Question 1

A rationale for the installment sale method tax rule is:

Accepted Answer

A)  Ability to pay.
B)  Equity and fairness.
C)  Simplicity.
D)  Revenue neutrality.E) C) and D)
F) None of the above

Question 2

Which, if any, of the following provisions cannot be justified as mitigating the effect of the annual accounting period concept?

Accepted Answer

A)  Nonrecognition of gain allowed for involuntary conversions.
B)  Net operating loss carryover provisions.
C)  Carryover of excess charitable contributions.
D)  Use of the installment method to recognize gain.
E)  Carryover of excess capital losses.F) A) and B)
G) B) and E)

Question 3

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 4

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 5

Because it is consistent with the wherewithal to pay concept, the tax law requires a seller to recognize a gain in the year the installment sale occurs.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following taxes is paid only by the employer?

Accepted Answer

A)  FICA
B)  FUTA
C)  Social Security tax
D)  Medicare taxE) None of the above
F) C) and D)

Question 7

Two persons who live in the same state but in different counties may not be subject to the same general sales tax rate.

Accepted Answer

A) True 
 B)False

Question 8

Sales made by mail order are not exempt from the application of a general sales (or use) tax.

Accepted Answer

A) True 
 B)False

Question 9

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 10

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) B) and D)
G) D) and E)

Question 11

A tax cut enacted by Congress that contains a sunset provision will make the tax cut temporary.

Accepted Answer

A) True 
 B)False

Question 12

There is a Federal excise tax on hotel occupancy.

Accepted Answer

A) True 
 B)False

Question 13

Taxes levied by both states and the Federal government include:

Accepted Answer

A)  General sales tax.
B)  Customs duties.
C)  Hotel occupancy tax.
D)  Franchise tax.
E)  None of these.F) B) and E)
G) C) and D)

Question 14

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) B) and C)
G) C) and D)

Question 15

Using the choices provided below, show the justification for each provision of the tax law listed.
a.Economic considerations
b.Social considerations 
c.Equity considerations 
d.Both a.and b.
-A deduction for qualified tuition paid to obtain higher education.

Accepted Answer

The answer of Using the choices provided below, show the...

Question 16

What is a severance tax? How productive can it be in terms of generating revenue?

Accepted Answer

A severance tax is one imposed when natu...

Question 17

Provisions in the tax law that promote energy conservation and more use of alternative (nonfossil)  fuels can be justified by:

Accepted Answer

A)  Political considerations.
B)  Economic and social considerations.
C)  Promoting administrative feasibility.
D)  Encouragement of small business.
E)  None of these.F) A) and D)
G) A) and E)

Question 18

Using the choices provided below, show the justification for each provision of the tax law listed.
a.Economic considerations
b.Social considerations 
c.Equity considerations 
d.Both a.and b.
-Contributions to charitable organizations are deductible.

Accepted Answer

The answer of Using the choices provided below, show the...

Question 19

Mona inherits her mother's personal residence, which she converts to a furnished rental house.These changes should affect the amount of ad valorem property taxes levied on the properties.

Accepted Answer

A) True 
 B)False

Question 20

The FICA tax (Medicare component) on wages is progressive since the tax due increases as wages increase.

Accepted Answer

A) True 
 B)False

Exam 1: Introduction to Taxation

Which of the following taxes is paid only by the employer?

Correct AnswerverifiedShow Answer

Two persons who live in the same state but in different counties may not be subject to the same general sales tax rate.

Correct AnswerverifiedShow Answer

A tax cut enacted by Congress that contains a sunset provision will make the tax cut temporary.

Correct AnswerverifiedShow Answer

Sales made by mail order are not exempt from the application of a general sales (or use) tax.

Correct AnswerverifiedShow Answer

Because it is consistent with the wherewithal to pay concept, the tax law requires a seller to recognize a gain in the year the installment sale occurs.

Correct AnswerverifiedShow Answer

A use tax is imposed by:

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

Using the choices provided below, show the justification for each provision of the tax law listed. a.Economic considerations b.Social considerations c.Equity considerations d.Both a.and b. -Contributions to charitable organizations are deductible.

Correct AnswerverifiedShow Answer

Which, if any, of the following provisions cannot be justified as mitigating the effect of the annual accounting period concept?

Correct AnswerverifiedShow Answer

Provisions in the tax law that promote energy conservation and more use of alternative (nonfossil) fuels can be justified by:

Correct AnswerverifiedShow Answer

A rationale for the installment sale method tax rule is:

Correct AnswerverifiedShow Answer

The FICA tax (Medicare component) on wages is progressive since the tax due increases as wages increase.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Both economic and social considerations can be used to justify:

Correct AnswerverifiedShow Answer

What is a severance tax? How productive can it be in terms of generating revenue?

Correct AnswerverifiedA severance tax is one imposed when natu...View AnswerShow Answer

Mona inherits her mother's personal residence, which she converts to a furnished rental house.These changes should affect the amount of ad valorem property taxes levied on the properties.

Correct AnswerverifiedShow Answer

Using the choices provided below, show the justification for each provision of the tax law listed. a.Economic considerations b.Social considerations c.Equity considerations d.Both a.and b. -A deduction for qualified tuition paid to obtain higher education.

Correct AnswerverifiedShow Answer

Taxes levied by both states and the Federal government include:

Correct AnswerverifiedShow Answer

There is a Federal excise tax on hotel occupancy.

Correct AnswerverifiedShow Answer

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A severance tax is one imposed when natu...
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