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

The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution)levied tax rates from a low of 2% to a high of 6%.

The objective of pay-as-you-go (paygo)is to achieve revenue neutrality.

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.

Using the choices provided below,show the justification for each provision of the tax law listed. -A tax credit for amounts spent to furnish care for children while the parent is at work.

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

The annual exclusion,currently $14,000,is available for gift and estate tax purposes.

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

Match the statements that relate to each other.Note: Some choices may be used more than once or not at all. -Tax fraud suspected

The tax law allows an income tax deduction (or a credit)for foreign income taxes.Explain why.

If fraud is involved,there is no time limit on the assessment of a deficiency by the IRS.

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

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 filed.

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

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

Match the statements that relate to each other.Note: Some choices may be used more than once or not at all. -"Pay­as­you­go" (paygo)