Question 1

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-"Pay-as-you-go" (paygo)

Accepted Answer

A) Deferral of gains from involuntary conversions 
B) 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

Question 2

The U.S. (either Federal, state, or local) does not impose:

Accepted Answer

A)  Franchise taxes. 
B)  Severance taxes. 
C)  Occupational fees. 
D)  Custom duties. 
E)  Export duties.

Question 3

In 2018, 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 4

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.

Question 5

The annual exclusion, currently $15,000, is available for gift and estate tax purposes.

Accepted Answer

A) True 
 B)False

Question 6

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-Revenue neutrality

Accepted Answer

A) Deferral of gains from involuntary conversions 
B) 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

Question 7

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

Accepted Answer

A)  $400. 
B)  $3,600. 
C)  $4,000. 
D)  $4,400. 
E)  None of these.

Question 8

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-Import taxes (customs duties)

Accepted Answer

A) Deferral of gains from involuntary conversions 
B) 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

Question 9

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-Wherewithal to pay concept

Accepted Answer

A) Deferral of gains from involuntary conversions 
B) 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

Question 10

The principal objective of the FUTA tax is to provide some measure of retirement security.

Accepted Answer

A) True 
 B)False

Question 11

To lessen, or eliminate, the effect of multiple taxation, a taxpayer who is subject to both foreign and U.S. income taxes on the same income is allowed either a deduction or a credit for the foreign tax paid.

Accepted Answer

A) True 
 B)False

Question 12

A rationale for the installment method tax rule is:

Accepted Answer

A)  Ability to pay. 
B)  Equity and fairness. 
C)  Simplicity. 
D)  Revenue neutrality.

Question 13

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-Decoupling
A)Deferral of gains from involuntary conversions
B)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

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.

Question 15

A VAT (value added tax):

Accepted Answer

A)  Is regressive in its effect. 
B)  Has not proved 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 these.

Question 16

Because the law is complicated, most individual taxpayers are not able to complete their Federal income tax returns without outside assistance.

Accepted Answer

A) True 
 B)False

Question 17

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

The answer of Due to the population change, the Goose...

Question 18

A provision in the law that compels accrual basis taxpayers to pay a tax on prepaid income in the year received and not when earned is consistent with generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 19

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 20

Which, if any, of the following statements best describes the history of the Federal income tax?

Accepted Answer

A)  It did not exist during the Civil War. 
B)  The Federal income tax on corporations was held by the U.S. Supreme Court to be allowable under the U.S. Constitution. 
C)  The Federal income tax on individuals was held by the U.S. Supreme Court to be allowable under the U.S. Constitution. 
D)  Both the Federal income tax on individuals and on corporations was held by the U.S. Supreme Court to be contrary to the U.S. Constitution. 
E)  None of these.

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

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -"Pay-as-you-go" (paygo)

The U.S. (either Federal, state, or local) does not impose:

In 2018, 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.

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

The annual exclusion, currently $15,000, is available for gift and estate tax purposes.

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -Revenue neutrality

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

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -Import taxes (customs duties)

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -Wherewithal to pay concept

The principal objective of the FUTA tax is to provide some measure of retirement security.

To lessen, or eliminate, the effect of multiple taxation, a taxpayer who is subject to both foreign and U.S. income taxes on the same income is allowed either a deduction or a credit for the foreign tax paid.

A rationale for the installment method tax rule is:

Taxes not imposed by the Federal government include:

A VAT (value added tax) :

Because the law is complicated, most individual taxpayers are not able to complete their Federal income tax returns without outside assistance.

A provision in the law that compels accrual basis taxpayers to pay a tax on prepaid income in the year received and not when earned is consistent with generally accepted accounting principles.

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

Which, if any, of the following statements best describes the history of the Federal income tax?