Question 1

When Congress enacts a tax cut that is phased in over a period of years,revenue neutrality is achieved.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Property can be transferred within the family group by gift or at death.One motivation for preferring the gift approach is:

Accepted Answer

A) To take advantage of the per donee annual exclusion. 
B) To avoid a future decline in value of the property transferred. 
C) To take advantage of the higher unified transfer tax credit available under the gift tax. 
D) To shift income to higher bracket donees. 
E) None of the above. 
A) To take advantage of the per donee annual exclusion. 
B) To avoid a future decline in value of the property transferred. 
C) To take advantage of the higher unified transfer tax credit available under the gift tax. 
D) To shift income to higher bracket donees. 
E) None of the above.

Question 4

Which,if any,of the following provisions cannot be justified as mitigating the effect of the annual accounting period concept?

Accepted Answer

A) Nonrecognition of gain allowed for involuntary conversions. 
B) Net operating loss carryback and carryover provisions. 
C) Carry over of excess charitable contributions. 
D) Use of the installment method to recognize gain. 
E) Carry over of excess capital losses. 
A) Nonrecognition of gain allowed for involuntary conversions. 
B) Net operating loss carryback and carryover provisions. 
C) Carry over of excess charitable contributions. 
D) Use of the installment method to recognize gain. 
E) Carry over of excess capital losses.

Question 5

Two persons who live in the same state but in different counties may not be subject to the same general sales tax rate.

Accepted Answer

A) True 
 B)False

Question 6

Unlike FICA,FUTA requires that employers comply with state as well as Federal rules.

Accepted Answer

A) True 
 B)False

Question 7

If the tax deficiency is attributable to fraud,the negligence penalty will not be imposed.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

A use tax is imposed by:

Accepted Answer

A) The Federal government and all states. 
B) The Federal government and a majority of the states. 
C) Most of the states and not the Federal government. 
D) All states and not the Federal government. 
E) None of the above. 
A) The Federal government and all states. 
B) The Federal government and a majority of the states. 
C) Most of the states and not the Federal government. 
D) All states and not the Federal government. 
E) None of the above.

Question 10

State income taxes generally can be characterized by:

Accepted Answer

A) Provision for withholding procedures. 
B) A different date for filing than the Federal income tax. 
C) Allowance of a deduction for Federal income taxes paid. 
D) Applying only to individuals and not applying to corporations. 
E) None of the above. 
A) Provision for withholding procedures. 
B) A different date for filing than the Federal income tax. 
C) Allowance of a deduction for Federal income taxes paid. 
D) Applying only to individuals and not applying to corporations. 
E) None of the above.

Question 11

Allowing a domestic production activities deduction for certain manufacturing income can be justified:

Accepted Answer

A) As mitigating the effect of the annual accounting period concept. 
B) By economic considerations. 
C) As promoting administrative feasibility. 
D) Based on the wherewithal to pay concept. 
E) None of the above. 
A) As mitigating the effect of the annual accounting period concept. 
B) By economic considerations. 
C) As promoting administrative feasibility. 
D) Based on the wherewithal to pay concept. 
E) None of the above.

Question 12

The Federal estate and gift taxes are examples of progressive taxes.

Accepted Answer

A) True 
 B)False

Question 13

In 1980,Jonathan leased real estate to Jay Corporation for 20 years.Jay Corporation made significant capital improvements to the property.In 2000,Jay decides not to renew the lease and vacates the property.At that time,the value of the improvements is $900,000.Jonathan sells the real estate in 2010 for $1,300,000 of which $1,000,000 is attributable to the improvements.How and when is Jonathan taxed on the improvements made by Jay Corporation?

Accepted Answer

Jonathan is not subject to taxation on t

Question 14

The Tax Relief Reconciliation Act of 2001 made certain changes in the estate and gift taxes.

Accepted Answer

The answer of The Tax Relief Reconciliation Act of 2001...

Question 15

In 2004,Congress enacted a provision to allow a deduction for state and local sales taxes.Such a provision can be justified on equity grounds.

Accepted Answer

A) True 
 B)False

Question 16

Your client,Connie,won $12,000 in a football office pool.She sees no reason to include it in her income for several reasons.First,the amount won will not be reported to the IRS.Second,as an average income employee,she is unlikely to be audited by the IRS.Third,she feels that she has probably lost this much in other past office pools.How do you respond?

Accepted Answer

As a practitioner,you cannot play the au

Question 17

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

Accepted Answer

The answer of Linda,a widow,makes cash gifts to her six...

Question 18

If a taxpayer files late (i.e. ,after the due date of the return),the statute of limitations on assessments begins on the date the return is filed.

Accepted Answer

A) True 
 B)False

Question 19

Taxes levied by all states include:

Accepted Answer

A) Liquor excise tax. 
B) Individual income tax. 
C) Inheritance tax. 
D) General sales tax. 
E) None of the above. 
A) Liquor excise tax. 
B) Individual income tax. 
C) Inheritance tax. 
D) General sales tax. 
E) None of the above.

Question 20

In preparing an income tax return,the use of a client's estimates is not permitted.

Accepted Answer

A) True 
 B)False

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

When Congress enacts a tax cut that is phased in over a period of years,revenue neutrality is achieved.

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

Property can be transferred within the family group by gift or at death.One motivation for preferring the gift approach is:

Which,if any,of the following provisions cannot be justified as mitigating the effect of the annual accounting period concept?

Two persons who live in the same state but in different counties may not be subject to the same general sales tax rate.

Unlike FICA,FUTA requires that employers comply with state as well as Federal rules.

If the tax deficiency is attributable to fraud,the negligence penalty will not be imposed.

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

A use tax is imposed by:

State income taxes generally can be characterized by:

Allowing a domestic production activities deduction for certain manufacturing income can be justified:

The Federal estate and gift taxes are examples of progressive taxes.

The Tax Relief Reconciliation Act of 2001 made certain changes in the estate and gift taxes.

In 2004,Congress enacted a provision to allow a deduction for state and local sales taxes.Such a provision can be justified on equity grounds.

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

If a taxpayer files late (i.e. ,after the due date of the return),the statute of limitations on assessments begins on the date the return is filed.

Taxes levied by all states include:

In preparing an income tax return,the use of a client's estimates is not permitted.

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