Question 1

Which of the following statements is true?

Accepted Answer

A) Municipal bond interest is subject to explicit federal tax 
B) Municipal bond interest is subject to implicit tax 
C) Municipal bonds typically pay a higher interest rate than corporate bonds with similar risk 
D) All of these statements are true 
E) None of these statements is true 
A) Municipal bond interest is subject to explicit federal tax 
B) Municipal bond interest is subject to implicit tax 
C) Municipal bonds typically pay a higher interest rate than corporate bonds with similar risk 
D) All of these statements are true 
E) None of these statements is true B

Question 2

Leonardo earns $80,000 of taxable income. He also has $15,000 in city of Tulsa bonds. His wife, Theresa, earns $50,000 of taxable income.
How much money would Leonardo and Theresa save if they file jointly instead of separately for year 2016?

Accepted Answer

A) Nothing 
B) $121.50 
C) $309.75 
D) $5,927.50 
E) None of these 
A) Nothing 
B) $121.50 
C) $309.75 
D) $5,927.50 
E) None of these B

Question 3

Which of the following is true?

Accepted Answer

A) A regressive tax rate structure imposes an increasing marginal tax rate as the tax base increases 
B) Regressive tax structures are the most common tax rate structure 
C) An example of a regressive tax is an excise tax 
D) In terms of effective tax rates, a sales tax can be viewed as a regressive tax 
E) None of these 
A) A regressive tax rate structure imposes an increasing marginal tax rate as the tax base increases 
B) Regressive tax structures are the most common tax rate structure 
C) An example of a regressive tax is an excise tax 
D) In terms of effective tax rates, a sales tax can be viewed as a regressive tax 
E) None of these D

Question 4

Margaret was issued a $150 speeding ticket. This is:

Accepted Answer

A) A tax because payment is required by law 
B) A tax because the payment is not related to any specific benefit received from the government agency collecting the ticket 
C) Not a tax because it is considered a fine intended to punish illegal behavior 
D) A tax because it is imposed by a government agency 
E) Not a tax because Margaret could have avoided payment if she did not speed 
A) A tax because payment is required by law 
B) A tax because the payment is not related to any specific benefit received from the government agency collecting the ticket 
C) Not a tax because it is considered a fine intended to punish illegal behavior 
D) A tax because it is imposed by a government agency 
E) Not a tax because Margaret could have avoided payment if she did not speed

Question 5

Namratha has the choice between investing in a city of Watkinsville bond at 4.5% or a Moe's, Inc. bond at 7%. Assuming that both bonds have the same non-tax characteristics and that Namratha has a 25% marginal tax rate, in which bond should she invest? What interest rate offered by Moe's, Inc. would make Namratha indifferent between investing in the two bonds?

Accepted Answer

Namratha's after tax rate of return on t

Question 6

Which of the following is false?

Accepted Answer

A) A proportional tax rate structure imposes a constant tax rate while a progressive tax rate structure imposes an increasing marginal rate related to the tax base 
B) The average tax rate changes under a proportional tax rate structure, but it is static for a progressive tax rate system 
C) An example of a proportional tax is the tax on gasoline 
D) An example of a progressive tax is the federal tax on gifts 
E) None of these 
A) A proportional tax rate structure imposes a constant tax rate while a progressive tax rate structure imposes an increasing marginal rate related to the tax base 
B) The average tax rate changes under a proportional tax rate structure, but it is static for a progressive tax rate system 
C) An example of a proportional tax is the tax on gasoline 
D) An example of a progressive tax is the federal tax on gifts 
E) None of these

Question 7

Jackson has the choice to invest in city of Mitchell bonds or Sundial, Inc. corporate bonds that pay 10% interest. Jackson is a single taxpayer who earns $55,000 annually. Assume that the city of Mitchell bonds and the Sundial, Inc. bonds have similar risk.
Assume the original facts as given except that Jackson is a head of household taxpayer and the city of Mitchell pays interest of 7.8%. How would you advise Jackson to invest his money?

Accepted Answer

A) Invest in Sundial, Inc.bonds because their explicit tax is greater than the implicit tax on city of Mitchell bonds. 
B) Invest in city of Mitchell bonds because their implicit tax is greater than the explicit tax on Sundial, Inc.bonds. 
C) Invest in Sundial, Inc.bonds because their explicit tax is less than the implicit tax on city of Mitchell bonds. 
D) Invest in city of Mitchell bonds because their implicit tax is less than the explicit tax on Sundial, Inc.bonds. 
E) None of these. 
A) Invest in Sundial, Inc.bonds because their explicit tax is greater than the implicit tax on city of Mitchell bonds. 
B) Invest in city of Mitchell bonds because their implicit tax is greater than the explicit tax on Sundial, Inc.bonds. 
C) Invest in Sundial, Inc.bonds because their explicit tax is less than the implicit tax on city of Mitchell bonds. 
D) Invest in city of Mitchell bonds because their implicit tax is less than the explicit tax on Sundial, Inc.bonds. 
E) None of these.

Question 8

The city of Granby, Colorado recently enacted a 1.5% surcharge on vacation cabin rentals that will help pay for the city's new elementary school. This surcharge is an example of ________.

Accepted Answer

A) a sin tax to discourage undesirable behavior 
B) a government fine 
C) an earmarked tax 
D) a sin tax to discourage undesirable behavior and An earmarked tax 
E) None of these 
A) a sin tax to discourage undesirable behavior 
B) a government fine 
C) an earmarked tax 
D) a sin tax to discourage undesirable behavior and An earmarked tax 
E) None of these

Question 9

A 1% charge imposed by a local government on football tickets sold is not considered a tax if all proceeds are earmarked to fund local schools.

Accepted Answer

A) True 
 B)False

Question 10

Mandy, the mayor of Bogart and a strong advocate of a clean downtown, is proposing an increase in the city sales tax from 7% to 50% on all packs of chewing gum purchased in Bogart. Based on the current gum sales, Mandy estimates that this tax will actually reduce the tax revenue on gum sales. What type of forecasting is Mandy using to derive her tax revenue estimates? What "effect" is her estimate based on? Does this necessarily imply that Mandy will be happy given her desire to have a clean downtown?

Accepted Answer

Mandy's forecast is based on dynamic for

Question 11

To calculate a tax, you need to know:
I. the tax base
II. the taxing agency
III. the tax rate
IV. the purpose of the tax

Accepted Answer

A) Only I is correct 
B) Only IV is correct 
C) Only III is correct 
D) Items I through IV are correct 
E) I and III are correct 
A) Only I is correct 
B) Only IV is correct 
C) Only III is correct 
D) Items I through IV are correct 
E) I and III are correct

Question 12

George recently paid $50 to renew his driver's license. The $50 payment is considered a tax.

Accepted Answer

A) True 
 B)False

Question 13

The effective tax rate, in general, provides a better depiction of a taxpayer's tax burden than the average tax rate.

Accepted Answer

A) True 
 B)False

Question 14

Earmarked taxes are:

Accepted Answer

A) Taxes assessed only on certain taxpayers 
B) Taxes assessed to fund a specific purpose 
C) Taxes assessed for only a specific time period 
D) Taxes assessed to discourage less desirable behavior 
E) None of these 
A) Taxes assessed only on certain taxpayers 
B) Taxes assessed to fund a specific purpose 
C) Taxes assessed for only a specific time period 
D) Taxes assessed to discourage less desirable behavior 
E) None of these

Question 15

Bart is contemplating starting his own business. His new business would operate as a sole proprietorship and would require hiring several employees. Describe the employment-related taxes that Bart should be aware of as he starts his new business as a self-employed business owner.

Accepted Answer

Employment taxes consist of the Old Age,

Question 16

A taxpayer's average tax rate is the most appropriate tax rate to use in tax planning.

Accepted Answer

A) True 
 B)False

Question 17

Although the primary purpose of a tax system is to raise revenue, Congress uses the federal tax system for other purposes as well. Describe the other ways in which Congress uses the federal tax system. Be specific.

Accepted Answer

In addition to the general objective of

Question 18

Jonah, a single taxpayer, earns $150,000 in taxable income and $10,000 in interest from an investment in city of Denver Bonds. Using the U.S. tax rate schedule for year 2016, how much federal tax will he owe? What is his average tax rate? What is his effective tax rate? What is his current marginal tax rate? If Jonah earned an additional $40,000 of taxable income, what is his marginal tax rate on this income? (Round the tax rates to 2 decimal places, e.g., .12345 as 12.35%)

Accepted Answer

Jonah will owe $35,036.75 in federal inc

Question 19

While sales taxes are quite common, currently the U.S. federal government does not impose a sales tax.

Accepted Answer

A) True 
 B)False

Question 20

Fred and Wilma, married taxpayers, earn $100,000 in taxable income and $20,000 in interest from an investment in city of Bedrock Bonds. Using the U.S. tax rate schedule for married filing jointly for year 2016, how much federal tax will they owe? What is their average tax rate? What is their effective tax rate? What is their current marginal tax rate? If Fred and Wilma earn an additional $40,000 of taxable income, what is their marginal tax rate on this income? (Round the tax rates to 2 decimal places, e.g., .12345 as 12.35%)

Accepted Answer

Fred and Wilma will owe $16,542.50 in fe

Which of the following statements is true?

Leonardo earns $80,000 of taxable income. He also has $15,000 in city of Tulsa bonds. His wife, Theresa, earns $50,000 of taxable income. How much money would Leonardo and Theresa save if they file jointly instead of separately for year 2016?

Which of the following is true?

Margaret was issued a $150 speeding ticket. This is:

Which of the following is false?

The city of Granby, Colorado recently enacted a 1.5% surcharge on vacation cabin rentals that will help pay for the city's new elementary school. This surcharge is an example of ________.

A 1% charge imposed by a local government on football tickets sold is not considered a tax if all proceeds are earmarked to fund local schools.

To calculate a tax, you need to know: I. the tax base II. the taxing agency III. the tax rate IV. the purpose of the tax

George recently paid $50 to renew his driver's license. The $50 payment is considered a tax.

The effective tax rate, in general, provides a better depiction of a taxpayer's tax burden than the average tax rate.

Earmarked taxes are:

Bart is contemplating starting his own business. His new business would operate as a sole proprietorship and would require hiring several employees. Describe the employment-related taxes that Bart should be aware of as he starts his new business as a self-employed business owner.

A taxpayer's average tax rate is the most appropriate tax rate to use in tax planning.

Although the primary purpose of a tax system is to raise revenue, Congress uses the federal tax system for other purposes as well. Describe the other ways in which Congress uses the federal tax system. Be specific.

While sales taxes are quite common, currently the U.S. federal government does not impose a sales tax.

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters

Exam 1: An Introduction to Tax

Which of the following statements is true?

Leonardo earns $80,000 of taxable income. He also has $15,000 in city of Tulsa bonds. His wife, Theresa, earns $50,000 of taxable income. How much money would Leonardo and Theresa save if they file jointly instead of separately for year 2016?

Which of the following is true?

Margaret was issued a $150 speeding ticket. This is:

Which of the following is false?

The city of Granby, Colorado recently enacted a 1.5% surcharge on vacation cabin rentals that will help pay for the city's new elementary school. This surcharge is an example of ________.

A 1% charge imposed by a local government on football tickets sold is not considered a tax if all proceeds are earmarked to fund local schools.

To calculate a tax, you need to know: I. the tax base II. the taxing agency III. the tax rate IV. the purpose of the tax

George recently paid $50 to renew his driver's license. The $50 payment is considered a tax.

The effective tax rate, in general, provides a better depiction of a taxpayer's tax burden than the average tax rate.

Earmarked taxes are:

Bart is contemplating starting his own business. His new business would operate as a sole proprietorship and would require hiring several employees. Describe the employment-related taxes that Bart should be aware of as he starts his new business as a self-employed business owner.

A taxpayer's average tax rate is the most appropriate tax rate to use in tax planning.

Although the primary purpose of a tax system is to raise revenue, Congress uses the federal tax system for other purposes as well. Describe the other ways in which Congress uses the federal tax system. Be specific.

While sales taxes are quite common, currently the U.S. federal government does not impose a sales tax.

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning

Filters