Question 1

Property taxes may be imposed on both real and personal property.

Accepted Answer

A) True 
 B)False  True

Question 2

Assume the original facts as given except that Jackson is a head of household taxpayer and the city of Mitchell pays interest of 7.8%. How would you advise Jackson to invest his money?

Accepted Answer

A)  Invest in Sundial, Inc. 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, Inc. bonds. 
C)  Invest in Sundial, Inc. 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, Inc. bonds. 
E)  None of these. 
A)  Invest in Sundial, Inc. 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, Inc. bonds. 
C)  Invest in Sundial, Inc. 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, Inc. bonds. 
E)  None of these. D

Question 3

The city of Granby, Colorado recently enacted a 1.5% surcharge on vacation cabin rentals that will help pay for the city's new elementary school. This surcharge is an example of ________.

Accepted Answer

A)  A sin tax to discourage undesirable behavior 
B)  A government fine 
C)  An earmarked tax 
D)  Both a sin tax to discourage undesirable behavior and an earmarked tax 
E)  None of these 
A)  A sin tax to discourage undesirable behavior 
B)  A government fine 
C)  An earmarked tax 
D)  Both a sin tax to discourage undesirable behavior and an earmarked tax 
E)  None of these C

Question 4

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 these 
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 these

Question 5

In a regressive tax rate system, the marginal tax rate will often be greater than the average tax rate.

Accepted Answer

A) True 
 B)False

Question 6

Mandy, the mayor of Bogart and a strong advocate of a clean downtown, is proposing an increase in the city sales tax from 7% to 50% 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 7

Which of the following would not be a failure of the horizontal equity concept?

Accepted Answer

A)  Two taxpayers with identical income pay different amounts of tax because one taxpayer's income includes tax exempt interest. 
B)  Two taxpayers pay different amounts of property tax amounts on similar plots of land (i.e., same value) because one plot of land is used to raise crops. 
C)  Two taxpayers pay different amounts of estate tax because one taxpayer's estate is worth significantly more. 
D)  All of these. 
E)  None of these. 
A)  Two taxpayers with identical income pay different amounts of tax because one taxpayer's income includes tax exempt interest. 
B)  Two taxpayers pay different amounts of property tax amounts on similar plots of land (i.e., same value) because one plot of land is used to raise crops. 
C)  Two taxpayers pay different amounts of estate tax because one taxpayer's estate is worth significantly more. 
D)  All of these. 
E)  None of these.

Question 8

If Leonardo instead had $30,000 of additional tax deductions for year 2014, his marginal tax rate (rounded) on the deductions would be:

Accepted Answer

A)  28.00% 
B)  25.00% 
C)  25.57% 
D)  17.07% 
E)  None of these 
A)  28.00% 
B)  25.00% 
C)  25.57% 
D)  17.07% 
E)  None of these

Question 9

What interest rate would the city of Mitchell have to pay in order to make Jackson indifferent between investing in the city of Mitchell and the Sundial, Inc. bonds for year 2014?

Accepted Answer

A)  7.50% 
B)  10.00% 
C)  8.00% 
D)  7.20% 
E)  None of these 
A)  7.50% 
B)  10.00% 
C)  8.00% 
D)  7.20% 
E)  None of these

Question 10

A sales tax is a common example of a progressive tax rate structure.

Accepted Answer

A) True 
 B)False

Question 11

Given the following tax structure, what is the minimum tax that would need to be assessed on Dora to make the tax progressive with respect to average tax rates? What is the minimum tax that would need to be assessed on Dora to make the tax progressive with respect to effective tax rates? $$\begin{array} { l c r c } 
\underline{\text { Taxpayer }} & \underline{\text { Salary }} & \underline{\text { Muni-Bond Interest }} & \underline{\text { Total Tax }} \\
\text { Diego } & 30,000 & 10,000 & 1,500\
\text { Dora } & 50,000 & 5,000 &  ? ? ?\
\end{array}$$

Accepted Answer

Diego's average tax rate is 5%. @#LAT-DLM& A 5% av

Question 12

The difficulty in calculating a tax is typically in the determination of:

Accepted Answer

A)  The correct tax rate 
B)  Where to file the tax return 
C)  The tax base 
D)  The due date for the return 
E)  None of these 
A)  The correct tax rate 
B)  Where to file the tax return 
C)  The tax base 
D)  The due date for the return 
E)  None of these

Question 13

What is Manny's current marginal tax rate for year 2014?

Accepted Answer

A)  18.63% 
B)  28.00% 
C)  15.72% 
D)  22.86% 
E)  None of these 
A)  18.63% 
B)  28.00% 
C)  15.72% 
D)  22.86% 
E)  None of these

Question 14

Geronimo files his tax return as a head of household for year 2014. If his taxable income is $72,000, what is his average tax rate (rounded)?

Accepted Answer

A)  17.24% 
B)  18.24% 
C)  19.24% 
D)  25.00% 
E)  None of these 
A)  17.24% 
B)  18.24% 
C)  19.24% 
D)  25.00% 
E)  None of these

Question 15

Nick and Jessica are married taxpayers that file married filing separately. Jessica earns $250,000 of taxable income per year. Nick earns $130,000 of taxable income per year. Using the appropriate U.S. tax rate schedule for year 2014, how much tax does each of them pay? What are their marginal and average tax rates? How much tax would they save, if any, if they filed jointly? (Round the tax rates to 2 decimal places, e.g., .12345 as 12.35%)

Accepted Answer

Nick would owe $30,852.25 and Jessica wo

Question 16

The effective tax rate expresses the taxpayer's total tax as a percentage of the taxpayer's taxable and nontaxable income.

Accepted Answer

A) True 
 B)False

Question 17

A flat tax is an example of a graduated tax system.

Accepted Answer

A) True 
 B)False

Question 18

Milton and Rocco are having a heated debate regarding a national sales tax. Milton argues that a national sales tax is a proportional, vertically equitable tax. Rocco argues that a national sales tax would be a regressive, vertically inequitable tax. Explain both sides of the argument.

Accepted Answer

A sales tax by definition is a proportio

Question 19

If Susie earns $750,000 in taxable income and files as head of household for year 2014, what is Susie's average tax rate (rounded)?

Accepted Answer

A)  33.24% 
B)  33.87% 
C)  35.00% 
D)  39.60% 
E)  None of these 
A)  33.24% 
B)  33.87% 
C)  35.00% 
D)  39.60% 
E)  None of these

Question 20

The main difficulty in calculating an income tax is determining the correct amount of the tax base.

Accepted Answer

A) True 
 B)False

Property taxes may be imposed on both real and personal property.

Assume the original facts as given except that Jackson is a head of household taxpayer and the city of Mitchell pays interest of 7.8%. How would you advise Jackson to invest his money?

The city of Granby, Colorado recently enacted a 1.5% surcharge on vacation cabin rentals that will help pay for the city's new elementary school. This surcharge is an example of ________.

The substitution effect:

In a regressive tax rate system, the marginal tax rate will often be greater than the average tax rate.

Which of the following would not be a failure of the horizontal equity concept?

If Leonardo instead had $30,000 of additional tax deductions for year 2014, his marginal tax rate (rounded) on the deductions would be:

What interest rate would the city of Mitchell have to pay in order to make Jackson indifferent between investing in the city of Mitchell and the Sundial, Inc. bonds for year 2014?

A sales tax is a common example of a progressive tax rate structure.

The difficulty in calculating a tax is typically in the determination of:

What is Manny's current marginal tax rate for year 2014?

Geronimo files his tax return as a head of household for year 2014. If his taxable income is $72,000, what is his average tax rate (rounded)?

The effective tax rate expresses the taxpayer's total tax as a percentage of the taxpayer's taxable and nontaxable income.

A flat tax is an example of a graduated tax system.

Milton and Rocco are having a heated debate regarding a national sales tax. Milton argues that a national sales tax is a proportional, vertically equitable tax. Rocco argues that a national sales tax would be a regressive, vertically inequitable tax. Explain both sides of the argument.

If Susie earns $750,000 in taxable income and files as head of household for year 2014, what is Susie's average tax rate (rounded)?

The main difficulty in calculating an income tax is determining the correct amount of the tax base.

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Filters

Exam 1: An Introduction to Tax

Property taxes may be imposed on both real and personal property.

Assume the original facts as given except that Jackson is a head of household taxpayer and the city of Mitchell pays interest of 7.8%. How would you advise Jackson to invest his money?

The city of Granby, Colorado recently enacted a 1.5% surcharge on vacation cabin rentals that will help pay for the city's new elementary school. This surcharge is an example of ________.

The substitution effect:

In a regressive tax rate system, the marginal tax rate will often be greater than the average tax rate.

Which of the following would not be a failure of the horizontal equity concept?

If Leonardo instead had $30,000 of additional tax deductions for year 2014, his marginal tax rate (rounded) on the deductions would be:

What interest rate would the city of Mitchell have to pay in order to make Jackson indifferent between investing in the city of Mitchell and the Sundial, Inc. bonds for year 2014?

A sales tax is a common example of a progressive tax rate structure.

The difficulty in calculating a tax is typically in the determination of:

What is Manny's current marginal tax rate for year 2014?

Geronimo files his tax return as a head of household for year 2014. If his taxable income is $72,000, what is his average tax rate (rounded)?

The effective tax rate expresses the taxpayer's total tax as a percentage of the taxpayer's taxable and nontaxable income.

A flat tax is an example of a graduated tax system.

Milton and Rocco are having a heated debate regarding a national sales tax. Milton argues that a national sales tax is a proportional, vertically equitable tax. Rocco argues that a national sales tax would be a regressive, vertically inequitable tax. Explain both sides of the argument.

If Susie earns $750,000 in taxable income and files as head of household for year 2014, what is Susie's average tax rate (rounded)?

The main difficulty in calculating an income tax is determining the correct amount of the tax base.

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Filters