Question 1

Taxes levied by all states include:

Accepted Answer

A)  Tobacco excise tax. 
B)  Individual income tax. 
C)  Inheritance tax. 
D)  General sales tax. 
E)  None of these. 
A)  Tobacco excise tax. 
B)  Individual income tax. 
C)  Inheritance tax. 
D)  General sales tax. 
E)  None of these.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Social considerations can be used to justify:

Accepted Answer

A)  Allowance of a credit for child care expenses. 
B)  Allowing excess capital losses to be carried over to other years. 
C)  Allowing accelerated amortization for the cost of installing pollution control facilities. 
D)  Allowing a Federal income tax deduction for state and local sales taxes. 
E)  None of these. 
A)  Allowance of a credit for child care expenses. 
B)  Allowing excess capital losses to be carried over to other years. 
C)  Allowing accelerated amortization for the cost of installing pollution control facilities. 
D)  Allowing a Federal income tax deduction for state and local sales taxes. 
E)  None of these.

Question 4

On transfers by death, the Federal government relies on an estate tax, while states impose an estate tax, an inheritance tax, both taxes, or neither tax.

Accepted Answer

A) True 
 B)False

Question 5

An excise tax is often used to try to influence behavior.

Accepted Answer

A) True 
 B)False

Question 6

Two months after the burglary of his personal residence, Eric is audited by the IRS. Among the items taken in the burglary was a shoe box containing approximately $50,000 in cash. Eric is the owner and operator of a cash-and- carry liquor store. Eric wonders why he was audited. Can you help explain?

Accepted Answer

Although Eric's audit by the IRS could b

Question 7

Match the statements that relate to each other. Note: Some choices may be used more than once.
-No return and statute limitations

Accepted Answer

A) Three years from date return is filed 
B) Three years from due date of return 
C) 20% of underpayment 
D) 5% per month (25% limit) 
E) 0.5% per month (25% limit)
F)Conducted at IRS office
G)Conducted at taxpayer's office
H)Six years
I)45-day grace period allowed to IRS
J)No statute of limitations (period remains open)
K)75% of underpayment
L)No correct match provided 
A) Three years from date return is filed 
B) Three years from due date of return 
C) 20% of underpayment 
D) 5% per month (25% limit) 
E) 0.5% per month (25% limit)
F)Conducted at IRS office
G)Conducted at taxpayer's office
H)Six years
I)45-day grace period allowed to IRS
J)No statute of limitations (period remains open)
K)75% of underpayment
L)No correct match provided

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Mona inherits her mother's personal residence, which she converts to a furnished rental house. These changes should affect the amount of ad valorem property taxes levied on the properties.

Accepted Answer

A) True 
 B)False

Question 10

The United States (either Federal, state, or local) does not impose:

Accepted Answer

A)  Franchise taxes. 
B)  Severance taxes. 
C)  Occupational fees. 
D)  Custom duties. 
E)  Export duties. 
A)  Franchise taxes. 
B)  Severance taxes. 
C)  Occupational fees. 
D)  Custom duties. 
E)  Export duties.

Question 11

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-"Pay as you go" (paygo)

Accepted Answer

A) Deferral of gains from involuntary conversions 
B) Carryforward of net operating losses 
C) "No change" is a possible result 
D) State income tax applied to a visiting nonresident 
E) IRS special agent
F)Undoing the "piggyback" result
G)Ideal budget goal as to new tax legislation
H)Every state that has a general sales tax has one
I)Imposed by all states and the Federal government
J)Imposed by some states but not the Federal government
K)Imposed only by the Federal government
L)No correct match provided 
A) Deferral of gains from involuntary conversions 
B) Carryforward of net operating losses 
C) "No change" is a possible result 
D) State income tax applied to a visiting nonresident 
E) IRS special agent
F)Undoing the "piggyback" result
G)Ideal budget goal as to new tax legislation
H)Every state that has a general sales tax has one
I)Imposed by all states and the Federal government
J)Imposed by some states but not the Federal government
K)Imposed only by the Federal government
L)No correct match provided

Question 12

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.

Accepted Answer

A) True 
 B)False

Question 13

Brayden files his Federal income tax return by April 15 but does not pay the tax. Although he expects to pay interest on the large amount of tax he still owes, he feels that the timely filing has avoided any penalties. Is Brayden's assumption correct?

Accepted Answer

Although Brayden has avoided t

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A)  State general sales tax 
B)  Federal individual income tax 
C)  Federal estate tax 
D)  Federal gift tax 
E)  All of these 
A)  State general sales tax 
B)  Federal individual income tax 
C)  Federal estate tax 
D)  Federal gift tax 
E)  All of these

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals.

Accepted Answer

A) True 
 B)False

Question 18

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-Decoupling

Accepted Answer

A) Deferral of gains from involuntary conversions 
B) Carryforward of net operating losses 
C) "No change" is a possible result 
D) State income tax applied to a visiting nonresident 
E) IRS special agent
F)Undoing the "piggyback" result
G)Ideal budget goal as to new tax legislation
H)Every state that has a general sales tax has one
I)Imposed by all states and the Federal government
J)Imposed by some states but not the Federal government
K)Imposed only by the Federal government
L)No correct match provided 
A) Deferral of gains from involuntary conversions 
B) Carryforward of net operating losses 
C) "No change" is a possible result 
D) State income tax applied to a visiting nonresident 
E) IRS special agent
F)Undoing the "piggyback" result
G)Ideal budget goal as to new tax legislation
H)Every state that has a general sales tax has one
I)Imposed by all states and the Federal government
J)Imposed by some states but not the Federal government
K)Imposed only by the Federal government
L)No correct match provided

Question 19

Allowing a tax credit for certain solar energy property can be justified:

Accepted Answer

A)  As helping small businesses. 
B)  As promoting administrative feasibility. 
C)  As promoting a government policy to use alternative energy sources. 
D)  Based on the wherewithal to pay concept. 
E)  None of these. 
A)  As helping small businesses. 
B)  As promoting administrative feasibility. 
C)  As promoting a government policy to use alternative energy sources. 
D)  Based on the wherewithal to pay concept. 
E)  None of these.

Question 20

A characteristic of FUTA is that:

Accepted Answer

A)  It is imposed on both employer and employee. 
B)  It is imposed solely on the employee. 
C)  Compliance requires following guidelines issued by both state and Federal regulatory authorities. 
D)  It is applicable to spouses of employees but not to any children under age 18. 
E)  None of these. 
A)  It is imposed on both employer and employee. 
B)  It is imposed solely on the employee. 
C)  Compliance requires following guidelines issued by both state and Federal regulatory authorities. 
D)  It is applicable to spouses of employees but not to any children under age 18. 
E)  None of these.

Exam 1: Understanding and Working With the Federal Tax Law

Taxes levied by all states include:

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

Social considerations can be used to justify:

On transfers by death, the Federal government relies on an estate tax, while states impose an estate tax, an inheritance tax, both taxes, or neither tax.

An excise tax is often used to try to influence behavior.

Match the statements that relate to each other. Note: Some choices may be used more than once. -No return and statute limitations

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

Mona inherits her mother's personal residence, which she converts to a furnished rental house. These changes should affect the amount of ad valorem property taxes levied on the properties.

The United States (either Federal, state, or local) does not impose:

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -"Pay as you go" (paygo)

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.

Brayden files his Federal income tax return by April 15 but does not pay the tax. Although he expects to pay interest on the large amount of tax he still owes, he feels that the timely filing has avoided any penalties. Is Brayden's assumption correct?

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

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

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

Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals.

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -Decoupling

Allowing a tax credit for certain solar energy property can be justified:

A characteristic of FUTA is that:

Working With the Tax Law

Computing the Tax

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

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses, Section 1231, and Recapture Provisions

Taxing Business Income

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters