Question 1

Some states impose a general sales tax while other states have a use tax.

Accepted Answer

A) True 
 B)False

Question 2

A calendar year taxpayer files his 2009 Federal income tax return on March 3,2010.The return reflects an overpayment of $5,200,and the taxpayer requests a refund of this amount.The refund is paid on June 18,2010.The refund must include interest.

Accepted Answer

A) True 
 B)False

Question 3

Upon audit by the IRS,Faith is assessed a deficiency of $40,000 of which $25,000 is attributable to negligence.The 20% negligence penalty will apply to all of the $40,000.

Accepted Answer

A) True 
 B)False

Question 4

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.

Accepted Answer

A) True 
 B)False

Question 5

Tom,a calendar year taxpayer,filed his 2005 Federal income tax return on April 3,2006.In 2010,the IRS audits this return and assesses an income tax deficiency against Tom.On the grounds that the statute of limitations has run,Tom disputes the assessment.Is Tom correct? Why?

Accepted Answer

Tom is correct as to the usual three-yea

Question 6

The retail sales of tobacco products are subject to both Federal and state excise taxes.

Accepted Answer

A) True 
 B)False

Question 7

States impose either a state income tax or a general sales tax,but not both types of taxes.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

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

Question 9

Characteristics of the "Fair Tax" (i.e. ,national sales tax)include which,if any,of the following:

Accepted Answer

A) Abolition of the Federal individual (but not the corporate)income tax. 
B) Abolition of all Federal income taxes but retention of payroll taxes (including the self-employment tax). 
C) Abolition of all Federal income taxes and payroll taxes but retention of the Federal estate and gift taxes. 
D) Abolition of all Federal income and payroll taxes as well as the Federal estate and gift taxes. 
E) None of the above. 
A) Abolition of the Federal individual (but not the corporate)income tax. 
B) Abolition of all Federal income taxes but retention of payroll taxes (including the self-employment tax). 
C) Abolition of all Federal income taxes and payroll taxes but retention of the Federal estate and gift taxes. 
D) Abolition of all Federal income and payroll taxes as well as the Federal estate and gift taxes. 
E) None of the above.

Question 10

On occasion,Congress has to enact legislation that clarifies the tax law in order to change a result reached by the U.S.Supreme Court.

Accepted Answer

A) True 
 B)False

Question 11

Congress reacts to judicial decisions that interpret the tax law in different ways.When it approves of a decision,Congress may act to amend the Code to incorporate the holding.When it disapproves,Congress may amend the Code to nullify its effect.Give an example of each one of these congressional reactions.

Accepted Answer

Congress approved of the judicial conclu

Question 12

The proposed flat tax:

Accepted Answer

A) Would simplify the income tax. 
B) Would eliminate the income tax. 
C) Would tax the increment in value as goods move through the production and manufacturing stages to the marketplace. 
D) Is a tax on consumption. 
E) None of the above. 
A) Would simplify the income tax. 
B) Would eliminate the income tax. 
C) Would tax the increment in value as goods move through the production and manufacturing stages to the marketplace. 
D) Is a tax on consumption. 
E) None of the above.

Question 13

Due to the population change,the Goose Creek School District has decided to close one of its high schools.Since it has no further need of the property,the school is listed for sale.The two bids it receives are as follows:
   The United Methodist Church would use the property to establish a sectarian middle school.Planet,a well-known car dealership,would revamp the property and operate it as a branch location.
If you were a member of the School District board,what factors would you consider in evaluating the two bids?

Accepted Answer

Although the bid from the United Methodi

Question 14

A parent employs his twin daughters,age 17,in his sole proprietorship.The daughters are not subject to FICA coverage.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

A VAT (value added tax):

Accepted Answer

A) Is not regressive in its effect. 
B) Has proved quite popular outside of the U.S. 
C) Is not a tax on consumption. 
D) Is used exclusively by third world (less developed)countries. 
E) None of the above. 
A) Is not regressive in its effect. 
B) Has proved quite popular outside of the U.S. 
C) Is not a tax on consumption. 
D) Is used exclusively by third world (less developed)countries. 
E) None of the above.

Question 18

The amount of a taxpayer's itemized deductions will not increase the chance of being audited by the IRS.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) Taxpayer owns and operates a check-cashing service. 
B) Taxpayer is an employed electrician. 
C) Taxpayer just received a $3 million personal injury award as a result of a lawsuit. 
D) Taxpayer just won a $1 million slot machine jackpot at a Las Vegas casino. 
E) Taxpayer has been audited several times before. 
A) Taxpayer owns and operates a check-cashing service. 
B) Taxpayer is an employed electrician. 
C) Taxpayer just received a $3 million personal injury award as a result of a lawsuit. 
D) Taxpayer just won a $1 million slot machine jackpot at a Las Vegas casino. 
E) Taxpayer has been audited several times before.

Question 20

State and local governments are sometimes forced to find ways to generate additional revenue.Comment on the pros and cons of the following procedures:

Accepted Answer

The answer of State and local governments are sometimes forced...

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

Some states impose a general sales tax while other states have a use tax.

A calendar year taxpayer files his 2009 Federal income tax return on March 3,2010.The return reflects an overpayment of $5,200,and the taxpayer requests a refund of this amount.The refund is paid on June 18,2010.The refund must include interest.

Upon audit by the IRS,Faith is assessed a deficiency of $40,000 of which $25,000 is attributable to negligence.The 20% negligence penalty will apply to all of the $40,000.

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.

Tom,a calendar year taxpayer,filed his 2005 Federal income tax return on April 3,2006.In 2010,the IRS audits this return and assesses an income tax deficiency against Tom.On the grounds that the statute of limitations has run,Tom disputes the assessment.Is Tom correct? Why?

The retail sales of tobacco products are subject to both Federal and state excise taxes.

States impose either a state income tax or a general sales tax,but not both types of taxes.

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

Characteristics of the "Fair Tax" (i.e. ,national sales tax)include which,if any,of the following:

On occasion,Congress has to enact legislation that clarifies the tax law in order to change a result reached by the U.S.Supreme Court.

The proposed flat tax:

A parent employs his twin daughters,age 17,in his sole proprietorship.The daughters are not subject to FICA coverage.

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

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

A VAT (value added tax):

The amount of a taxpayer's itemized deductions will not increase the chance of being audited by the IRS.

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

State and local governments are sometimes forced to find ways to generate additional revenue.Comment on the pros and cons of the following procedures:

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

Part 1--Property Transactions: Determination of Gain or Loss,basis Considerations,and Nontaxable Exchanges

Part 2--Property Transactions: Determination of Gain or Loss,basis Considerations,and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses,1231,and Recapure Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Distributions in Complete Liquidation and an Overview of Reorganizations

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

Filters