Question 1

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 2

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

Accepted Answer

A) Deferral of gains from involuntary conversions 
B) Carryback and 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 3

In preparing a tax return,all questions on the return must be answered.

Accepted Answer

A) True 
 B)False

Question 4

On his 2014 income tax return,Andrew omitted income and overstated deductions to the extent that his income tax was understated by $500,000.Disregarding any interest element,what is Andrew's penalty if the understatement was due to:
a.Negligence.
b.Civil fraud.
c.Criminal fraud.

Accepted Answer

The answer of On his 2014 income tax return,Andrew omitted...

Question 5

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 6

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

Accepted Answer

A) Deferral of gains from involuntary conversions 
B) Carryback and 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

Match the statements that relate to each other.Note: Some choices may be used more than once.
-Negligence penalty

Accepted Answer

A) 3 years from date return is filed 
B) 3 years from due date of return 
C) 20% of underpayment 
D) 5% per month (25% limit) 
E) 0.5% per month (25% limit)
F)Conducted at IRS office
G)Conducted at taxpayer's office
H)6 years
I)45-day grace period allowed to IRS
J)No statute of limitations (period remains open)
K)75% of underpayment
L)No correct match provided

Question 8

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) Carryback and 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

Even if property tax rates are not changed,the amount of ad valorem taxes imposed on realty may not remain the same.

Accepted Answer

A) True 
 B)False

Question 10

A state income tax can be imposed on nonresident taxpayers who earn income within the state on an itinerant basis.

Accepted Answer

A) True 
 B)False

Question 11

How do the net operating loss provisions in the tax law mitigate the effect of the annual accounting concept?

Accepted Answer

The answer of How do the net operating loss provisions...

Question 12

Match the statements that relate to each other.Note: Some choices may be used more than once.
-Late filing and statute limitations (deficiency situations)

Accepted Answer

A) 3 years from date return is filed 
B) 3 years from due date of return 
C) 20% of underpayment 
D) 5% per month (25% limit) 
E) 0.5% per month (25% limit)
F)Conducted at IRS office
G)Conducted at taxpayer's office
H)6 years
I)45-day grace period allowed to IRS
J)No statute of limitations (period remains open)
K)75% of underpayment
L)No correct match provided

Question 13

What are the pros and cons of the following state and local tax provisions?
a.An ad valorem property tax holiday made available to a manufacturing plant that is relocating.
b.Hotel occupancy tax and a rental car surcharge.
c.A back-to-school sales tax holiday.

Accepted Answer

The answer of What are the pros and cons of...

Question 14

The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the U.S.

Accepted Answer

A) True 
 B)False

Question 15

No state has offered an income tax amnesty program more than once.

Accepted Answer

A) True 
 B)False

Question 16

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 17

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

Accepted Answer

A) Deferral of gains from involuntary conversions 
B) Carryback and 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 18

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 19

Jason's business warehouse is destroyed by fire.As the insurance proceeds exceed the basis of the property,a gain results.If Jason shortly reinvests the proceeds in a new warehouse,no gain is recognized due to the application of the wherewithal to pay concept.

Accepted Answer

A) True 
 B)False

Question 20

Without obtaining an extension,Pam files her income tax return 55 days after the due date.With her return,she pays an additional tax of $60,000.Disregarding any interest element,what is Pam's penalty for failure to pay and to file?

Accepted Answer

The answer of Without obtaining an extension,Pam files her income...

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

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

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

In preparing a tax return,all questions on the return must be answered.

On his 2014 income tax return,Andrew omitted income and overstated deductions to the extent that his income tax was understated by $500,000.Disregarding any interest element,what is Andrew's penalty if the understatement was due to: a.Negligence. b.Civil fraud. c.Criminal fraud.

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

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

Match the statements that relate to each other.Note: Some choices may be used more than once. -Negligence penalty

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

Even if property tax rates are not changed,the amount of ad valorem taxes imposed on realty may not remain the same.

A state income tax can be imposed on nonresident taxpayers who earn income within the state on an itinerant basis.

How do the net operating loss provisions in the tax law mitigate the effect of the annual accounting concept?

Match the statements that relate to each other.Note: Some choices may be used more than once. -Late filing and statute limitations (deficiency situations)

What are the pros and cons of the following state and local tax provisions? a.An ad valorem property tax holiday made available to a manufacturing plant that is relocating. b.Hotel occupancy tax and a rental car surcharge. c.A back-to-school sales tax holiday.

The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the U.S.

No state has offered an income tax amnesty program more than once.

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.

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

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

Jason's business warehouse is destroyed by fire.As the insurance proceeds exceed the basis of the property,a gain results.If Jason shortly reinvests the proceeds in a new warehouse,no gain is recognized due to the application of the wherewithal to pay concept.

Without obtaining an extension,Pam files her income tax return 55 days after the due date.With her return,she pays an additional tax of $60,000.Disregarding any interest element,what is Pam's penalty for failure to pay and to file?