Exam 1: Introduction to Taxation

What are the pros and cons of the following state and local tax provisions? a.An ad valorem property tax holiday made available to a manufacturing plant that is relocating. a.Such a holiday is designed to attract new industry to the area.This will bring more jobs and growth in consumption.On the other hand, if the tax holiday is too generous, this places a strain on available public revenue.The result could b.Hotel occupancy tax and a rental car surcharge. c.A back-to-school sales tax holiday.

Even if property tax rates are not changed, the amount of ad valorem taxes imposed on realty may not remain the same.

How do the net operating loss provisions in the tax law mitigate the effect of the annual accounting concept?

The tax law allows an income tax deduction (or a credit) for foreign income taxes.Explain why.

Under the usual state inheritance tax, two heirs, a cousin and a son of the deceased, would not be taxed at the same rate.

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

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

Using the choices provided below, 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.

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

The Federal excise tax on cigarettes is an example of a proportional tax.

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

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

Using the choices provided below, 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.

Briana lives in one state and works in the adjoining state.Both states tax the income she earns from her job.Does Briana have any relief from this apparent double taxation of the same income?

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.

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

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

A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no such taxes.

Federal excise taxes that are no longer imposed include:

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