Question 1

Using the choices provided below,show the justification for each provision of the tax law listed.
-Contributions to charitable organizations are deductible.

Accepted Answer

A)  Economic considerations
B)  Social considerations
C)  Equity considerationsD) All of the above
E) A) and B)

Question 2

Taxes not imposed by the Federal government include:

Accepted Answer

A)  Tobacco excise tax.
B)  Customs duties (tariffs on imports) .
C)  Tax on rent cars.
D)  Gas guzzler tax.
E)  None of these.F) B) and C)
G) D) and E)

Question 3

Two months after the burglary of his personal residence,Eric is audited by the IRS.Among the items taken in the burglary was a shoe box containing approximately $50,000 in cash.Eric is the owner and operator of a cash-and-carry liquor store.Eric wonders why he was audited.Can you help explain?

Accepted Answer

Although Eric's audit by the IRS could b...

Question 4

A major advantage of a flat tax type of income tax is its simplicity.

Accepted Answer

A) True 
 B)False

Question 5

Using the choices provided below,show the justification for each provision of the tax law listed.
-Additional depreciation deduction allowed for the year the asset is acquired.

Accepted Answer

A)  Economic considerations
B)  Social considerations
C)  Equity considerationsD) None of the above
E) All of the above

Question 6

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

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 agentF) Undoing the "piggyback" resultG) Ideal budget goal as to new tax legislationH) Every state that has a general sales tax has oneI) Imposed by all states and the Federal governmentJ) Imposed by some states but not the Federal governmentK) Imposed only by the Federal governmentL) No correct match providedM) B) and F)
N) C) and E)

Question 7

Match the statements that relate to each other.Note: Some choices may be used more than once.
-Criminal fraud 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 officeG) Conducted at taxpayer's officeH) 6 yearsI) 45-day grace period allowed to IRSJ) No statute of limitations (period remains open) K) 75% of underpaymentL) No correct match providedM) E) and I)
N) A) and E)

Question 8

If a "special agent" becomes involved in the audit of a return,this indicates that the IRS suspects that fraud is involved.

Accepted Answer

A) True 
 B)False

Question 9

Using the choices provided below,show the justification for each provision of the tax law listed.
-Tax brackets are increased for inflation.

Accepted Answer

A)  Economic considerations
B)  Social considerations
C)  Equity considerationsD) All of the above
E) B) and C)

Question 10

Both economic and social considerations can be used to justify:

Accepted Answer

A)  Favorable tax treatment for accident and health plans provided for employees and financed by employers.
B)  Disallowance of any deduction for expenditures deemed to be contrary to public policy (e.g. ,fines,penalties,illegal kickbacks,bribes to government officials) .
C)  Various tax credits,deductions,and exclusions that are designed to encourage taxpayers to obtain additional education.
D)  Allowance of a deduction for state and local income taxes paid.
E)  None of these.F) A) and D)
G) A) and E)

Question 11

Using the choices provided below,show the justification for each provision of the tax law listed.
-A small business corporation can elect to avoid the corporate income tax.

Accepted Answer

A)  Economic considerations
B)  Social considerations
C)  Equity considerationsD) All of the above
E) B) and C)

Question 12

The tax law provides various tax credits,deductions,and exclusions that are designed to encourage taxpayers to obtain additional education.These provisions can be justified on both economic and equity grounds.

Accepted Answer

A) True 
 B)False

Question 13

Currently,the tax base for the Social Security component of the FICA is not limited to a dollar amount.

Accepted Answer

A) True 
 B)False

Question 14

Some states use their state income tax return as a means of collecting unpaid sales and use taxes.

Accepted Answer

A) True 
 B)False

Question 15

Briana lives in one state and works in the adjoining state.Both states tax the income she earns from her job.Does Briana have any relief from this apparent double taxation of the same income?

Accepted Answer

Most states allow their residents some f...

Question 16

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 17

One of the motivations for making a gift is to save on income taxes.

Accepted Answer

A) True 
 B)False

Question 18

In 1985,Roy leased real estate to Drab Corporation for 20 years.Drab Corporation made significant capital improvements to the property.In 2005,Drab decides not to renew the lease and vacates the property.At that time,the value of the improvements is $800,000.Roy sells the real estate in 2014 for $1,200,000 of which $900,000 is attributable to the improvements.When is Roy taxed on the improvements made by Drab Corporation?

Accepted Answer

Roy is not subject to taxation on the im...

Question 19

Match the statements that relate to each other.Note: Some choices may be used more than once.
-More than 25% gross income omission and statute of limitations

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 officeG) Conducted at taxpayer's officeH) 6 yearsI) 45-day grace period allowed to IRSJ) No statute of limitations (period remains open) K) 75% of underpaymentL) No correct match providedM) D) and H)
N) C) and J)

Question 20

Melinda has been referred to you by one of your clients.In the past,she has prepared her own income tax returns,but she has become overwhelmed by the increased complexity of the tax law.Consequently,Melinda wants you to prepare her return for calendar year 2014.In reviewing her 2013 return,you note that she has claimed as a deduction the entire cost of a business building that should have been capitalized and depreciated.What course of action should you follow?

Accepted Answer

You should recommend to Melinda that an ...

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

Briana lives in one state and works in the adjoining state.Both states tax the income she earns from her job.Does Briana have any relief from this apparent double taxation of the same income?

Correct Answer
verified
Most states allow their residents some f...
View Answer

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.

Correct Answer
verified

If a "special agent" becomes involved in the audit of a return,this indicates that the IRS suspects that fraud is involved.

Correct Answer
verified

Two months after the burglary of his personal residence,Eric is audited by the IRS.Among the items taken in the burglary was a shoe box containing approximately $50,000 in cash.Eric is the owner and operator of a cash-and-carry liquor store.Eric wonders why he was audited.Can you help explain?

Correct Answer
verified
Although Eric's audit by the IRS could b...
View Answer

The tax law provides various tax credits,deductions,and exclusions that are designed to encourage taxpayers to obtain additional education.These provisions can be justified on both economic and equity grounds.

Correct Answer
verified

Using the choices provided below,show the justification for each provision of the tax law listed. -Additional depreciation deduction allowed for the year the asset is acquired.

Correct Answer
verified

One of the motivations for making a gift is to save on income taxes.

Correct Answer
verified

A major advantage of a flat tax type of income tax is its simplicity.

Correct Answer
verified

Correct Answer
verified
You should recommend to Melinda that an ...
View Answer

Using the choices provided below,show the justification for each provision of the tax law listed. -Tax brackets are increased for inflation.

Correct Answer
verified

Using the choices provided below,show the justification for each provision of the tax law listed. -Contributions to charitable organizations are deductible.

Correct Answer
verified

Some states use their state income tax return as a means of collecting unpaid sales and use taxes.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Match the statements that relate to each other.Note: Some choices may be used more than once. -More than 25% gross income omission and statute of limitations

Correct Answer
verified

Correct Answer
verified
Roy is not subject to taxation on the im...
View Answer

Currently,the tax base for the Social Security component of the FICA is not limited to a dollar amount.

Correct Answer
verified

Using the choices provided below,show the justification for each provision of the tax law listed. -A small business corporation can elect to avoid the corporate income tax.

Correct Answer
verified

Both economic and social considerations can be used to justify:

Correct Answer
verified

Taxes not imposed by the Federal government include:

Correct Answer
verified

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

Briana lives in one state and works in the adjoining state.Both states tax the income she earns from her job.Does Briana have any relief from this apparent double taxation of the same income?

Correct AnswerverifiedMost states allow their residents some f...View AnswerShow Answer

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.

Correct AnswerverifiedShow Answer

If a "special agent" becomes involved in the audit of a return,this indicates that the IRS suspects that fraud is involved.

Correct AnswerverifiedShow Answer

Two months after the burglary of his personal residence,Eric is audited by the IRS.Among the items taken in the burglary was a shoe box containing approximately $50,000 in cash.Eric is the owner and operator of a cash-and-carry liquor store.Eric wonders why he was audited.Can you help explain?

Correct AnswerverifiedAlthough Eric's audit by the IRS could b...View AnswerShow Answer

The tax law provides various tax credits,deductions,and exclusions that are designed to encourage taxpayers to obtain additional education.These provisions can be justified on both economic and equity grounds.

Correct AnswerverifiedShow Answer

Using the choices provided below,show the justification for each provision of the tax law listed. -Additional depreciation deduction allowed for the year the asset is acquired.

Correct AnswerverifiedShow Answer

One of the motivations for making a gift is to save on income taxes.

Correct AnswerverifiedShow Answer

A major advantage of a flat tax type of income tax is its simplicity.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedYou should recommend to Melinda that an ...View AnswerShow Answer

Using the choices provided below,show the justification for each provision of the tax law listed. -Tax brackets are increased for inflation.

Correct AnswerverifiedShow Answer

Using the choices provided below,show the justification for each provision of the tax law listed. -Contributions to charitable organizations are deductible.

Correct AnswerverifiedShow Answer

Some states use their state income tax return as a means of collecting unpaid sales and use taxes.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Match the statements that relate to each other.Note: Some choices may be used more than once. -More than 25% gross income omission and statute of limitations

Correct AnswerverifiedShow Answer

Correct AnswerverifiedRoy is not subject to taxation on the im...View AnswerShow Answer

Currently,the tax base for the Social Security component of the FICA is not limited to a dollar amount.

Correct AnswerverifiedShow Answer

Using the choices provided below,show the justification for each provision of the tax law listed. -A small business corporation can elect to avoid the corporate income tax.

Correct AnswerverifiedShow Answer

Both economic and social considerations can be used to justify:

Correct AnswerverifiedShow Answer

Taxes not imposed by the Federal government include:

Correct AnswerverifiedShow Answer

Correct Answer
verified
Most states allow their residents some f...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Although Eric's audit by the IRS could b...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
You should recommend to Melinda that an ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Roy is not subject to taxation on the im...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified