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

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Question 31

True/False

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A fixture will be subject to the ad valorem tax on personalty rather than the ad valorem tax on realty.

A) True
B) False

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Question 32

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When a state decouples from a Federal tax provision,it means that this provision will not apply for state income tax purposes.

A) True
B) False

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Question 33

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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 -A tax credit for amounts spent to furnish care for children while the parent is at work.

Match the statements that relate to each other.Note: Some choices may be used more than once or not at all. a.Deferral of gains from involuntary conversions b.Carryback and carryforward of net operating losses c."No change" is one possible result d.State income tax applied to visiting nonresident e.IRS special agent f.Undoing the "piggyback" result g.Ideal budget goal as to new tax legislation h.Every state that has a general sales tax has one i.Imposed by all states and the Federal government j.Imposed by some states but not the Federal government k.Imposed only by the Federal government l.No correct match provided -Excise tax on tobacco

Stealth taxes have the effect of generating additional taxes from all taxpayers.

In 2016,José,a widower,sells land (fair market value of $100,000)to his daughter,Linda,for $50,000.José has not made a taxable gift.

In preparing an income tax return,the use of a client's estimates is not permitted.

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

Match the statements that relate to each other.Note: Some choices may be used more than once or not at all. a.Deferral of gains from involuntary conversions b.Carryback and carryforward of net operating losses c."No change" is one possible result d.State income tax applied to visiting nonresident e.IRS special agent f.Undoing the "piggyback" result g.Ideal budget goal as to new tax legislation h.Every state that has a general sales tax has one i.Imposed by all states and the Federal government j.Imposed by some states but not the Federal government k.Imposed only by the Federal government l.No correct match provided -Export taxes

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.

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

Match the statements that relate to each other.Note: Some choices may be used more than once or not at all. a.Deferral of gains from involuntary conversions b.Carryback and carryforward of net operating losses c."No change" is one possible result d.State income tax applied to visiting nonresident e.IRS special agent f.Undoing the "piggyback" result g.Ideal budget goal as to new tax legislation h.Every state that has a general sales tax has one i.Imposed by all states and the Federal government j.Imposed by some states but not the Federal government k.Imposed only by the Federal government l.No correct match provided -Mitigation of the annual accounting period concept

Match the statements that relate to each other.Note: Some choices may be used more than once or not at all. a.Deferral of gains from involuntary conversions b.Carryback and carryforward of net operating losses c."No change" is one possible result d.State income tax applied to visiting nonresident e.IRS special agent f.Undoing the "piggyback" result g.Ideal budget goal as to new tax legislation h.Every state that has a general sales tax has one i.Imposed by all states and the Federal government j.Imposed by some states but not the Federal government k.Imposed only by the Federal government l.No correct match provided -Use tax

For Federal income tax purposes,there never has been a general amnesty period.

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

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

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

If the tax deficiency is attributable to fraud,the negligence penalty will not be imposed.

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

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