Question 1

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

Accepted Answer

A) The use of client estimates in preparing a return may be 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 these. 
A) The use of client estimates in preparing a return may be 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 these.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

A characteristic of the fraud penalties is:

Accepted Answer

A) When negligence and civil fraud apply to a deficiency, the negligence penalty predominates. 
B) Criminal 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 these. 
A) When negligence and civil fraud apply to a deficiency, the negligence penalty predominates. 
B) Criminal 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 these.

Question 4

For Federal income tax purposes,there never has been a general amnesty period.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

In 2017,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.

Accepted Answer

A) True 
 B)False

Question 7

On his 2017 income tax return,Andrew omitted income and overstated deductions to the extent that his income tax was understated by $500,000.Disregarding any interest element,what is Andrew's penalty if the understatement was due to:
a.Negligence.
b.Civil fraud.
c.Criminal fraud.

Accepted Answer

The answer of On his 2017 income tax return,Andrew omitted...

Question 8

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

Accepted Answer

A severance tax is one imposed when natu

Question 9

There is a Federal excise tax on hotel occupancy.

Accepted Answer

A) True 
 B)False

Question 10

Currently,the tax base for the Social Security component of the FICA is not limited to a dollar amount.

Accepted Answer

A) True 
 B)False

Question 11

Match the statements that relate to each other. Note: Some choices may be used more than once.
a.3 years from date return is filed
b.3 years from due date of return
c.20% of underpayment
d.5% per month (25% limit)
e.0.5% per month (25% limit)
f.Conducted at IRS office
g.Conducted at taxpayer's office
h.6 years
i.45-day grace period allowed to IRS
j.No statute of limitations (period remains open)
k.75% of underpayment
l.No correct match provided
-Early filing and statute of limitations (deficiency situations)

Accepted Answer

The answer of Match the statements that relate to each...

Question 12

To mitigate the effect of the annual accounting period concept,the tax law permits the carryforward to other years of the excess charitable contributions of a particular year.

Accepted Answer

A) True 
 B)False

Question 13

Match the statements that relate to each other. Note: Some choices may be used more than once.
a.3 years from date return is filed
b.3 years from due date of return
c.20% of underpayment
d.5% per month (25% limit)
e.0.5% per month (25% limit)
f.Conducted at IRS office
g.Conducted at taxpayer's office
h.6 years
i.45-day grace period allowed to IRS
j.No statute of limitations (period remains open)
k.75% of underpayment
l.No correct match provided
-No return and statute limitations

Accepted Answer

The answer of Match the statements that relate to each...

Question 14

Taxes not imposed by the Federal government include:

Accepted Answer

A) Tobacco excise tax. 
B) Customs duties (tariffs on imports). 
C) Tax on rental cars. 
D) Gas guzzler tax. 
E) None of these. 
A) Tobacco excise tax. 
B) Customs duties (tariffs on imports). 
C) Tax on rental cars. 
D) Gas guzzler tax. 
E) None of these.

Question 15

Indicate which,if any,statement is incorrect.State income taxes:

Accepted Answer

A) Can piggyback to the Federal version. 
B) Cannot apply to visiting nonresidents. 
C) Can decouple from the Federal version. 
D) Can provide occasional amnesty programs. 
E) None of these. 
A) Can piggyback to the Federal version. 
B) Cannot apply to visiting nonresidents. 
C) Can decouple from the Federal version. 
D) Can provide occasional amnesty programs. 
E) None of these.

Question 16

The Federal excise tax on cigarettes is an example of a proportional tax.

Accepted Answer

A) True 
 B)False

Question 17

As it is consistent with the wherewithal to pay concept,the tax law requires a seller to recognize gain in the year the installment sale occurs.

Accepted Answer

A) True 
 B)False

Question 18

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
-Discriminant Index Function (DIF)

Accepted Answer

The answer of Match the statements that relate to each...

Question 19

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:

Accepted Answer

A) A clear reflection of income result. 
B) The tax benefit rule. 
C) The arm's length concept. 
D) The wherewithal to pay concept. 
E) None of these. 
A) A clear reflection of income result. 
B) The tax benefit rule. 
C) The arm's length concept. 
D) The wherewithal to pay concept. 
E) None of these.

Question 20

Which,if any,of the following taxes are proportional (rather than progressive)?

Accepted Answer

A) State general sales tax 
B) Federal corporate income tax 
C) Federal estate tax 
D) Federal gift tax 
E) All of these 
A) State general sales tax 
B) Federal corporate income tax 
C) Federal estate tax 
D) Federal gift tax 
E) All of these

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

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

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

A characteristic of the fraud penalties is:

For Federal income tax purposes,there never has been a general amnesty period.

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

In 2017,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.

On his 2017 income tax return,Andrew omitted income and overstated deductions to the extent that his income tax was understated by $500,000.Disregarding any interest element,what is Andrew's penalty if the understatement was due to: a.Negligence. b.Civil fraud. c.Criminal fraud.

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

There is a Federal excise tax on hotel occupancy.

Currently,the tax base for the Social Security component of the FICA is not limited to a dollar amount.

To mitigate the effect of the annual accounting period concept,the tax law permits the carryforward to other years of the excess charitable contributions of a particular year.

Taxes not imposed by the Federal government include:

Indicate which,if any,statement is incorrect.State income taxes:

The Federal excise tax on cigarettes is an example of a proportional tax.

As it is consistent with the wherewithal to pay concept,the tax law requires a seller to recognize gain in the year the installment sale occurs.

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:

Which,if any,of the following taxes are proportional (rather than progressive)?

Working With the Tax Law

Computing the Tax

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

Tax Credits and Payments

Property Transactions: Determination of Gain or Loss, basis Considerations, and Nontaxable Exchanges

Property Transactions, capital Gains and Losses, sec1231, and Recapture Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Corporations: Distributions in Complete Liquidation and an Overview of Reorganization

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

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