Question 1

The proposed flat tax:

Accepted Answer

A)   Would increase the number of deductions available to individuals
B)   Would not require individuals to file returns.
C)   Would tax the increment in value as goods move through the production and manufacturing stages to the marketplace.
D)   Is a type of consumption tax.
E)   None of these.F) B) and D)
G) B) and C)

Question 2

Like the Federal counterpart, the amount of the state excise taxes on gasoline varies from state to state.

Accepted Answer

A) True 
 B)False

Question 3

Using the choices provided below, show the justification for each provision of the tax law listed.
-A bribe to the local sheriff, although business related, is not deductible.

Accepted Answer

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

Question 4

In 1987, Roy leased real estate to Drab Corporation for 20 years. Drab Corporation made significant capital improvements to the property. In 2006, 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 2018 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 5

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 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) G) and H)
N) A) and B)

Question 6

For individual taxpayers, the interest rate for income tax refunds (overpayments) is the same as that applicable to assessments (underpayments).

Accepted Answer

A) True 
 B)False

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) A) and I)
N) A) and C)

Question 8

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 considerations
D)  Both a. and b.E) A) and B)
F) A) and C)

Question 9

A characteristic of the fraud penalties is:

Accepted Answer

A)   When negligence and civil fraud apply to a deficiency, the negligence penalty predominates.
B)   Criminal fraud can result in a fine and a prison sentence.
C)   The criminal fraud penalty is 75% of the deficiency attributable to the fraud.
D)   The IRS has the same burden of proof in the case of criminal fraud than with civil fraud.
E)   None of these.F) B) and E)
G) A) and B)

Question 10

Taxes levied by all states include:

Accepted Answer

A)   Tobacco excise tax.
B)   Individual income tax.
C)   Inheritance tax.
D)   General sales tax.
E)   None of these.F) B) and E)
G) A) and B)

Question 11

Which, if any, of the following transactions will increase a taxing jurisdiction's revenue from the ad valorem tax imposed on real estate?

Accepted Answer

A)   A resident dies and leaves his farm to his church.
B)   A large property owner issues a conservation easement as to some of her land.
C)   A tax holiday issued 10 years ago has expired.
D)   A bankrupt motel is acquired by the Red Cross and is to be used to provide housing for homeless persons.
E)   None of these.F) None of the above
G) B) and E)

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

The proposed flat tax:

Correct Answer
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A characteristic of the fraud penalties is:

Correct Answer
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Taxes levied by all states include:

Correct Answer
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Using the choices provided below, show the justification for each provision of the tax law listed. -A bribe to the local sheriff, although business related, is not deductible.

Correct Answer
verified

For individual taxpayers, the interest rate for income tax refunds (overpayments) is the same as that applicable to assessments (underpayments).

Correct Answer
verified

Like the Federal counterpart, the amount of the state excise taxes on gasoline varies from state to state.

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

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

Correct Answer
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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
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Which, if any, of the following transactions will increase a taxing jurisdiction's revenue from the ad valorem tax imposed on real estate?

Correct Answer
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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

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

The proposed flat tax:

Correct AnswerverifiedShow Answer

A characteristic of the fraud penalties is:

Correct AnswerverifiedShow Answer

Taxes levied by all states include:

Correct AnswerverifiedShow Answer

Using the choices provided below, show the justification for each provision of the tax law listed. -A bribe to the local sheriff, although business related, is not deductible.

Correct AnswerverifiedShow Answer

For individual taxpayers, the interest rate for income tax refunds (overpayments) is the same as that applicable to assessments (underpayments).

Correct AnswerverifiedShow Answer

Like the Federal counterpart, the amount of the state excise taxes on gasoline varies from state to state.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedRoy is not subject to taxation on the im...View AnswerShow 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 or not at all. -Income tax amnesty

Correct AnswerverifiedShow Answer

Which, if any, of the following transactions will increase a taxing jurisdiction's revenue from the ad valorem tax imposed on real estate?

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

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

Correct Answer
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Correct Answer
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Correct Answer
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