Question 1

The amount of a taxpayer's itemized deductions will increase the chance of being audited by the IRS.

Accepted Answer

A) True 
 B)False

Question 2

If an income tax return is not filed by a taxpayer, there is no statute of limitations on assessments of tax by the IRS.

Accepted Answer

A) True 
 B)False

Question 3

Unlike FICA, FUTA requires that employers comply with state as well as Federal rules.

Accepted Answer

A) True 
 B)False

Question 4

If a taxpayer files early (i.e., before the due date of the return), the statute of limitations on assessments begins on the date the return is due.

Accepted Answer

A) True 
 B)False

Question 5

Which, if any, is not one of Adam Smith's canons of taxation?

Accepted Answer

A) Economy. 
B) Certainty. 
C) Convenience. 
D) Simplicity. 
E) Equality. 
A) Economy. 
B) Certainty. 
C) Convenience. 
D) Simplicity. 
E) Equality.

Question 6

Even though a client refuses to correct an error on a past return, it may be possible for a practitioner to continue to prepare returns for the client.

Accepted Answer

A) True 
 B)False

Question 7

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

Question 8

Using the choices provided below, show the justification for each provision of the tax law listed.Note: In some cases, more than one answer is appropriate.
   Tax credits available for home improvements that conserve energy.

Accepted Answer

The answer of Using the choices provided below, show the...

Question 9

State income taxes generally can be characterized by:

Accepted Answer

A) A different date for filing than the Federal income tax. 
B) No provision for withholding procedures. 
C) Allowance of a deduction for Federal income taxes paid. 
D) Applying only to individuals and not applying to corporations. 
E) None of the above. 
A) A different date for filing than the Federal income tax. 
B) No provision for withholding procedures. 
C) Allowance of a deduction for Federal income taxes paid. 
D) Applying only to individuals and not applying to corporations. 
E) None of the above.

Question 10

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 the above. 
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 the above.

Question 11

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

Accepted Answer

A) A tax holiday is granted to an out-of-state business that is searching for a new factory site. 
B) An abandoned church is converted to a restaurant. 
C) A public school is razed and turned into a city park. 
D) A local university sells a dormitory for use as an apartment building. 
E) None of the above. 
A) A tax holiday is granted to an out-of-state business that is searching for a new factory site. 
B) An abandoned church is converted to a restaurant. 
C) A public school is razed and turned into a city park. 
D) A local university sells a dormitory for use as an apartment building. 
E) None of the above.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Briana lives in one state and works in the adjoining state.Both states tax the income she earns from her job.Does Briana have any relief from this apparent double taxation of the same income?

Accepted Answer

Most states allow their residents some f

Question 14

Upon audit by the IRS, Faith is assessed a deficiency of $40,000 of which $25,000 is attributable to negligence.The 20% negligence penalty will apply to $40,000.

Accepted Answer

A) True 
 B)False

Question 15

When interest is charged on a deficiency, any part of a month counts as a full month.

Accepted Answer

A) True 
 B)False

Question 16

A provision in the law that compels accrual basis taxpayers to pay a tax on prepaid income in the year received and not when earned is inconsistent with generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 17

Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals.

Accepted Answer

A) True 
 B)False

Question 18

The IRS agent auditing the return will not issue an RAR if the taxpayer owes no additional taxes.

Accepted Answer

A) True 
 B)False

Question 19

Noah dies in 2012 with an estate worth $12 million.Under his will, $6 million passes to his wife while $6 million goes to his church.What is Noah's Federal estate tax result?

Accepted Answer

None. After a marital deductio

Question 20

A tax cut enacted by Congress that contains a sunset provision will make the tax cut temporary.

Accepted Answer

A) True 
 B)False

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

The amount of a taxpayer's itemized deductions will increase the chance of being audited by the IRS.

If an income tax return is not filed by a taxpayer, there is no statute of limitations on assessments of tax by the IRS.

Unlike FICA, FUTA requires that employers comply with state as well as Federal rules.

If a taxpayer files early (i.e., before the due date of the return), the statute of limitations on assessments begins on the date the return is due.

Which, if any, is not one of Adam Smith's canons of taxation?

Even though a client refuses to correct an error on a past return, it may be possible for a practitioner to continue to prepare returns for the client.

Taxes levied by all states include:

Using the choices provided below, show the justification for each provision of the tax law listed.Note: In some cases, more than one answer is appropriate. Tax credits available for home improvements that conserve energy.

State income taxes generally can be characterized by:

The proposed flat tax:

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

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

Briana lives in one state and works in the adjoining state.Both states tax the income she earns from her job.Does Briana have any relief from this apparent double taxation of the same income?

Upon audit by the IRS, Faith is assessed a deficiency of $40,000 of which $25,000 is attributable to negligence.The 20% negligence penalty will apply to $40,000.

When interest is charged on a deficiency, any part of a month counts as a full month.

A provision in the law that compels accrual basis taxpayers to pay a tax on prepaid income in the year received and not when earned is inconsistent with generally accepted accounting principles.

Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals.

The IRS agent auditing the return will not issue an RAR if the taxpayer owes no additional taxes.

Noah dies in 2012 with an estate worth $12 million.Under his will, $6 million passes to his wife while $6 million goes to his church.What is Noah's Federal estate tax result?

A tax cut enacted by Congress that contains a sunset provision will make the tax cut temporary.

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