Question 1

Which of the following is true regarding tax-advantaged assets?

Accepted Answer

A) They are typically subject to excise taxes to account for their low explicit taxes. 
B) A corporate bond is typically considered a tax-advantaged asset. 
C) They are often subject to implicit taxes. 
D) A corporate bond is typically considered a tax-advantaged asset. They are often subject to implicit taxes but they are not typically subject to excise taxes to account for their low explicit taxes. 
E) None of the choices are correct. 
A) They are typically subject to excise taxes to account for their low explicit taxes. 
B) A corporate bond is typically considered a tax-advantaged asset. 
C) They are often subject to implicit taxes. 
D) A corporate bond is typically considered a tax-advantaged asset. They are often subject to implicit taxes but they are not typically subject to excise taxes to account for their low explicit taxes. 
E) None of the choices are correct. C

Question 2

Leonardo, who is married but files separately, earns $70,500 of taxable income. He also has $19,400 in city of Tulsa bonds. His wife, Theresa, earns $54,400 of taxable income. If Leonardo and his wife are married filing jointly in 2020, what is Leonardo and Theresa's effective tax rate for 2020? (Use tax rate schedule.)(Round your final answer to two decimal places.)

Accepted Answer

A) 12.00 percent 
B) 14.92 percent 
C) 19.52 percent 
D) 22.00 percent 
E) None of the choices are correct. 
A) 12.00 percent 
B) 14.92 percent 
C) 19.52 percent 
D) 22.00 percent 
E) None of the choices are correct. E

Question 3

Curtis invests $250,000 in a city of Athens bond that pays 7 percent interest. Alternatively, Curtis could have invested the $250,000 in a bond recently issued by Initech, Incorporated that pays 9 percent interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 24 percent. How much implicit tax would Curtis pay on the city of Athens bond?

Accepted Answer

A) $17,500 
B) $1,400 
C) $1,300 
D) $5,000 
E) None of the choices are correct 
A) $17,500 
B) $1,400 
C) $1,300 
D) $5,000 
E) None of the choices are correct D

Question 4

Horizontal equity is defined in terms of taxpayers in similar situations whereas vertical equity is defined in terms of taxpayers in different situations.

Accepted Answer

A) True 
 B)False

Question 5

Congress recently approved a new, smaller budget for the IRS. What taxation concept evaluates the cost of administering our tax law?

Accepted Answer

A) Convenience 
B) Economy 
C) Certainty 
D) Equity 
E) None of the choices are correct 
A) Convenience 
B) Economy 
C) Certainty 
D) Equity 
E) None of the choices are correct

Question 6

Leonardo, who is married but files separately, earns $67,000 of taxable income. He also has $18,000 in city of Tulsa bonds. His wife, Theresa, earns $53,000 of taxable income. If Leonardo instead had $33,000 of additional tax deductions for 2020, his marginal tax rate on the deductions would be: (Use tax rate schedule.)(Round your final answer to two decimal places.)

Accepted Answer

A) 10.14 percent 
B) 21.76 percent 
C) 20.14 percent 
D) 22.14 percent 
E) None of the choices are correct 
A) 10.14 percent 
B) 21.76 percent 
C) 20.14 percent 
D) 22.14 percent 
E) None of the choices are correct

Question 7

Mandy, the mayor of Bogart and a strong advocate of a clean downtown, is proposing an increase in the city sales tax from 7 percent to 50 percent on all packs of chewing gum purchased in Bogart. Based on the current gum sales, Mandy estimates that this tax will actually reduce the tax revenue on gum sales. What type of forecasting is Mandy using to derive her tax revenue estimates? What "effect" is her estimate based on? Does this necessarily imply that Mandy will be happy given her desire to have a clean downtown?

Accepted Answer

Mandy's forecast is based on dynamic for

Question 8

Estimated tax payments are one way the federal income tax system addresses the "certainty" criterion in evaluating tax systems.

Accepted Answer

A) True 
 B)False

Question 9

Curtis invests $775,000 in a city of Athens bond that pays 9.75 percent interest. Alternatively, Curtis could have invested the $775,000 in a bond recently issued by Initech, Incorporated that pays 12.00 percent interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 24 percent. If Curtis invested in the Initech, Incorporated bonds, what would be his after-tax rate of return from this investment?

Accepted Answer

A) 7)60 percent 
B) 9)75 percent 
C) 9)12 percent 
D) 5)80 percent 
E) None of the choices are correct 
A) 7)60 percent 
B) 9)75 percent 
C) 9)12 percent 
D) 5)80 percent 
E) None of the choices are correct

Question 10

Regressive tax rate structures are typically considered to be vertically equitable.

Accepted Answer

A) True 
 B)False

Question 11

Curtis invests $250,000 in a city of Athens bond that pays 7 percent interest. Alternatively, Curtis could have invested the $250,000 in a bond recently issued by Initech, Incorporated that pays 9 percent interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 24 percent. If Curtis invested in the Initech, Incorporated bonds, what would be his after-tax rate of return from this investment?

Accepted Answer

A) 5)32 percent 
B) 7)00 percent 
C) 6)84 percent 
D) 2)52 percent 
E) None of the choices are correct 
A) 5)32 percent 
B) 7)00 percent 
C) 6)84 percent 
D) 2)52 percent 
E) None of the choices are correct

Question 12

A taxpayer's average tax rate is the most appropriate tax rate to use in tax planning.

Accepted Answer

A) True 
 B)False

Question 13

Margaret was issued a $150 speeding ticket. This is:

Accepted Answer

A) a tax because payment is required by law. 
B) a tax because the payment is not related to any specific benefit received from the government agency collecting the ticket. 
C) not a tax because it is considered a fine intended to punish illegal behavior. 
D) a tax because it is imposed by a government agency. 
E) not a tax because Margaret could have avoided payment if she did not speed. 
A) a tax because payment is required by law. 
B) a tax because the payment is not related to any specific benefit received from the government agency collecting the ticket. 
C) not a tax because it is considered a fine intended to punish illegal behavior. 
D) a tax because it is imposed by a government agency. 
E) not a tax because Margaret could have avoided payment if she did not speed.

Question 14

Dynamic forecasting does not take into consideration taxpayers' responses to a tax change when estimating tax revenues.

Accepted Answer

A) True 
 B)False

Question 15

If Susie earns $798,000 in taxable income, how much tax will she pay as a single taxpayer for 2020? (Use tax rate schedule.)

Accepted Answer

A) $232,409 
B) $295,260 
C) $259,687 
D) $156,235 
E) None of the choices are correct 
A) $232,409 
B) $295,260 
C) $259,687 
D) $156,235 
E) None of the choices are correct

Question 16

In a proportional (flat)tax rate system, the marginal tax rate will always equal the average tax rate.

Accepted Answer

A) True 
 B)False

Question 17

Heather, a single taxpayer who files as a head of household, earns $60,000 in taxable income and $5,000 in interest from an investment in city of Oxford bonds. Using the U.S. tax rate schedule for year 2020, how much federal tax will she owe? What is her average tax rate? What is her effective tax rate? What is her current marginal tax rate? If Heather has an additional $20,000 of tax deductions, what is her marginal tax rate on these deductions? (Round the tax rates to two decimal places, e.g., .12345 as 12.35 percent.)(Use tax rate schedule.)

Accepted Answer

Heather will owe $7,548 in federal incom

Question 18

Common examples of sin taxes include the taxes imposed on airline tickets and gasoline.

Accepted Answer

A) True 
 B)False

Question 19

Jed Clampett is expanding his family-run beer distributorship into Georgia or Tennessee. His parents began the business many years ago and now three generations of Clampetts work in the family business. Jed will relocate the entire family (his parents, spouse, children, etc.)to either state after the move. What types of taxes may influence his decision of where to locate his business? What nontax factors may influence the decision?

Accepted Answer

Taxes will affect several aspects of Jed

Question 20

Geronimo files his tax return as a head of household for year 2020. If his taxable income is $73,600, what is his average tax rate? (Use tax rate schedule.)(Round your final answer to two decimal places.)

Accepted Answer

A) 14.32 percent 
B) 16.32 percent 
C) 11.62 percent 
D) 22.00 percent 
E) None of the choices are correct 
A) 14.32 percent 
B) 16.32 percent 
C) 11.62 percent 
D) 22.00 percent 
E) None of the choices are correct

Which of the following is true regarding tax-advantaged assets?

Horizontal equity is defined in terms of taxpayers in similar situations whereas vertical equity is defined in terms of taxpayers in different situations.

Congress recently approved a new, smaller budget for the IRS. What taxation concept evaluates the cost of administering our tax law?

Estimated tax payments are one way the federal income tax system addresses the "certainty" criterion in evaluating tax systems.

Regressive tax rate structures are typically considered to be vertically equitable.

A taxpayer's average tax rate is the most appropriate tax rate to use in tax planning.

Margaret was issued a $150 speeding ticket. This is:

Dynamic forecasting does not take into consideration taxpayers' responses to a tax change when estimating tax revenues.

If Susie earns $798,000 in taxable income, how much tax will she pay as a single taxpayer for 2020? (Use tax rate schedule.)

In a proportional (flat)tax rate system, the marginal tax rate will always equal the average tax rate.

Common examples of sin taxes include the taxes imposed on airline tickets and gasoline.

Geronimo files his tax return as a head of household for year 2020. If his taxable income is $73,600, what is his average tax rate? (Use tax rate schedule.)(Round your final answer to two decimal places.)

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Exam 1: An Introduction to Tax

Which of the following is true regarding tax-advantaged assets?

Horizontal equity is defined in terms of taxpayers in similar situations whereas vertical equity is defined in terms of taxpayers in different situations.

Congress recently approved a new, smaller budget for the IRS. What taxation concept evaluates the cost of administering our tax law?

Estimated tax payments are one way the federal income tax system addresses the "certainty" criterion in evaluating tax systems.

Regressive tax rate structures are typically considered to be vertically equitable.

A taxpayer's average tax rate is the most appropriate tax rate to use in tax planning.

Margaret was issued a $150 speeding ticket. This is:

Dynamic forecasting does not take into consideration taxpayers' responses to a tax change when estimating tax revenues.

If Susie earns $798,000 in taxable income, how much tax will she pay as a single taxpayer for 2020? (Use tax rate schedule.)

In a proportional (flat)tax rate system, the marginal tax rate will always equal the average tax rate.

Common examples of sin taxes include the taxes imposed on airline tickets and gasoline.

Geronimo files his tax return as a head of household for year 2020. If his taxable income is $73,600, what is his average tax rate? (Use tax rate schedule.)(Round your final answer to two decimal places.)

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters