Exam 1: An Introduction to Taxation and Understanding the Federal Tax Law

Using the choices provided below, show the justification for each provision of the tax law listed. -A Federal deduction for state and local sales taxes paid.

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

Which, if any, of the following provisions of the tax law cannot be justified as promoting administrative feasibility (simplifying the task of the IRS)?

Under Clint's will, all of his property passes to either the Lutheran Church or to his wife. No Federal estate tax will be due on Clint's death in 2018.

For the tax year 2017, Noah reported gross income of $300,000 on his timely filed Federal income tax return. a. Presuming the general rule applies, when does the statute of limitations on assessments normally expire? b. Suppose Noah inadvertently omitted gross income of $76,000. When does the statute of limitations on assessments expire? c. Suppose the omission was deliberate and not inadvertent. When does the statute of limitations on assessments expire?

The objective of pay-as-you-go (paygo) is to improve administrative feasibility.

Which of the following statements about a value added tax (VAT) is false?

Taylor, a widow, makes cash gifts to her five married children (including their spouses) and to her seven grandchildren. What is the maximum amount Taylor can give for calendar year 2018 without using her unified transfer tax credit?

One of the motivations for making a gift is to save on income taxes.

In cases of doubt, courts have held that tax relief provisions should be broadly construed in favor of taxpayers.

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

The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.

Ultimately, most taxes are paid by individuals.

Upon audit by the IRS, Faith is assessed a deficiency of $40,000 of which $25,000 is attributable to negligence. The 20% negligence penalty will apply to $25,000.

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. -Interest due on refund

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

Under state amnesty programs, all delinquent and unpaid income taxes are forgiven.

A parent employs his twin daughters, age 17, in his sole proprietorship. The daughters are not subject to FICA coverage.

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.