Question 1

Not all of the states that impose a general sales tax also have a use tax.

Accepted Answer

A) True 
 B)False

Question 2

Social considerations can be used to justify:

Accepted Answer

A)   Allowance of a credit for child care expenses.
B)   Allowing excess capital losses to be carried over to other years.
C)   Allowing accelerated amortization for the cost of installing pollution control facilities.
D)   Allowing a Federal income tax deduction for state and local sales taxes.
E)   None of these.F) C) and D)
G) B) and C)

Question 3

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 4

Currently, the Federal corporate income tax is less progressive than the individual income tax.

Accepted Answer

A) True 
 B)False

Question 5

State income taxes generally can be characterized by:

Accepted Answer

A)   The same date for filing as the Federal income tax.
B)   No provision for withholding procedures.
C)   Allowance of a deduction for Federal income taxes paid.
D)   Applying only to individuals and not applying to corporations.
E)   None of these.F) None of the above
G) B) and D)

Question 6

What is the difference between an inheritance tax and an estate tax? Who imposes these taxes?

Accepted Answer

An inheritance tax is a tax on the right...

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Allowing a tax credit for certain solar energy property can be justified:

Accepted Answer

A)   As helping small businesses.
B)   As promoting administrative feasibility.
C)   As promoting a government policy to use alternative energy sources.
D)   Based on the wherewithal to pay concept.
E)   None of these.F) A) and B)
G) D) and E)

Question 9

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)   Carry over of excess charitable contributions.
D)   Use of the installment method to recognize gain.
E)   Carry over of excess capital losses.F) A) and C)
G) B) and E)

Question 10

The tax law contains various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain additional education. On what grounds can these provisions be justified?

Accepted Answer

Social and economic considerat...

Question 11

Tracy has just been audited and the IRS agent has issued an RAR that assesses a large deficiency. Since Tracy disagrees with the result, her next step is to go to court. Do you agree?

Accepted Answer

Tracy might save herself time and expens...

Question 12

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 13

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 14

Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-Mitigation of the annual accounting period concept

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 J)
N) E) and G)

Question 17

Regarding proper ethical guidelines, which (if any)  of the following is correct?

Accepted Answer

A)   The use of client estimates in preparing a return may be acceptable.
B)   Under no circumstances should a question on a tax return be left unanswered.
C)   If a client has made a mistake in a prior year's return and refuses to correct it, you should withdraw from the engagement.
D)   If the exact amount of a deduction is not certain (e.g., around mid-$600s) , it should be recorded as an odd amount (i.e., $649)  so as to increase the appearance of greater certainty.
E)   None of these.F) B) and E)
G) None of the above

Question 18

The Federal estate and gift taxes are examples of progressive taxes.

Accepted Answer

A) True 
 B)False

Question 19

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

Question 20

Congressman Smith wants to impose a new tax on sugar drinks. Analyze this proposal against the principles of equity, simplicity and neutrality.

Accepted Answer

Equity - The tax is regressive in that i...

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

Congressman Smith wants to impose a new tax on sugar drinks. Analyze this proposal against the principles of equity, simplicity and neutrality.

Correct AnswerverifiedEquity - The tax is regressive in that i...View AnswerShow Answer

Currently, the Federal corporate income tax is less progressive than the individual income tax.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -Mitigation of the annual accounting period concept

Correct AnswerverifiedShow Answer

Social considerations can be used to justify:

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

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

Correct AnswerverifiedShow Answer

State income taxes generally can be characterized by:

Correct AnswerverifiedShow Answer

Not all of the states that impose a general sales tax also have a use tax.

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

Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals.

Correct AnswerverifiedShow Answer

Tracy has just been audited and the IRS agent has issued an RAR that assesses a large deficiency. Since Tracy disagrees with the result, her next step is to go to court. Do you agree?

Correct AnswerverifiedTracy might save herself time and expens...View AnswerShow Answer

Allowing a tax credit for certain solar energy property can be justified:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Both economic and social considerations can be used to justify:

Correct AnswerverifiedShow Answer

What is the difference between an inheritance tax and an estate tax? Who imposes these taxes?

Correct AnswerverifiedAn inheritance tax is a tax on the right...View AnswerShow Answer

Regarding proper ethical guidelines, which (if any) of the following is correct?

Correct AnswerverifiedShow Answer

The tax law contains various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain additional education. On what grounds can these provisions be justified?

Correct AnswerverifiedSocial and economic considerat...View AnswerShow Answer

The Federal estate and gift taxes are examples of progressive taxes.

Correct AnswerverifiedShow Answer

Correct Answer
verified
Equity - The tax is regressive in that i...
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
Tracy might save herself time and expens...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
An inheritance tax is a tax on the right...
View Answer

Correct Answer
verified

Correct Answer
verified
Social and economic considerat...
View Answer

Correct Answer
verified