Question 1

What is a severance tax? How productive can it be in terms of generating revenue?

Accepted Answer

A severance tax is one imposed when natu

Question 2

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

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 3

The civil fraud penalty can entail large fines and possible incarceration.

Accepted Answer

A) True 
 B)False

Question 4

Using the following choices, show the justification for each provision of the tax law listed.
-A deduction for qualified tuition paid to obtain higher education.

Accepted Answer

A) Economic considerations 
B) Social considerations 
C) Equity considerations 
D) Both a. and b. 
A) Economic considerations 
B) Social considerations 
C) Equity considerations 
D) Both a. and b.

Question 5

Using the following choices, show the justification for each provision of the tax law listed.
-Tax brackets are increased for inflation.

Accepted Answer

A) Economic considerations 
B) Social considerations 
C) Equity considerations 
D) Both a. and b. 
A) Economic considerations 
B) Social considerations 
C) Equity considerations 
D) Both a. and b.

Question 6

Provisions in the tax law that promote energy conservation and more use of alternative (nonfossil) fuels can be justified by:

Accepted Answer

A)  Political considerations. 
B)  Economic and social considerations. 
C)  Promoting administrative feasibility. 
D)  Encouragement of small business. 
E)  None of these. 
A)  Political considerations. 
B)  Economic and social considerations. 
C)  Promoting administrative feasibility. 
D)  Encouragement of small business. 
E)  None of these.

Question 7

Which, if any, of the following statements best describes the history of the Federal income tax?

Accepted Answer

A)  It did not exist during the Civil War. 
B)  The Federal income tax on corporations was held by the U.S. Supreme Court to be allowable under the U.S. Constitution. 
C)  The Federal income tax on individuals was held by the U.S. Supreme Court to be allowable under the U.S. Constitution. 
D)  Both the Federal income tax on individuals and on corporations was held by the U.S. Supreme Court to be contrary to the U.S. Constitution. 
E)  None of these. 
A)  It did not exist during the Civil War. 
B)  The Federal income tax on corporations was held by the U.S. Supreme Court to be allowable under the U.S. Constitution. 
C)  The Federal income tax on individuals was held by the U.S. Supreme Court to be allowable under the U.S. Constitution. 
D)  Both the Federal income tax on individuals and on corporations was held by the U.S. Supreme Court to be contrary to the U.S. Constitution. 
E)  None of these.

Question 8

Using the following choices, show the justification for each provision of the tax law listed.
-A tax credit for amounts spent to furnish care for children while the parent is at work.

Accepted Answer

A) Economic considerations 
B) Social considerations 
C) Equity considerations 
D) Both a. and b. 
A) Economic considerations 
B) Social considerations 
C) Equity considerations 
D) Both a. and b.

Question 9

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

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 10

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-Mitigation of the annual accounting period concept

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 11

A VAT (value added tax):

Accepted Answer

A)  Is regressive in its effect. 
B)  Has not proved popular outside of the United States. 
C)  Is not a tax on consumption. 
D)  Is used exclusively by third world (less developed) countries. 
E)  None of these. 
A)  Is regressive in its effect. 
B)  Has not proved popular outside of the United States. 
C)  Is not a tax on consumption. 
D)  Is used exclusively by third world (less developed) countries. 
E)  None of these.

Question 12

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

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 13

As a matter of administrative convenience, the IRS would prefer to have Congress decrease (rather than increase)
the amount of the standard deduction allowed to individual taxpayers.

Accepted Answer

A) True 
 B)False

Question 14

Match the statements that relate to each other. Note: Some choices may be used more than once.
-Late filing and statute limitations (deficiency situations)

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 15

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

Accepted Answer

A) True 
 B)False

Question 16

Using the following choices, show the justification for each provision of the tax law listed.
-Additional depreciation deduction allowed for the year the asset is acquired.

Accepted Answer

A) Economic considerations 
B) Social considerations 
C) Equity considerations 
D) Both a. and b. 
A) Economic considerations 
B) Social considerations 
C) Equity considerations 
D) Both a. and b.

Question 17

Various tax provisions encourage the creation of certain types of retirement plans. Such provisions can be justified on both economic and social grounds.

Accepted Answer

A) True 
 B)False

Question 18

The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business use personalty.

Accepted Answer

A) True 
 B)False

Question 19

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-Tax on transfers at death (inheritance type)

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 20

No state may offer an income tax amnesty program more than once.

Accepted Answer

A) True 
 B)False

Exam 1: Understanding and Working With the Federal Tax Law

What is a severance tax? How productive can it be in terms of generating revenue?

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

The civil fraud penalty can entail large fines and possible incarceration.

Using the following choices, show the justification for each provision of the tax law listed. -A deduction for qualified tuition paid to obtain higher education.

Using the following choices, show the justification for each provision of the tax law listed. -Tax brackets are increased for inflation.

Provisions in the tax law that promote energy conservation and more use of alternative (nonfossil) fuels can be justified by:

Which, if any, of the following statements best describes the history of the Federal income tax?

Using the following choices, show the justification for each provision of the tax law listed. -A tax credit for amounts spent to furnish care for children while the parent is at work.

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

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -Mitigation of the annual accounting period concept

A VAT (value added tax):

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

As a matter of administrative convenience, the IRS would prefer to have Congress decrease (rather than increase) the amount of the standard deduction allowed to individual taxpayers.

Match the statements that relate to each other. Note: Some choices may be used more than once. -Late filing and statute limitations (deficiency situations)

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

Using the following choices, show the justification for each provision of the tax law listed. -Additional depreciation deduction allowed for the year the asset is acquired.

Various tax provisions encourage the creation of certain types of retirement plans. Such provisions can be justified on both economic and social grounds.

The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business use personalty.

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -Tax on transfers at death (inheritance type)

No state may offer an income tax amnesty program more than once.

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

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