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

Several years ago,Gordon purchased extra grazing land for his ranch at a cost of $80,000.In 2010,the land is condemned by the state for development as a highway maintenance depot.Under the condemnation award,Gordon receives $200,000 for the land.Within the same year,he replaces the property with other grazing land.What is Gordon's tax situation if the replacement land cost:

An inheritance tax is a tax on an heir's right to receive property from a decedent.

Because they are politically unpopular,many cities are reducing or eliminating their hotel occupancy and car rental surcharges.

A state income tax cannot be imposed on nonresident taxpayers who earn income within the state or on an itinerant basis.

Some states have offered income tax amnesty programs on more than one occasion.

Compare civil fraud with criminal fraud with regard to the following:

The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.

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

Which,if any,of the following is a typical characteristic of an ad valorem tax on personality?

Taxes not imposed by the Federal government include:

A tax cut enacted by Congress that contains a sunset provision will make the tax cut permanent.

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

A lack of compliance in the payment of use taxes can be eased by several means.In this regard,comment on the following:

Under Clint's will,all of his property passes to either the Lutheran Church or to his wife.No Federal estate tax will be due on Clint's death in 2009.

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

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

The tax law allows an income tax deduction for state and local income taxes or state and local sales taxes paid.Explain the justification for each.

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

One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from being accumulated within the family unit.

The Garfields were surprised to learn that the ad valorem taxes on their personal residence have been increased for 2010.They have made no capital improvements to the residence and the property tax rate has not changed.Furthermore,they feel that property values have recently declined since several homes in the neighborhood are scheduled for foreclosure.What probably caused the property tax increase?