Question 1

S Corporations result in a single level of taxation.

Accepted Answer

A) True 
 B)False  True

Question 2

While federal and state income taxes as well as the federal gift and estate taxes are generally progressive in nature,property taxes are proportional.

Accepted Answer

A) True 
 B)False  True

Question 3

In 2014,an estate is not taxable unless the sum of the taxable estate and taxable gifts made after 1976 exceeds

Accepted Answer

A) $1,000,000. 
B) $3,500,000. 
C) $5,000,000. 
D) $5,340,000. 
A) $1,000,000. 
B) $3,500,000. 
C) $5,000,000. 
D) $5,340,000. D

Question 4

The Internal Revenue Service is the branch of the Treasury Department responsible for administering the federal tax law.

Accepted Answer

A) True 
 B)False

Question 5

Explain how returns are selected for audit.

Accepted Answer

The IRS uses both computers and experien

Question 6

Which of the following individuals is most likely to be audited?

Accepted Answer

A) Lola has AGI of $35,000 from wages and uses the standard deduction. 
B) Marvella has a $145,000 net loss from her unincorporated business (a horse farm).She also received $950,000 salary as a CEO of a corporation. 
C) Melvin is retired and receives Social Security benefits. 
D) Jerry is a school teacher with two children earning $55,000 a year.He also receives $200 in interest income on a bank account. 
A) Lola has AGI of $35,000 from wages and uses the standard deduction. 
B) Marvella has a $145,000 net loss from her unincorporated business (a horse farm).She also received $950,000 salary as a CEO of a corporation. 
C) Melvin is retired and receives Social Security benefits. 
D) Jerry is a school teacher with two children earning $55,000 a year.He also receives $200 in interest income on a bank account.

Question 7

A tax bill introduced in the House of Representatives is then

Accepted Answer

A) referred to the House Ways and Means Committee for hearings and approval. 
B) referred to the full House for hearings. 
C) forwarded to the Senate Finance Committee for consideration. 
D) voted upon by the full House. 
A) referred to the House Ways and Means Committee for hearings and approval. 
B) referred to the full House for hearings. 
C) forwarded to the Senate Finance Committee for consideration. 
D) voted upon by the full House.

Question 8

For gift tax purposes,a $14,000 annual exclusion per donee is permitted.

Accepted Answer

A) True 
 B)False

Question 9

Which is not a component of tax practice?

Accepted Answer

A) providing clients tax refund advance loans 
B) tax research 
C) tax planning and consulting 
D) compliance 
A) providing clients tax refund advance loans 
B) tax research 
C) tax planning and consulting 
D) compliance

Question 10

Brad and Angie had the following income and deductions during 2014:
   Calculate Brad and Angie's tax liability due or refund,assuming that they have 2 personal exemptions.They file a joint tax return.

Accepted Answer

$110,000 + 10,000 - $16,000 -

Question 11

In an S corporation,shareholders

Accepted Answer

A) are taxed on their proportionate share of earnings. 
B) are taxed only on dividends. 
C) may allocate income among themselves in order to consider special contributions. 
D) are only taxed on salaries. 
A) are taxed on their proportionate share of earnings. 
B) are taxed only on dividends. 
C) may allocate income among themselves in order to consider special contributions. 
D) are only taxed on salaries.

Question 12

Flow-through entities do not have to file tax returns since they are not taxable entities.

Accepted Answer

A) True 
 B)False

Question 13

The Sixteenth Amendment permits the passage of a federal income tax.

Accepted Answer

A) True 
 B)False

Question 14

When returns are processed,they are scored to determine their potential for yielding additional tax revenues.This program is called

Accepted Answer

A) Taxpayer Compliance Measurement Program. 
B) Discriminant Function System. 
C) Standard Audit Program. 
D) Field Audit Program. 
A) Taxpayer Compliance Measurement Program. 
B) Discriminant Function System. 
C) Standard Audit Program. 
D) Field Audit Program.

Question 15

Jeffery died in 2014 leaving a $16,000,000 gross estate.Six months after his death,the gross assets are valued at $16,100,000.In years prior to 2014 (but after 1976),Jeffery had made taxable gifts of $300,000.Of the $16,000,000 gross estate,estate assets valued at $3 million were transferred to his wife and $100,000 was used to pay administrative and funeral expenses.Jeffery had debts of $200,000,and the remainder of the estate was transferred to his children.
a.What is the amount of Jeffery's taxable estate?
b.What is the tax base for computing Jeffery's estate?
c.What is the amount of estate tax owed if the unified credit is $2,081,800?
d.Alternatively,if six months after his death,the gross assets in Jeffery's estate declined in value to $15,000,000,can the administrator of Jeffery's estate elect the alternate valuation date?

Accepted Answer

@#IMG-DLM& d.The alternate valuation date (six mon

Question 16

During the current tax year,Charlie Corporation generated gross income of $1,800,000 and had ordinary and necessary deductions of $1,300,000,resulting in taxable income of $500,000.If Charlie Corporation paid qualifying dividends of $200,000 to shareholders,all of whom are in the 25% marginal tax bracket,what is the total tax paid on both corporate income and the corporate dividends?

Accepted Answer

Taxable income is $1,800,000 - $1,300,00

Question 17

If a taxpayer's total tax liability is $4,000,taxable income is $20,000,and total economic income is $40,000,then the effective tax rate is 20 percent.

Accepted Answer

A) True 
 B)False

Question 18

When a change in the tax law is deemed necessary by Congress,the entire Internal Revenue Code must be revised.

Accepted Answer

A) True 
 B)False

Question 19

Vertical equity means that

Accepted Answer

A) taxpayers with the same amount of income pay the same amount of tax. 
B) taxpayers with larger amounts of income should pay more tax than taxpayer's with lower amounts of income. 
C) all taxpayers should pay the same tax. 
D) none of the above. 
A) taxpayers with the same amount of income pay the same amount of tax. 
B) taxpayers with larger amounts of income should pay more tax than taxpayer's with lower amounts of income. 
C) all taxpayers should pay the same tax. 
D) none of the above.

Question 20

Which of the following taxes is progressive?

Accepted Answer

A) sales tax 
B) excise tax 
C) property tax 
D) federal income tax 
A) sales tax 
B) excise tax 
C) property tax 
D) federal income tax

Exam 2 an Introduction to Taxation

S Corporations result in a single level of taxation.

While federal and state income taxes as well as the federal gift and estate taxes are generally progressive in nature,property taxes are proportional.

In 2014,an estate is not taxable unless the sum of the taxable estate and taxable gifts made after 1976 exceeds

The Internal Revenue Service is the branch of the Treasury Department responsible for administering the federal tax law.

Explain how returns are selected for audit.

Which of the following individuals is most likely to be audited?

A tax bill introduced in the House of Representatives is then

For gift tax purposes,a $14,000 annual exclusion per donee is permitted.

Which is not a component of tax practice?

Brad and Angie had the following income and deductions during 2014: Calculate Brad and Angie's tax liability due or refund,assuming that they have 2 personal exemptions.They file a joint tax return.

In an S corporation,shareholders

Flow-through entities do not have to file tax returns since they are not taxable entities.

The Sixteenth Amendment permits the passage of a federal income tax.

When returns are processed,they are scored to determine their potential for yielding additional tax revenues.This program is called

If a taxpayer's total tax liability is $4,000,taxable income is $20,000,and total economic income is $40,000,then the effective tax rate is 20 percent.

When a change in the tax law is deemed necessary by Congress,the entire Internal Revenue Code must be revised.

Vertical equity means that

Which of the following taxes is progressive?

Tax Research

Corporate Formations and Capital Structure

I: Determination of Tax

The Corporate Income Tax

Gross Income: Inclusions

Corporate Nonliquidating Distributions

Gross Income: Exclusions

Other Corporate Tax Levies

Property Transactions: Capital Gains and Losses

Corporate Liquidating Distributions

Deductions and Losses

Corporate Acquisitions and Reorganizations

Itemized Deductions

Consolidated Tax Returns

Losses and Bad Debts

Partnership Formation and Operation

Employee Expenses and Deferred Compensation

Special Partnership Issues

Depreciation cost Recovery amortization and Depletion

S Corporations

Accounting Periods and Methods

The Gift Tax

Property Transactions: Nontaxable Exchanges

The Estate Tax

Property Transactions: Section 1231 and Recapture

Income Taxation of Trusts and Estates

Special Tax Computation Methods, tax Credits, and Payment of Tax

Administrative Procedures

Filters