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. a.Economic considerations b.Social considerations c.Equity considerations d.​Both a. and b. -Additional depreciation deduction allowed for the year the asset is acquired.

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.

For individual taxpayers,the interest rate for income tax refunds (overpayments) is the same as that applicable to assessments (underpayments).

For the tax year 2017,Noah reported gross income of $300,000 on his timely filed Federal income tax return. a.​Presuming the general rule applies, when does the statute of limitations on assessments normally expire? b.​Suppose Noah inadvertently omitted gross income of $76,000. When does the statute of limitations on assessments expire? c.​Suppose the omission was deliberate and not inadvertent. When does the statute of limitations on assessments expire?

Provisions in the tax law that promote energy conservation and more use of alternative (non-fossil) fuels can be justified by:

A major advantage of a flat tax type of income tax is its simplicity.

If more IRS audits are producing a greater number of no change results,this indicates increased compliance on the part of taxpayers.

State income taxes generally can be characterized by:

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

Mona inherits her mother's personal residence,which she converts to a furnished rental house.These changes should affect the amount of ad valorem property taxes levied on the properties.

Stealth taxes have the effect of generating additional taxes from all taxpayers.

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. a.Deferral of gains from involuntary conversions b.Carryback and carryforward of net operating losses c."No change" is one possible result d.State income tax applied to visiting nonresident e.IRS special agent f.Undoing the "piggyback" result g.Ideal budget goal as to new tax legislation h.Every state that has a general sales tax has one i.Imposed by all states and the Federal government j.Imposed by some states but not the Federal government k.Imposed only by the Federal government l.No correct match provided -Revenue Agent's Report (RAR)

Using the choices provided below, show the justification for each provision of the tax law listed. a.Economic considerations b.Social considerations c.Equity considerations d.​Both a. and b. -A tax credit for amounts spent to furnish care for children while the parent is at work.

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

What is the difference between an inheritance tax and an estate tax? Who imposes these taxes?