Question 1

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  False

Question 2

The pay-as-you-go feature of the Federal income tax on individuals conforms to Adam Smith's canon of certainty.

Accepted Answer

A) True 
 B)False  False

Question 3

Jason's business warehouse is destroyed by fire.As the insurance proceeds exceed the basis of the property,a gain results.If Jason shortly reinvests the proceeds in a new warehouse,no gain is recognized due to the application of the wherewithal to pay concept.

Accepted Answer

A) True 
 B)False  True

Question 4

With regard to state income taxes,explain what is meant by the "jock tax"?

Accepted Answer

Although states have a right to levy an

Question 5

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

Accepted Answer

First,the clients' confidentia

Question 6

A characteristic of the fraud penalties is:

Accepted Answer

A)  When negligence and civil fraud apply to a deficiency, the civil fraud penalty predominates. 
B)  Civil fraud can result in a fine and a prison sentence. 
C)  The criminal fraud penalty is 75% of the deficiency attributable to the fraud. 
D)  The IRS has the same burden of proof in the case of criminal fraud than with civil fraud. 
E)  None of the above. 
A)  When negligence and civil fraud apply to a deficiency, the civil fraud penalty predominates. 
B)  Civil fraud can result in a fine and a prison sentence. 
C)  The criminal fraud penalty is 75% of the deficiency attributable to the fraud. 
D)  The IRS has the same burden of proof in the case of criminal fraud than with civil fraud. 
E)  None of the above.

Question 7

If property tax rates are not changed,the amount of ad valorem taxes imposed on realty will remain the same.

Accepted Answer

A) True 
 B)False

Question 8

In 1985,Roy leased real estate to Drab Corporation for 20 years.Drab Corporation made significant capital improvements to the property.In 2005,Roy decides not to renew the lease and vacates the property.At that time,the value of the improvements is $800,000.Roy sells the real estate in 2012 for $1,200,000 of which $900,000 is attributable to the improvements.How and when is Roy taxed on the improvements made by Drab Corporation?

Accepted Answer

Roy is not subject to taxation on the im

Question 9

Pam,a widow,makes cash gifts to her four married children (including their spouses)and to her six grandchildren.

Accepted Answer

The answer of Pam,a widow,makes cash gifts to her four...

Question 10

What are the pros and cons of the following state and local tax provisions?

Accepted Answer

The answer of What are the pros and cons of...

Question 11

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 12

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.
a. Economic considerations
b. Social considerations
c. Equity considerations

Accepted Answer

A deduction for contributions

Question 13

Scott files his tax return 65 days after the due date.Along with the return,Scott remits a check for $50,000 which is the balance of the tax owed.Disregarding the interest element,Scott's total failure to file and to pay penalties are:

Accepted Answer

A)  $8,250. 
B)  $7,500. 
C)  $6,000. 
D)  $750. 
E)  None of the above. 
A)  $8,250. 
B)  $7,500. 
C)  $6,000. 
D)  $750. 
E)  None of the above.

Question 14

A safe and easy way for a taxpayer to avoid local and state sales taxes is to have the purchase sent to an address in another state that levies no such taxes.

Accepted Answer

A) True 
 B)False

Question 15

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 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

An inheritance tax is a tax on a decedent's right to pass property at death.

Accepted Answer

A) True 
 B)False

Question 18

The tax law contains various tax credits,deductions,and exclusions that are designed to encourage taxpayers to obtain additional education.On what grounds can these provisions be justified?

Accepted Answer

Social and economic considerat

Question 19

To lessen,or eliminate,the effect of multiple taxation,a taxpayer who is subject to both foreign and U.S.income taxes on the same income is allowed either a deduction or a credit for the foreign tax paid.

Accepted Answer

A) True 
 B)False

Question 20

Regarding proper ethical guidelines,which (if any)of the following is correct?

Accepted Answer

A)  The use of client estimates in preparing a return is not acceptable. 
B)  Under no circumstances should a question on a tax return be left unanswered. 
C)  If a client has made a mistake in a prior year's return and refuses to correct it, you should withdraw from the engagement. 
D)  If the exact amount of a deduction is not certain so as to increase the appearance of greater certainty. 
E)  None of the above. 
A)  The use of client estimates in preparing a return is not acceptable. 
B)  Under no circumstances should a question on a tax return be left unanswered. 
C)  If a client has made a mistake in a prior year's return and refuses to correct it, you should withdraw from the engagement. 
D)  If the exact amount of a deduction is not certain so as to increase the appearance of greater certainty. 
E)  None of the above.

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

The pay-as-you-go feature of the Federal income tax on individuals conforms to Adam Smith's canon of certainty.

Jason's business warehouse is destroyed by fire.As the insurance proceeds exceed the basis of the property,a gain results.If Jason shortly reinvests the proceeds in a new warehouse,no gain is recognized due to the application of the wherewithal to pay concept.

With regard to state income taxes,explain what is meant by the "jock tax"?

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

A characteristic of the fraud penalties is:

If property tax rates are not changed,the amount of ad valorem taxes imposed on realty will remain the same.

Pam,a widow,makes cash gifts to her four married children (including their spouses)and to her six grandchildren.

What are the pros and cons of the following state and local tax provisions?

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

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. a. Economic considerations b. Social considerations c. Equity considerations

Scott files his tax return 65 days after the due date.Along with the return,Scott remits a check for $50,000 which is the balance of the tax owed.Disregarding the interest element,Scott's total failure to file and to pay penalties are:

A safe and easy way for a taxpayer to avoid local and state sales taxes is to have the purchase sent to an address in another state that levies no such taxes.

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.

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

An inheritance tax is a tax on a decedent's right to pass property at death.

The tax law contains various tax credits,deductions,and exclusions that are designed to encourage taxpayers to obtain additional education.On what grounds can these provisions be justified?

To lessen,or eliminate,the effect of multiple taxation,a taxpayer who is subject to both foreign and U.S.income taxes on the same income is allowed either a deduction or a credit for the foreign tax paid.

Regarding proper ethical guidelines,which (if any)of the following is correct?

Working With the Tax Law

Tax Formula and Tax Determination; an Overview of Property Transactions

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

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: Section 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters

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

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

The pay-as-you-go feature of the Federal income tax on individuals conforms to Adam Smith's canon of certainty.

Jason's business warehouse is destroyed by fire.As the insurance proceeds exceed the basis of the property,a gain results.If Jason shortly reinvests the proceeds in a new warehouse,no gain is recognized due to the application of the wherewithal to pay concept.

With regard to state income taxes,explain what is meant by the "jock tax"?

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

A characteristic of the fraud penalties is:

If property tax rates are not changed,the amount of ad valorem taxes imposed on realty will remain the same.

Pam,a widow,makes cash gifts to her four married children (including their spouses)and to her six grandchildren.

What are the pros and cons of the following state and local tax provisions?

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

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. a. Economic considerations b. Social considerations c. Equity considerations

Scott files his tax return 65 days after the due date.Along with the return,Scott remits a check for $50,000 which is the balance of the tax owed.Disregarding the interest element,Scott's total failure to file and to pay penalties are:

A safe and easy way for a taxpayer to avoid local and state sales taxes is to have the purchase sent to an address in another state that levies no such taxes.

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.

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

An inheritance tax is a tax on a decedent's right to pass property at death.

The tax law contains various tax credits,deductions,and exclusions that are designed to encourage taxpayers to obtain additional education.On what grounds can these provisions be justified?

To lessen,or eliminate,the effect of multiple taxation,a taxpayer who is subject to both foreign and U.S.income taxes on the same income is allowed either a deduction or a credit for the foreign tax paid.

Regarding proper ethical guidelines,which (if any)of the following is correct?

Working With the Tax Law

Tax Formula and Tax Determination; an Overview of Property Transactions

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

Alternative Minimum Tax

Tax Credits and Payment Procedures

Property Transactions: Determination of Gain or Loss and Basis Considerations

Property Transactions: Nontaxable Exchanges

Property Transactions: Capital Gains and Losses

Property Transactions: Section 1231 and Recapture Provisions

Accounting Periods and Methods

Deferred Compensation

Corporations and Partnerships

Filters