Question 1

A characteristic of FICA is that:

Accepted Answer

A) It does not apply when one spouse works for the other spouse. 
B) It is imposed only on the employer. 
C) It provides a modest source of income in the event of loss of employment. 
D) It is administered by both state and Federal governments. 
E) None of these. 
A) It does not apply when one spouse works for the other spouse. 
B) It is imposed only on the employer. 
C) It provides a modest source of income in the event of loss of employment. 
D) It is administered by both state and Federal governments. 
E) None of these.

Question 2

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
-Revenue Agent's Report (RAR)

Accepted Answer

The answer of Match the statements that relate to each...

Question 3

The formula for the Federal income tax on corporations is the same as that applicable to individuals.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

To mitigate the effect of the annual accounting period concept,the tax law permits the carryforward to other years of the excess charitable contributions of a particular year.

Accepted Answer

A) True 
 B)False

Question 6

Virtually all state income tax returns contain checkoff boxes for donations to various causes.On what grounds has this procedure been criticized?

Accepted Answer

In many cases the procedure is overused

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

A state income tax can be imposed on nonresident taxpayers who earn income within the state on an itinerant basis.

Accepted Answer

A) True 
 B)False

Question 9

How do the net operating loss provisions in the tax law mitigate the effect of the annual accounting concept?

Accepted Answer

Without the allowance of carryback and/o

Question 10

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 tax credit for amounts spent to furnish care for children while the parent is at work.

Accepted Answer

The answer of Match the statements that relate to each...

Question 11

Which of the following is a characteristic of the audit process?

Accepted Answer

A) Most taxpayer audits involve "special" agents. 
B) Self-employed taxpayers are less likely to be selected for audit than employed taxpayers. 
C) Less important issues are handled by means of a correspondence audit. 
D) If a taxpayer disagrees with the IRS auditor's finding,the only resort is to the courts. 
E) None of these. 
A) Most taxpayer audits involve "special" agents. 
B) Self-employed taxpayers are less likely to be selected for audit than employed taxpayers. 
C) Less important issues are handled by means of a correspondence audit. 
D) If a taxpayer disagrees with the IRS auditor's finding,the only resort is to the courts. 
E) None of these.

Question 12

Due to the population change,the Goose Creek School District has decided to close one of its high schools.Since it has no further need of the property,the school is listed for sale.The two bids it receives are as follows: United Methodist Church $1,700,000 Planet Motors 1,600,000 The United Methodist Church would use the property to establish a sectarian middle school.Planet,a well-known car dealership,would revamp the property and operate it as a branch location. If you were a member of the School District board,what factors would you consider in evaluating the two bids?

Accepted Answer

Although the bid from the United Methodi

Question 13

Stealth taxes have the effect of generating additional taxes from all taxpayers.

Accepted Answer

A) True 
 B)False

Question 14

During any month in which both the failure to file penalty and the failure to pay penalty apply,the failure to file penalty is increased by the amount of the failure to pay penalty.

Accepted Answer

A) True 
 B)False

Question 15

In terms of Adam Smith's canons of taxation,how does the Federal income tax fare as far as economy is concerned?

Accepted Answer

Economy is present only if the

Question 16

Federal excise taxes that are no longer imposed include:

Accepted Answer

A) Tax on air travel. 
B) Tax on wagering. 
C) Tax on the manufacture of sporting equipment. 
D) Tax on alcohol. 
E) None of these. 
A) Tax on air travel. 
B) Tax on wagering. 
C) Tax on the manufacture of sporting equipment. 
D) Tax on alcohol. 
E) None of these.

Question 17

An inheritance tax is a tax on a decedent's right to pass property at death.

Accepted Answer

A) True 
 B)False

Question 18

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
-"Pay-as-you-go" (paygo)

Accepted Answer

The answer of Match the statements that relate to each...

Question 19

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 income taxes paid.

Accepted Answer

The answer of Match the statements that relate to each...

Question 20

Taxes levied by all states include:

Accepted Answer

A) Tobacco excise tax. 
B) Individual income tax. 
C) Inheritance tax. 
D) General sales tax. 
E) None of these. 
A) Tobacco excise tax. 
B) Individual income tax. 
C) Inheritance tax. 
D) General sales tax. 
E) None of these.

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

A characteristic of FICA is that:

The formula for the Federal income tax on corporations is the same as that applicable to individuals.

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

To mitigate the effect of the annual accounting period concept,the tax law permits the carryforward to other years of the excess charitable contributions of a particular year.

Virtually all state income tax returns contain checkoff boxes for donations to various causes.On what grounds has this procedure been criticized?

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

A state income tax can be imposed on nonresident taxpayers who earn income within the state on an itinerant basis.

How do the net operating loss provisions in the tax law mitigate the effect of the annual accounting concept?

Which of the following is a characteristic of the audit process?

Stealth taxes have the effect of generating additional taxes from all taxpayers.

During any month in which both the failure to file penalty and the failure to pay penalty apply,the failure to file penalty is increased by the amount of the failure to pay penalty.

In terms of Adam Smith's canons of taxation,how does the Federal income tax fare as far as economy is concerned?

Federal excise taxes that are no longer imposed include:

An inheritance tax is a tax on a decedent's right to pass property at death.

Taxes levied by all states include:

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation, cost Recovery, amortization, and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, basis Considerations, and Nontaxabl

Property Transactions: Capital Gains and Losses, section 1231 and Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Family Tax Planning

Income Taxation of Trusts and Estates

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