Question 1

A major disadvantage of a flat tax type of income tax is its complexity.

Accepted Answer

A) True 
 B)False  False

Question 2

Under Clint's will, all of his property passes to either the Lutheran Church or to his wife.No Federal estate tax will be due on Clint's death in 2012.

Accepted Answer

A) True 
 B)False  True

Question 3

A safe and easy way for a taxpayer to avoid local and state sales taxes is to have the purchase sent to an address in another state that levies no such taxes.

Accepted Answer

A) True 
 B)False  False

Question 4

If property tax rates are not changed, the amount of ad valorem taxes imposed on realty will remain the same.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) Taxpayer compliance is greater for personal use property than for business use property. 
B) The tax on automobiles sometimes considers the age of the vehicle. 
C) Most states impose a tax on intangibles. 
D) The tax on intangibles generates considerable revenue since it is difficult for taxpayers to avoid. 
E) None of the above. 
A) Taxpayer compliance is greater for personal use property than for business use property. 
B) The tax on automobiles sometimes considers the age of the vehicle. 
C) Most states impose a tax on intangibles. 
D) The tax on intangibles generates considerable revenue since it is difficult for taxpayers to avoid. 
E) None of the above.

Question 6

The Federal estate and gift taxes are examples of progressive taxes.

Accepted Answer

A) True 
 B)False

Question 7

A parent employs his twin daughters, age 18, in his sole proprietorship.The daughters are not subject to FICA coverage.

Accepted Answer

A) True 
 B)False

Question 8

The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business use personalty.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Compare civil fraud with criminal fraud with regard to the following:

Accepted Answer

The answer of Compare civil fraud with criminal fraud with...

Question 11

The annual exclusion, currently $13,000, is available for gift but not estate tax purposes.

Accepted Answer

A) True 
 B)False

Question 12

A Federal excise tax is still imposed on admission to theaters.

Accepted Answer

A) True 
 B)False

Question 13

Your client, Connie, won $12,000 in a football office pool. She sees no reason to include it in her income for several reasons. First, the amount won will not be reported to the IRS. Second, as an average income employee, she is unlikely to be audited by the IRS. Third, she feels that she has probably lost this much in other past office pools. How do you respond?

Accepted Answer

As a practitioner, you cannot play the a

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

The tax law contains various provisions that encourage home ownership.

Accepted Answer

The answer of The tax law contains various provisions that...

Question 16

Taxes levied by both states and the Federal government include:

Accepted Answer

A) General sales tax. 
B) Custom duties. 
C) Car rental tax. 
D) Franchise tax. 
E) None of the above. 
A) General sales tax. 
B) Custom duties. 
C) Car rental tax. 
D) Franchise tax. 
E) None of the above.

Question 17

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:
   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 18

Which, if any, of the following provisions cannot be justified as mitigating the effect of the annual accounting period concept?

Accepted Answer

A) Nonrecognition of gain allowed for involuntary conversions. 
B) Net operating loss carryback and carryover provisions. 
C) Carry over of excess charitable contributions. 
D) Use of the installment method to recognize gain. 
E) Carry over of excess capital losses. 
A) Nonrecognition of gain allowed for involuntary conversions. 
B) Net operating loss carryback and carryover provisions. 
C) Carry over of excess charitable contributions. 
D) Use of the installment method to recognize gain. 
E) Carry over of excess capital losses.

Question 19

Allowing a domestic production activities deduction for certain manufacturing income can be justified:

Accepted Answer

A) As mitigating the effect of the annual accounting period concept. 
B) As promoting administrative feasibility. 
C) By economic considerations. 
D) Based on the wherewithal to pay concept. 
E) None of the above. 
A) As mitigating the effect of the annual accounting period concept. 
B) As promoting administrative feasibility. 
C) By economic considerations. 
D) Based on the wherewithal to pay concept. 
E) None of the above.

Question 20

With regard to state income taxes, explain what is meant by the "jock tax"?

Accepted Answer

Although states have a right to levy an

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

A major disadvantage of a flat tax type of income tax is its complexity.

Under Clint's will, all of his property passes to either the Lutheran Church or to his wife.No Federal estate tax will be due on Clint's death in 2012.

A safe and easy way for a taxpayer to avoid local and state sales taxes is to have the purchase sent to an address in another state that levies no such taxes.

If property tax rates are not changed, the amount of ad valorem taxes imposed on realty will remain the same.

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

The Federal estate and gift taxes are examples of progressive taxes.

A parent employs his twin daughters, age 18, in his sole proprietorship.The daughters are not subject to FICA coverage.

The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business use personalty.

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

Compare civil fraud with criminal fraud with regard to the following:

The annual exclusion, currently $13,000, is available for gift but not estate tax purposes.

A Federal excise tax is still imposed on admission to theaters.

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

The tax law contains various provisions that encourage home ownership.

Taxes levied by both states and the Federal government include:

Which, if any, of the following provisions cannot be justified as mitigating the effect of the annual accounting period concept?

Allowing a domestic production activities deduction for certain manufacturing income can be justified:

With regard to state income taxes, explain what is meant by the "jock tax"?

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 Nontaxable Exchanges-Part 1

Property Transactions: Determination of Gain or Loss, Basis Considerations, and Nontaxable Exchanges-Part 2

Property Transactions: Capital Gains and Losses, 1231, 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

Income Taxation of Trusts and Estates

Filters