteenth Amendment to the U.S.Constitution was necessary to validate the Federal income tax on corporations.

On occasion, Congress has to enact legislation that clarifies the tax law in order to change a result reached by the U.S.Supreme Court.

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 fixture will be subject to the ad valorem tax on personalty rather than the ad valorem tax on realty.

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 contributions by an employee to certain retirement plans.