Question 1

Using the following choices, show the justification for each provision of the tax law listed.
-More rapid expensing for tax purposes of the costs of installing pollution control devices.

Accepted Answer

A)  Economic considerations
B)  Social considerations
C)  Equity considerations
D)  Both a. and b.E) A) and B)
F) All of the above

Question 2

The AICPA Statements on Standards for Tax Services are:

Accepted Answer

A)   Enforceable.
B)   Educational.
C)   Out of date.
D)   Do not exist.E) B) and C)
F) All of the above

Question 3

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

Accepted Answer

A)  Three years from date return is filed
B)  Three 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) Six 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 F)
N) D) and I)

Question 4

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.F) A) and E)
G) A) and D)

Question 5

Under the usual state inheritance tax, two heirs, a cousin and a son of the deceased, would not be taxed at the same rate.

Accepted Answer

A) True 
 B)False

Question 6

In 2017, Deborah became 65 years old. In 2018 she added a swimming pool and in 2019 she converted the residence to rental property and moved into an assisted living facility. Since 2016, Deborah's ad valorem property taxes have decreased once and increased twice. Explain.

Accepted Answer

The decrease probably came in 2017 when ...

Question 7

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 8

For omissions from gross income in excess of 25% of that reported, there is no statute of limitations on additional income tax assessments by the IRS.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A)  Deferral of gains from involuntary conversions
B)  Carryforward of net operating losses
C)  "No change" is a possible result
D)  State income tax applied to a 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) E) and F)
N) G) and K)

Question 10

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

Accepted Answer

A)  Three years from date return is filed
B)  Three 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) Six yearsI) 45-day grace period allowed to IRSJ) No statute of limitations (period remains open) K) 75% of underpaymentL) No correct match providedM) C) and H)
N) H) and J)

Question 11

A parent employs his twin daughters, age 17, in his sole proprietorship. The daughters are not subject to FICA
coverage.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

The Federal income tax is based on a pay-as-you-go system and has become a "mass tax." Explain this statement.

Accepted Answer

The pay-as-you-go system is present in t...

Question 14

A characteristic of FICA is that:

Accepted Answer

A)   It does not apply when one spouse works for the other spouse.
B)   It is imposed only on the employer.
C)   It provides a modest source of income in the event of loss of employment.
D)   It is administered by both state and Federal governments.
E)   None of these.F) None of the above
G) A) and B)

Question 15

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 16

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)   All states but not the Federal government.
D)   Most of the states but not the Federal government.
E)   None of these.F) A) and B)
G) A) and E)

Question 17

Jason's business warehouse is destroyed by fire. Because 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 18

An inheritance tax is a tax on a decedent's right to pass property at death.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements about a value added tax (VAT)  is false?

Accepted Answer

A)   Many countries use a VAT.
B)   The United States has imposed a VAT since 1913.
C)   A VAT has been proposed in the United States to replace part of the income tax.
D)   A VAT operates similarly to a sales tax.E) A) and B)
F) A) and C)

Question 20

In 1988, Roy leased real estate to Drab Corporation for 20 years. Drab Corporation made significant capital improvements to the property. In 2007, Drab decided not to renew the lease and vacated the property. At that time, the value of the improvements was $800,000. Roy sells the real estate in 2019 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...

Exam 1: Understanding and Working With the Federal Tax Law

A parent employs his twin daughters, age 17, in his sole proprietorship. The daughters are not subject to FICA coverage.

Correct Answer
verified

The Federal income tax is based on a pay-as-you-go system and has become a "mass tax." Explain this statement.

Correct Answer
verified
The pay-as-you-go system is present in t...
View Answer

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

Correct Answer
verified

A use tax is imposed by:

Correct Answer
verified

An inheritance tax is a tax on a decedent's right to pass property at death.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

For omissions from gross income in excess of 25% of that reported, there is no statute of limitations on additional income tax assessments by the IRS.

Correct Answer
verified

The AICPA Statements on Standards for Tax Services are:

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Which of the following statements about a value added tax (VAT) is false?

Correct Answer
verified

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

A characteristic of FICA is that:

Correct Answer
verified

Taxes not imposed by the Federal government include:

Correct Answer
verified

Jason's business warehouse is destroyed by fire. Because 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.

Correct Answer
verified

In 2017, Deborah became 65 years old. In 2018 she added a swimming pool and in 2019 she converted the residence to rental property and moved into an assisted living facility. Since 2016, Deborah's ad valorem property taxes have decreased once and increased twice. Explain.

Correct Answer
verified
The decrease probably came in 2017 when ...
View Answer

Under the usual state inheritance tax, two heirs, a cousin and a son of the deceased, would not be taxed at the same rate.

Correct Answer
verified

Using the following choices, show the justification for each provision of the tax law listed. -More rapid expensing for tax purposes of the costs of installing pollution control devices.

Correct Answer
verified

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

Exam 1: Understanding and Working With the Federal Tax Law

A parent employs his twin daughters, age 17, in his sole proprietorship. The daughters are not subject to FICA coverage.

Correct AnswerverifiedShow Answer

The Federal income tax is based on a pay-as-you-go system and has become a "mass tax." Explain this statement.

Correct AnswerverifiedThe pay-as-you-go system is present in t...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

A use tax is imposed by:

Correct AnswerverifiedShow Answer

An inheritance tax is a tax on a decedent's right to pass property at death.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For omissions from gross income in excess of 25% of that reported, there is no statute of limitations on additional income tax assessments by the IRS.

Correct AnswerverifiedShow Answer

The AICPA Statements on Standards for Tax Services are:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements about a value added tax (VAT) is false?

Correct AnswerverifiedShow 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

A characteristic of FICA is that:

Correct AnswerverifiedShow Answer

Taxes not imposed by the Federal government include:

Correct AnswerverifiedShow Answer

Jason's business warehouse is destroyed by fire. Because 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.

Correct AnswerverifiedShow Answer

In 2017, Deborah became 65 years old. In 2018 she added a swimming pool and in 2019 she converted the residence to rental property and moved into an assisted living facility. Since 2016, Deborah's ad valorem property taxes have decreased once and increased twice. Explain.

Correct AnswerverifiedThe decrease probably came in 2017 when ...View AnswerShow Answer

Under the usual state inheritance tax, two heirs, a cousin and a son of the deceased, would not be taxed at the same rate.

Correct AnswerverifiedShow Answer

Using the following choices, show the justification for each provision of the tax law listed. -More rapid expensing for tax purposes of the costs of installing pollution control devices.

Correct AnswerverifiedShow Answer

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

Correct Answer
verified

Correct Answer
verified
The pay-as-you-go system is present in t...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The decrease probably came in 2017 when ...
View Answer

Correct Answer
verified

Correct Answer
verified

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