Question 1

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 2

A calendar year taxpayer files his 2017 Federal income tax return on March 4, 2018. The return reflects an overpayment of $6,000, and the taxpayer requests a refund of this amount. The refund is paid on May 16, 2018. The refund need not include interest.

Accepted Answer

A) True 
 B)False

Question 3

Match the statements that relate to each other. Note: Some choices may be used more than once.
-No return and statute 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) K) and L)
N) I) and J)

Question 4

Using the choices provided below, show the justification for each provision of the tax law listed.
-A deduction for certain expenses (interest and taxes)  incident to home ownership.

Accepted Answer

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

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-Revenue Agent's Report (RAR)

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) K) and L)
N) D) and H)

Question 7

Sally's neighbor often brags that his employer often pays him in cash "off the books" to save him taxes. Sally is tired of hearing this and contacts the IRS to report the neighbor. If this tip results in taxes collected by the IRS, Sally will likely receive an award of a portion of the tax and penalties collected.

Accepted Answer

A) True 
 B)False

Question 8

Various tax provisions encourage the creation of certain types of retirement plans. Such provisions can be justified on both economic and social grounds.

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.
-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) B) and E)
N) A) and J)

Question 10

Before proposing that the state's sales tax be expanded to include food, a legislator should ask whether:

Accepted Answer

A)   the state tax agency will allow this expansion.
B)   a majority of his constituents agree.
C)   grocery stores will be able to collect the tax.
D)   the state's constitution allows for this tax.E) B) and C)
F) A) and D)

Question 11

Characteristics of the "Fair Tax" (i.e., national sales tax)  include which, if any, of the following:

Accepted Answer

A)   Abolition of the Federal individual (but not the corporate)  income tax.
B)   Abolition of all Federal income taxes but retention of payroll taxes (including the self-employment tax) .
C)   Abolition of all Federal income taxes and payroll taxes but retention of the Federal estate and gift taxes.
D)   Abolition of all Federal income and payroll taxes as well as the Federal estate and gift taxes.
E)   None of these.F) A) and D)
G) A) and E)

Question 12

The tax law contains various provisions that encourage home ownership.
a. On what basis can this objective be justified?
b. Are there any negative considerations? Explain.

Accepted Answer

a. Home ownership can be justified on ec...

Question 13

Provisions in the tax law that promote energy conservation and more use of alternative (non-fossil)  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 B)
G) A) and C)

Question 14

In connection with facilitating the function of the IRS in the administration of the tax laws, comment on the utility of the following:
a. An increase in the amount of the standard deduction.
b. Dollar and percentage limitations on the deduction of personal casualty losses in Federally- declared disaster areas.
c. Availability of interest and penalties for taxpayer noncompliance.

Accepted Answer

a. An increase in the amount of the stan...

Question 15

There is a Federal excise tax on hotel occupancy.

Accepted Answer

A) True 
 B)False

Question 16

In late June 2018, Art is audited by the state and a large deficiency is assessed. In November of the same year, his Federal income tax return is audited by the IRS. What has probably happened?

Accepted Answer

The IRS has been not...

Question 17

Which, if any, of the following is a typical characteristic of an ad valorem tax on personalty?

Accepted Answer

A)   Taxpayer compliance is greater for personal use property than for business use property.
B)   The tax on automobiles sometimes considers the age of the vehicle.
C)   Most states impose a tax on intangibles.
D)   The tax on intangibles generates considerable revenue since it is difficult for taxpayers to avoid.
E)   None of these.F) C) and E)
G) A) and E)

Question 18

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)  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 L)
N) G) and H)

Question 19

The value added tax (VAT) has not had wide acceptance in the international community.

Accepted Answer

A) True 
 B)False

Question 20

Even though a client refuses to correct an error on a past return, it may be possible for a practitioner to continue to prepare returns for the client.

Accepted Answer

A) True 
 B)False

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

Match the statements that relate to each other. Note: Some choices may be used more than once. -No return and statute limitations

Correct Answer
verified

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

Correct Answer
verified

Even though a client refuses to correct an error on a past return, it may be possible for a practitioner to continue to prepare returns for the client.

Correct Answer
verified

Before proposing that the state's sales tax be expanded to include food, a legislator should ask whether:

Correct Answer
verified

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

Correct Answer
verified

The tax law contains various provisions that encourage home ownership. a. On what basis can this objective be justified? b. Are there any negative considerations? Explain.

Correct Answer
verified
a. Home ownership can be justified on ec...
View Answer

Using the choices provided below, show the justification for each provision of the tax law listed. -A deduction for certain expenses (interest and taxes) incident to home ownership.

Correct Answer
verified

Correct Answer
verified
a. An increase in the amount of the stan...
View Answer

The value added tax (VAT) has not had wide acceptance in the international community.

Correct Answer
verified

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

Correct Answer
verified

In late June 2018, Art is audited by the state and a large deficiency is assessed. In November of the same year, his Federal income tax return is audited by the IRS. What has probably happened?

Correct Answer
verified
The IRS has been not...
View Answer

Correct Answer
verified

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -Revenue Agent's Report (RAR)

Correct Answer
verified

There is a Federal excise tax on hotel occupancy.

Correct Answer
verified

A calendar year taxpayer files his 2017 Federal income tax return on March 4, 2018. The return reflects an overpayment of $6,000, and the taxpayer requests a refund of this amount. The refund is paid on May 16, 2018. The refund need not include interest.

Correct Answer
verified

Which, if any, of the following is a typical characteristic of an ad valorem tax on personalty?

Correct Answer
verified

Various tax provisions encourage the creation of certain types of retirement plans. Such provisions can be justified on both economic and social grounds.

Correct Answer
verified

Characteristics of the "Fair Tax" (i.e., national sales tax) include which, if any, of the following:

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

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

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

Match the statements that relate to each other. Note: Some choices may be used more than once. -No return and statute limitations

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Even though a client refuses to correct an error on a past return, it may be possible for a practitioner to continue to prepare returns for the client.

Correct AnswerverifiedShow Answer

Before proposing that the state's sales tax be expanded to include food, a legislator should ask whether:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The tax law contains various provisions that encourage home ownership. a. On what basis can this objective be justified? b. Are there any negative considerations? Explain.

Correct Answerverifieda. Home ownership can be justified on ec...View AnswerShow Answer

Using the choices provided below, show the justification for each provision of the tax law listed. -A deduction for certain expenses (interest and taxes) incident to home ownership.

Correct AnswerverifiedShow Answer

Correct Answerverifieda. An increase in the amount of the stan...View AnswerShow Answer

The value added tax (VAT) has not had wide acceptance in the international community.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In late June 2018, Art is audited by the state and a large deficiency is assessed. In November of the same year, his Federal income tax return is audited by the IRS. What has probably happened?

Correct AnswerverifiedThe IRS has been not...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -Revenue Agent's Report (RAR)

Correct AnswerverifiedShow Answer

There is a Federal excise tax on hotel occupancy.

Correct AnswerverifiedShow Answer

A calendar year taxpayer files his 2017 Federal income tax return on March 4, 2018. The return reflects an overpayment of $6,000, and the taxpayer requests a refund of this amount. The refund is paid on May 16, 2018. The refund need not include interest.

Correct AnswerverifiedShow Answer

Which, if any, of the following is a typical characteristic of an ad valorem tax on personalty?

Correct AnswerverifiedShow Answer

Various tax provisions encourage the creation of certain types of retirement plans. Such provisions can be justified on both economic and social grounds.

Correct AnswerverifiedShow Answer

Characteristics of the "Fair Tax" (i.e., national sales tax) include which, if any, of the following:

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

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

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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a. Home ownership can be justified on ec...
View Answer

Correct Answer
verified

Correct Answer
verified
a. An increase in the amount of the stan...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The IRS has been not...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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