Question 1

George recently paid $50 to renew his driver's license. The $50 payment is considered a tax.

Accepted Answer

A) True 
 B)False

Question 2

One benefit of a sin tax (e.g., a tax on cigarettes)is that it should increase the demand for the products being taxed.

Accepted Answer

A) True 
 B)False

Question 3

The state of Georgia recently increased its tax on a carton of cigarettes by $2.00. What type of tax is this?

Accepted Answer

A) A sin tax 
B) An excise tax 
C) It is not a tax; it is a fine 
D) A sin tax and an excise tax are correct 
E) None of the choices are correct 
A) A sin tax 
B) An excise tax 
C) It is not a tax; it is a fine 
D) A sin tax and an excise tax are correct 
E) None of the choices are correct

Question 4

Ariel invests $50,000 in a city of Las Vegas bond that pays 5 percent interest. Alternatively, Ariel could have invested the $50,000 in a bond recently issued by Jittery Joe's, Incorporated that pays 8 percent interest with similar non-tax characteristics as the city of Las Vegas bond (e.g., similar risk). Assume that Ariel's marginal tax rate is 24 percent. What is her after-tax rate of return for the city of Las Vegas bond? For the Jittery Joe's, Incorporated bond? How much explicit tax does Ariel pay on the city of Las Vegas bond? How much implicit tax does she pay on the city of Las Vegas bond? How much explicit tax would she have paid on the Jittery Joe's, Incorporated bond? Which bond should she choose?

Accepted Answer

Since the city of Las Vegas bond is a ta

Question 5

A use tax is typically imposed by a state on goods purchased within the state.

Accepted Answer

A) True 
 B)False

Question 6

Given the following tax structure, what amount of tax would need to be assessed on Carrie to make the tax horizontally equitable? What is the minimum tax that Simon should pay to make the tax structure vertically equitable based on Fantasia's tax rate? This would result in what type of tax rate structure?

Accepted Answer

Horizontal equity means that two taxpaye

Question 7

Leonardo, who is married but files separately, earns $82,200 of taxable income. He also has $17,200 in city of Tulsa bonds. His wife, Theresa, earns $52,200 of taxable income.If Leonardo earned an additional $32,200 of taxable income this year, what would be the marginal tax rate on the extra income for 2020? (Use tax rate schedule.)(Round your final answer to two decimal places.)

Accepted Answer

A) 22.16 percent 
B) 18.97 percent 
C) 24.16 percent 
D) 23.79 percent 
E) None of the choices are correct 
A) 22.16 percent 
B) 18.97 percent 
C) 24.16 percent 
D) 23.79 percent 
E) None of the choices are correct

Question 8

Leonardo, who is married but files separately, earns $80,000 of taxable income. He also has $15,000 in city of Tulsa bonds. His wife, Theresa, earns $50,000 of taxable income. If Leonardo instead had $30,000 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) 12.00 percent 
B) 23.62 percent 
C) 22.00 percent 
D) 24.00 percent 
E) None of the choices are correct 
A) 12.00 percent 
B) 23.62 percent 
C) 22.00 percent 
D) 24.00 percent 
E) None of the choices are correct

Question 9

Curtis invests $500,000 in a city of Athens bond that pays 7.25 percent interest. Alternatively, Curtis could have invested the $500,000 in a bond recently issued by Initech, Incorporated that pays 7.75 percent interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 24 percent. How much explicit tax would Curtis incur on interest earned on the Initech, Incorporated bond?

Accepted Answer

A) $29,850.00 
B) $9,300.00 
C) $8,700.00 
D) $26,850.00 
E) None of the choices are correct 
A) $29,850.00 
B) $9,300.00 
C) $8,700.00 
D) $26,850.00 
E) None of the choices are correct

Question 10

The tax base for the federal income tax is taxable income.

Accepted Answer

A) True 
 B)False

Question 11

Jackson has the choice to invest in city of Mitchell bonds or Sundial, Incorporated corporate bonds that pay 10 percent interest. Jackson is a single taxpayer who earns $55,000 annually. Assume that the city of Mitchell bonds and the Sundial, Incorporated bonds have similar risk. Assume the original facts as given except that Jackson is a head of household taxpayer and the city of Mitchell pays interest of 8 percent. How would you advise Jackson to invest his money?

Accepted Answer

A) Invest in Sundial, Incorporated bonds because their explicit tax is greater than the implicit tax on city of Mitchell bonds. 
B) Invest in city of Mitchell bonds because their implicit tax is greater than the explicit tax on Sundial, Incorporated bonds. 
C) Invest in Sundial, Incorporated bonds because their explicit tax is less than the implicit tax on city of Mitchell bonds. 
D) Invest in city of Mitchell bonds because their implicit tax is less than the explicit tax on Sundial, Incorporated bonds. 
E) None of the choices are correct. 
A) Invest in Sundial, Incorporated bonds because their explicit tax is greater than the implicit tax on city of Mitchell bonds. 
B) Invest in city of Mitchell bonds because their implicit tax is greater than the explicit tax on Sundial, Incorporated bonds. 
C) Invest in Sundial, Incorporated bonds because their explicit tax is less than the implicit tax on city of Mitchell bonds. 
D) Invest in city of Mitchell bonds because their implicit tax is less than the explicit tax on Sundial, Incorporated bonds. 
E) None of the choices are correct.

Question 12

Bart is contemplating starting his own business. His new business would operate as a sole proprietorship and would require hiring several employees. Describe the employment-related taxes that Bart should be aware of as he starts his new business as a self-employed business owner.

Accepted Answer

Employment taxes consist of the Old Age,

Question 13

The estate tax is assessed based on the fair market values of transfers made during a taxpayer's life.

Accepted Answer

A) True 
 B)False

Question 14

Consider the following tax rate structures. Is it horizontally equitable? Why or why not? Is it vertically equitable? Why or why not?

Accepted Answer

The tax rate schedule is horizontally eq

Question 15

Manny, a single taxpayer, earns $69,600 per year in taxable income and an additional $12,460 per year in city of Boston bonds. What is Manny's current marginal tax rate for 2020? (Use tax rate schedule.)

Accepted Answer

A) 10.24 percent 
B) 12.00 percent 
C) 12.18 percent 
D) 14.41 percent 
E) 35 percent 
A) 10.24 percent 
B) 12.00 percent 
C) 12.18 percent 
D) 14.41 percent 
E) 35 percent

Question 16

Which of the following federal government actions would make sense if a tax system fails to provide sufficient tax revenue?

Accepted Answer

A) Only issue treasury bonds. 
B) Only cut funding to various federal projects. 
C) Only increase federal spending. 
D) Issue treasury bonds and cut funding to various federal projects but not increase federal spending. 
E) None of the choices are correct. 
A) Only issue treasury bonds. 
B) Only cut funding to various federal projects. 
C) Only increase federal spending. 
D) Issue treasury bonds and cut funding to various federal projects but not increase federal spending. 
E) None of the choices are correct.

Question 17

Taxes influence business decisions such as where a business should locate or how a business should be structured.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is true?

Accepted Answer

A) A regressive tax rate structure imposes an increasing marginal tax rate as the tax base increases. 
B) Regressive tax structures are the most common tax rate structure. 
C) An example of a regressive tax is an excise tax. 
D) In terms of effective tax rates, a sales tax can be viewed as a regressive tax. 
E) None of the choices are correct. 
A) A regressive tax rate structure imposes an increasing marginal tax rate as the tax base increases. 
B) Regressive tax structures are the most common tax rate structure. 
C) An example of a regressive tax is an excise tax. 
D) In terms of effective tax rates, a sales tax can be viewed as a regressive tax. 
E) None of the choices are correct.

Question 19

Marc, a single taxpayer, earns $60,400 in taxable income and $5,040 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2020, what is his effective tax rate? (Round your final answer to two decimal places.)(Use Tax rate schedule.)

Accepted Answer

A) 20.34 percent 
B) 13.87 percent 
C) 15.03 percent 
D) 10.51 percent 
E) None of the choices are correct 
A) 20.34 percent 
B) 13.87 percent 
C) 15.03 percent 
D) 10.51 percent 
E) None of the choices are correct

Question 20

The substitution effect:

Accepted Answer

A) predicts that taxpayers will work harder to pay for consumer products when tax rates increase. 
B) is one of the effects considered in static forecasting. 
C) results in the government collecting more aggregate tax revenue than under the income effect. 
D) is typically more descriptive for taxpayers with lower disposable income. 
E) None of the choices are correct. 
A) predicts that taxpayers will work harder to pay for consumer products when tax rates increase. 
B) is one of the effects considered in static forecasting. 
C) results in the government collecting more aggregate tax revenue than under the income effect. 
D) is typically more descriptive for taxpayers with lower disposable income. 
E) None of the choices are correct.

George recently paid $50 to renew his driver's license. The $50 payment is considered a tax.

One benefit of a sin tax (e.g., a tax on cigarettes)is that it should increase the demand for the products being taxed.

The state of Georgia recently increased its tax on a carton of cigarettes by $2.00. What type of tax is this?

A use tax is typically imposed by a state on goods purchased within the state.

The tax base for the federal income tax is taxable income.

Bart is contemplating starting his own business. His new business would operate as a sole proprietorship and would require hiring several employees. Describe the employment-related taxes that Bart should be aware of as he starts his new business as a self-employed business owner.

The estate tax is assessed based on the fair market values of transfers made during a taxpayer's life.

Consider the following tax rate structures. Is it horizontally equitable? Why or why not? Is it vertically equitable? Why or why not?

Manny, a single taxpayer, earns $69,600 per year in taxable income and an additional $12,460 per year in city of Boston bonds. What is Manny's current marginal tax rate for 2020? (Use tax rate schedule.)

Which of the following federal government actions would make sense if a tax system fails to provide sufficient tax revenue?

Taxes influence business decisions such as where a business should locate or how a business should be structured.

Which of the following is true?

Marc, a single taxpayer, earns $60,400 in taxable income and $5,040 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2020, what is his effective tax rate? (Round your final answer to two decimal places.)(Use Tax rate schedule.)

The substitution effect:

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

George recently paid $50 to renew his driver's license. The $50 payment is considered a tax.

One benefit of a sin tax (e.g., a tax on cigarettes)is that it should increase the demand for the products being taxed.

The state of Georgia recently increased its tax on a carton of cigarettes by $2.00. What type of tax is this?

A use tax is typically imposed by a state on goods purchased within the state.

The tax base for the federal income tax is taxable income.

Bart is contemplating starting his own business. His new business would operate as a sole proprietorship and would require hiring several employees. Describe the employment-related taxes that Bart should be aware of as he starts his new business as a self-employed business owner.

The estate tax is assessed based on the fair market values of transfers made during a taxpayer's life.

Consider the following tax rate structures. Is it horizontally equitable? Why or why not? Is it vertically equitable? Why or why not?

Manny, a single taxpayer, earns $69,600 per year in taxable income and an additional $12,460 per year in city of Boston bonds. What is Manny's current marginal tax rate for 2020? (Use tax rate schedule.)

Which of the following federal government actions would make sense if a tax system fails to provide sufficient tax revenue?

Taxes influence business decisions such as where a business should locate or how a business should be structured.

Which of the following is true?

Marc, a single taxpayer, earns $60,400 in taxable income and $5,040 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2020, what is his effective tax rate? (Round your final answer to two decimal places.)(Use Tax rate schedule.)

The substitution effect:

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