Question 1

Which,if any,of the following statements best describes the history of the Federal income tax?

Accepted Answer

A) It did not exist during the Civil War. 
B) The Federal income tax on corporations was held by the U.S.Supreme Court to be allowable under the U.S.Constitution. 
C) The Federal income tax on individuals was held by the U.S.Supreme Court to be allowable under the U.S.Constitution. 
D) Both the Federal income tax on individuals and on corporations was held by the U.S.Supreme Court to be contrary to the U.S.Constitution. 
E) None of these. 
A) It did not exist during the Civil War. 
B) The Federal income tax on corporations was held by the U.S.Supreme Court to be allowable under the U.S.Constitution. 
C) The Federal income tax on individuals was held by the U.S.Supreme Court to be allowable under the U.S.Constitution. 
D) Both the Federal income tax on individuals and on corporations was held by the U.S.Supreme Court to be contrary to the U.S.Constitution. 
E) None of these.

Question 2

The value added tax (VAT) has not had wide acceptance in the international community.

Accepted Answer

A) True 
 B)False

Question 3

Two months after the burglary of his personal residence,Eric is audited by the IRS.Among the items taken in the burglary was a shoe box containing approximately $50,000 in cash.Eric is the owner and operator of a cash-and-carry liquor store.Eric wonders why he was audited.Can you help explain?

Accepted Answer

Although Eric's audit by the IRS could b

Question 4

The proposed flat tax:

Accepted Answer

A) Would eliminate the income tax. 
B) Would simplify the income tax. 
C) Would tax the increment in value as goods move through the production and manufacturing stages to the marketplace. 
D) Is a tax on consumption. 
E) None of these. 
A) Would eliminate the income tax. 
B) Would simplify the income tax. 
C) Would tax the increment in value as goods move through the production and manufacturing stages to the marketplace. 
D) Is a tax on consumption. 
E) None of these.

Question 5

On his 2015 income tax return,Andrew omitted income and overstated deductions to the extent that his income tax was understated by $500,000.Disregarding any interest element,what is Andrew's penalty if the understatement was due to:
a.Negligence.
b.Civil fraud.
c.Criminal fraud.

Accepted Answer

a.$100,000 (20% × $5

Question 6

The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the U.S.

Accepted Answer

A) True 
 B)False

Question 7

In preparing an income tax return,the use of a client's estimates is not permitted.

Accepted Answer

A) True 
 B)False

Question 8

Mona inherits her mother's personal residence,which she converts to a furnished rent house.These changes should affect the amount of ad valorem property taxes levied on the properties.

Accepted Answer

A) True 
 B)False

Question 9

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
-Field audit

Accepted Answer

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

Question 10

The civil fraud penalty can entail large fines and possible incarceration.

Accepted Answer

A) True 
 B)False

Question 11

What is a severance tax? How productive can it be in terms of generating revenue?

Accepted Answer

A severance tax is one imposed when natu

Question 12

Some states use their state income tax return as a means of collecting unpaid sales and use taxes.

Accepted Answer

A) True 
 B)False

Question 13

Various tax provisions encourage the creation of certain types of retirement plans.Such provisions can be justified on both economic and social grounds.

Accepted Answer

A) True 
 B)False

Question 14

The ratification of the Sixteenth Amendment to the U.S.Constitution was necessary to validate the Federal income tax on corporations.

Accepted Answer

A) True 
 B)False

Question 15

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
-Late filing and statute limitations (deficiency situations)

Accepted Answer

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

Question 16

For the negligence penalty to apply,the underpayment must be caused by intentional disregard of rules and regulations without intent to defraud.

Accepted Answer

A) True 
 B)False

Question 17

A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no such taxes.

Accepted Answer

A) True 
 B)False

Question 18

Which,if any,of the following transactions will increase a taxing jurisdiction's revenue from the ad valorem tax imposed on real estate?

Accepted Answer

A) A resident dies and leaves his farm to his church. 
B) A large property owner issues a conservation easement as to some of her land. 
C) A tax holiday issued 10 years ago has expired. 
D) A bankrupt motel is acquired by the Red Cross and is to be used to provide housing for homeless persons. 
E) None of these. 
A) A resident dies and leaves his farm to his church. 
B) A large property owner issues a conservation easement as to some of her land. 
C) A tax holiday issued 10 years ago has expired. 
D) A bankrupt motel is acquired by the Red Cross and is to be used to provide housing for homeless persons. 
E) None of these.

Question 19

Currently,the tax base for the Social Security component of the FICA is not limited to a dollar amount.

Accepted Answer

A) True 
 B)False

Question 20

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 2015 without using her unified transfer tax credit?

Accepted Answer

$238,000.$14,000 (an

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

Which,if any,of the following statements best describes the history of the Federal income tax?

The value added tax (VAT) has not had wide acceptance in the international community.

Two months after the burglary of his personal residence,Eric is audited by the IRS.Among the items taken in the burglary was a shoe box containing approximately $50,000 in cash.Eric is the owner and operator of a cash-and-carry liquor store.Eric wonders why he was audited.Can you help explain?

The proposed flat tax:

On his 2015 income tax return,Andrew omitted income and overstated deductions to the extent that his income tax was understated by $500,000.Disregarding any interest element,what is Andrew's penalty if the understatement was due to: a.Negligence. b.Civil fraud. c.Criminal fraud.

The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the U.S.

In preparing an income tax return,the use of a client's estimates is not permitted.

Mona inherits her mother's personal residence,which she converts to a furnished rent house.These changes should affect the amount of ad valorem property taxes levied on the properties.

The civil fraud penalty can entail large fines and possible incarceration.

What is a severance tax? How productive can it be in terms of generating revenue?

Some states use their state income tax return as a means of collecting unpaid sales and use taxes.

Various tax provisions encourage the creation of certain types of retirement plans.Such provisions can be justified on both economic and social grounds.

The ratification of the Sixteenth Amendment to the U.S.Constitution was necessary to validate the Federal income tax on corporations.

For the negligence penalty to apply,the underpayment must be caused by intentional disregard of rules and regulations without intent to defraud.

A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no such taxes.

Which,if any,of the following transactions will increase a taxing jurisdiction's revenue from the ad valorem tax imposed on real estate?

Currently,the tax base for the Social Security component of the FICA is not limited to a dollar amount.

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 2015 without using her unified transfer tax credit?

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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