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

Using the choices provided below,show the justification for each provision of the tax law listed. -Tax credits for home improvements that conserve energy.

Match the statements that relate to each other.Note: Some choices may be used more than once or not at all. -Import taxes (customs duties)

Several years ago,Logan purchased extra grazing land for his ranch at a cost of $240,000.In 2014,the land is condemned by the state for development as a highway maintenance depot.Under the condemnation award,Logan receives $600,000 for the land.Within the same year,he replaces the property with other grazing land.What is Logan's tax situation if the replacement land cost: a.$210,000? b.$360,000? c.$630,000? d.Why?

Under what conditions is it permissible,from an ethical standpoint,for a CPA firm to outsource tax return preparation to a third party?

Social considerations can be used to justify:

The U.S.(either Federal,state,or local)does not impose:

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

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

Using the choices provided below,show the justification for each provision of the tax law listed. -A deduction for contributions by an employee to certain retirement plans.

As a matter of administrative convenience,the IRS would prefer to have Congress decrease (rather than increase)the amount of the standard deduction allowed to individual taxpayers.

Using the choices provided below,show the justification for each provision of the tax law listed. -Tax credits available for the purchase of a vehicle that uses alternative (non-fossil)fuels.

The IRS agent auditing the return will issue an RAR even if the taxpayer owes no additional taxes.

David files his tax return 45 days after the due date.Along with the return,David remits a check for $40,000 which is the balance of the tax owed.Disregarding the interest element,David's total failure to file and to pay penalties are:

Paige is the sole shareholder of Citron Corporation.During the year,Paige leases a building to Citron for a monthly rental of $80,000.If the fair rental value of the building is $60,000,what are the income tax consequences to the parties involved?

Using the choices provided below,show the justification for each provision of the tax law listed. -A deduction for certain expenses (interest and taxes)incident to home ownership.

A lack of compliance in the payment of use taxes can be resolved by several means.In this regard,comment on the following: a.Registration of automobiles. b.Reporting of Internet purchases on state income tax returns.

Various tax provisions encourage the creation of certain types of retirement plans.Such provisions can be justified on both economic and social grounds.

In 2014,José,a widower,sells land (fair market value of $100,000)to his daughter,Linda,for $50,000.José has not made a taxable gift.

Match the statements that relate to each other.Note: Some choices may be used more than once. -Fraud and statute of limitations

Which,if any,of the following provisions of the tax law cannot be justified as promoting administrative feasibility (simplifying the task of the IRS)?