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

A landlord leases property upon which the tenant makes improvements.The improvements are significant and are not made in lieu of rent.At the end of the lease,the value of the improvements are not income to the landlord.This rule is an example of:

A characteristic of FUTA is that:

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

The FICA tax (Medicare component)on wages is progressive since the tax due increases as wages increase.

In terms of probability,which of the following taxpayers would be least likely to be audited by the IRS?

The formula for the Federal income tax on corporations is the same as that applicable to individuals.

The principal objective of the FUTA tax is to provide some measure of retirement security.

Currently,the Federal income tax is less progressive than it ever has been in the past.

If the tax deficiency is attributable to fraud,the negligence penalty will not be imposed.

Match the statements that relate to each other.Note: Some choices may be used more than once. -Failure to file penalty

The value added tax (VAT)has not had wide acceptance in the international community.

Using the choices provided below,show the justification for each provision of the tax law listed. -A bribe to the local sheriff,although business related,is not deductible.

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

Taxes levied by both states and the Federal government include:

A fixture will be subject to the ad valorem tax on personalty rather than the ad valorem tax on realty.

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

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

During any month in which both the failure to file penalty and the failure to pay penalty apply,the failure to file penalty is increased by the amount of the failure to pay penalty.

State income taxes generally can be characterized by:

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