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

When Congress enacts a tax cut that is phased in over a period of years,revenue neutrality is achieved.

Match the statements that relate to each other.Note: Some choices may be used more than once. a.3 years from date return is filed b.3 years from due date of return c.20% of underpayment d.5% per month (25% limit) e.0.5% per month (25% limit) f.Conducted at IRS office g.Conducted at taxpayer's office h.6 years i.45-day grace period allowed to IRS j.No statute of limitations (period remains open) k.75% of underpayment l.No correct match provided -A small business corporation can elect to avoid the corporate income tax.

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

Without obtaining an extension,Pam files her income tax return 55 days after the due date.With her return,she pays an additional tax of $60,000.Disregarding any interest element,what is Pam's penalty for failure to pay and to file?

Match the statements that relate to each other.Note: Some choices may be used more than once or not at all. a.Deferral of gains from involuntary conversions b.Carryback and carryforward of net operating losses c."No change" is one possible result d.State income tax applied to visiting nonresident e.IRS special agent f.Undoing the "piggyback" result g.Ideal budget goal as to new tax legislation h.Every state that has a general sales tax has one i.Imposed by all states and the Federal government j.Imposed by some states but not the Federal government k.Imposed only by the Federal government l.No correct match provided -Export taxes

No state has offered an income tax amnesty program more than once.

A calendar year taxpayer files his 2014 Federal income tax return on March 5,2015.The return reflects an overpayment of $6,000,and the taxpayer requests a refund of this amount.The refund is paid on May 15,2015.The refund need not include interest.

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

Match the statements that relate to each other.Note: Some choices may be used more than once. a.3 years from date return is filed b.3 years from due date of return c.20% of underpayment d.5% per month (25% limit) e.0.5% per month (25% limit) f.Conducted at IRS office g.Conducted at taxpayer's office h.6 years i.45-day grace period allowed to IRS j.No statute of limitations (period remains open) k.75% of underpayment l.No correct match provided -A Federal deduction for state and local sales taxes paid.

A use tax is imposed by:

A Federal excise tax is no longer imposed on admission to theaters.

The IRS is required to redetermine the interest rate on underpayments and overpayments once a year.

Match the statements that relate to each other.Note: Some choices may be used more than once. a.3 years from date return is filed b.3 years from due date of return c.20% of underpayment d.5% per month (25% limit) e.0.5% per month (25% limit) f.Conducted at IRS office g.Conducted at taxpayer's office h.6 years i.45-day grace period allowed to IRS j.No statute of limitations (period remains open) k.75% of underpayment l.No correct match provided -Early filing and statute of limitations (deficiency situations)

In 2013,Deborah became 65 years old.In 2014 she added a swimming pool,and in 2015 she converted the residence to rental property and moved into an assisted living facility.Since 2012,Deborah's ad valorem property taxes have decreased once and increased twice.Explain.

When a state decouples from a Federal tax provision,it means that this provision will not apply for state income tax purposes.

A provision in the law that compels accrual basis taxpayers to pay a tax on prepaid income in the year received and not when earned is consistent with generally accepted accounting principles.

The U.S.(either Federal,state,or local) does not impose:

The tax law provides various tax credits,deductions,and exclusions that are designed to encourage taxpayers to obtain additional education.These provisions can be justified on both economic and equity grounds.

The pay-as-you-go feature of the Federal income tax on individuals conforms to Adam Smith's canon of certainty.

Match the statements that relate to each other.Note: Some choices may be used more than once. a.3 years from date return is filed b.3 years from due date of return c.20% of underpayment d.5% per month (25% limit) e.0.5% per month (25% limit) f.Conducted at IRS office g.Conducted at taxpayer's office h.6 years i.45-day grace period allowed to IRS j.No statute of limitations (period remains open) k.75% of underpayment l.No correct match provided -Office audit