Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Ava, an estate planner, is advising her wealthier clients to make any large gifts to family members before 2013.Why?

Accepted Answer

Under existing law, the exemption equiva

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

A characteristic of FICA is that:

Accepted Answer

A) It applies 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 the above. 
A) It applies 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 the above.

Question 5

Which, if any, of the following taxes are proportional (rather than progressive)?

Accepted Answer

A) Federal corporate income tax. 
B) Federal employment taxes (i.e., FICA, FUT
A) . 
C) Federal estate tax. 
D) Federal gift tax. 
E) All of the above. 
A) Federal corporate income tax. 
B) Federal employment taxes (i.e., FICA, FUT
A) . 
C) Federal estate tax. 
D) Federal gift tax. 
E) All of the above.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

A calendar year taxpayer files his 2011 Federal income tax return on March 5, 2012.The return reflects an overpayment of $6,000, and the taxpayer requests a refund of this amount.The refund is paid on May 18, 2012.The refund need not include interest.

Accepted Answer

A) True 
 B)False

Question 8

The tax law allows an income tax deduction for state and local income taxes.Explain why.

Accepted Answer

The deduction for state and lo

Question 9

The tax law allows, under certain conditions, deferral of gain recognition for involuntary conversions.

Accepted Answer

The answer of The tax law allows, under certain conditions,...

Question 10

If a "special agent" becomes involved in the audit of a return, this indicates that the IRS suspects that fraud is involved.

Accepted Answer

A) True 
 B)False

Question 11

Mona inherits her mother's personal residence, which she converts to a furnished rent house.These changes should not affect the amount of ad valorem property taxes levied on the properties.

Accepted Answer

A) True 
 B)False

Question 12

In 2012, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000.José has made a taxable gift of $50,000.

Accepted Answer

A) True 
 B)False

Question 13

Indicate which, if any, statement is incorrect.State income taxes:

Accepted Answer

A) Can piggyback to the Federal version. 
B) Cannot apply to visiting nonresidents. 
C) Can decouple from the Federal version. 
D) Can provide occasional amnesty programs. 
E) None of the above. 
A) Can piggyback to the Federal version. 
B) Cannot apply to visiting nonresidents. 
C) Can decouple from the Federal version. 
D) Can provide occasional amnesty programs. 
E) None of the above.

Question 14

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 the above. 
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 the above.

Question 15

Can a taxpayer start the 3-year statute of limitations on additional assessments by the IRS by filing his income tax return early (i.e., before the due date)? Can the period be shortened by filing late (i.e., after the due date)?

Accepted Answer

The answer is no in both cases

Question 16

Sales made by mail order are not exempt from the application of a general sales (or use) tax.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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 social grounds.

Accepted Answer

A) True 
 B)False

Question 19

Unlike the Federal counterpart, the amount of the state excise taxes on gasoline varies from state to state.

Accepted Answer

A) True 
 B)False

Question 20

Brayden files his Federal income tax return by April 15, but does not pay the tax.Although he expects to pay interest on the large amount of tax he still owes, he feels that the timely filing has avoided any penalties.Is Brayden's assumption correct?

Accepted Answer

Although Brayden has avoided t

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

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

Ava, an estate planner, is advising her wealthier clients to make any large gifts to family members before 2013.Why?

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

A characteristic of FICA is that:

Which, if any, of the following taxes are proportional (rather than progressive)?

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

A calendar year taxpayer files his 2011 Federal income tax return on March 5, 2012.The return reflects an overpayment of $6,000, and the taxpayer requests a refund of this amount.The refund is paid on May 18, 2012.The refund need not include interest.

The tax law allows an income tax deduction for state and local income taxes.Explain why.

The tax law allows, under certain conditions, deferral of gain recognition for involuntary conversions.

If a "special agent" becomes involved in the audit of a return, this indicates that the IRS suspects that fraud is involved.

Mona inherits her mother's personal residence, which she converts to a furnished rent house.These changes should not affect the amount of ad valorem property taxes levied on the properties.

In 2012, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000.José has made a taxable gift of $50,000.

Indicate which, if any, statement is incorrect.State income taxes:

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

Can a taxpayer start the 3-year statute of limitations on additional assessments by the IRS by filing his income tax return early (i.e., before the due date)? Can the period be shortened by filing late (i.e., after the due date)?

Sales made by mail order are not exempt from the application of a general sales (or use) tax.

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

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 social grounds.

Unlike the Federal counterpart, the amount of the state excise taxes on gasoline varies from state to state.

Brayden files his Federal income tax return by April 15, but does not pay the tax.Although he expects to pay interest on the large amount of tax he still owes, he feels that the timely filing has avoided any penalties.Is Brayden's assumption correct?

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