Question 1

The pay­as­you­go feature of the Federal income tax on individuals conforms to Adam Smith's canon of certainty.

Accepted Answer

A) True 
 B)False

Question 2

David files his tax return 45 days after the due date. Along with the return, David remits a check for $40,000 which is the balance of the tax owed. Disregarding the interest element, David's total failure to file and to pay penalties are:

Accepted Answer

A)   $400.
B)   $3,600.
C)   $4,000.
D)   $4,400.
E)   None of the above.F) A) and E)
G) C) and D)

Question 3

Using the choices provided below, show the justification for each provision of the tax law listed.
-A Federal deduction for state and local sales taxes paid.

Accepted Answer

A)  Economic considerations
B)  Social considerations
C)  Equity considerationsD) A) and B)
E) None of the above

Question 4

In cases of doubt, courts have held that tax relief provisions should be broadly construed in favor of taxpayers.

Accepted Answer

A) True 
 B)False

Question 5

For state income tax purposes, a majority of states allow a deduction for Federal income taxes.

Accepted Answer

A) True 
 B)False

Question 6

If fraud is involved, there is no time limit on the assessment of a deficiency by the IRS.

Accepted Answer

A) True 
 B)False

Question 7

To lessen, or eliminate, the effect of multiple taxation, a taxpayer who is subject to both foreign and U.S. income taxes on the same income is allowed either a deduction or a credit for the foreign tax paid.

Accepted Answer

A) True 
 B)False

Question 8

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-Excise tax on tobacco

Accepted Answer

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 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) A) and B)
N) C) and J)

Question 9

Which, if any, of the following statements best describes the history of the Federal income tax?

Accepted Answer

A)   It did not exist during the Civil War.
B)   The Federal income tax on corporations was held by the U.S. Supreme Court to be allowable under the U.S. Constitution.
C)   The Federal income tax on individuals was held by the U.S. Supreme Court to be allowable under the U.S. Constitution.
D)   Both the Federal income tax on individuals and on corporations was held by the U.S. Supreme Court to be contrary to the U.S. Constitution.
E)   None of the above.F) A) and E)
G) B) and D)

Question 10

Using the choices provided below, show the justification for each provision of the tax law listed.
-A deduction for qualified tuition paid to obtain higher education.

Accepted Answer

A)  Economic considerations
B)  Social considerations
C)  Equity considerationsD) All of the above
E) A) and C)

Question 11

Your client, Connie, won $12,000 in a football office pool. She sees no reason to include it in her income for several reasons. First, the amount won will not be reported to the IRS. Second, as an average income employee, she is unlikely to be audited by the IRS. Third, she feels that she has probably lost this much in other past office pools. How do you respond?

Accepted Answer

As a practitioner, you cannot play the a...

Question 12

Match the statements that relate to each other. Note: Some choices may be used more than once.
-Interest due on refund

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) E) and I)
N) G) and I)

Question 13

The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution) levied tax rates from a low of 2% to a high of 6%.

Accepted Answer

A) True 
 B)False

Question 14

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 so as to increase the appearance of greater certainty.
E)   None of the above.F) B) and E)
G) A) and D)

Question 15

One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from being accumulated within the family unit.

Accepted Answer

A) True 
 B)False

Question 16

State and local governments are sometimes forced to find ways to generate additional revenue. Comment on the pros and cons of the following procedures:
a. Decouple what would be part of the piggyback format of the state income tax.
b. Tax amnesty provisions.
c. Internet shaming.

Accepted Answer

a. The decoupling process is easily acco...

Question 17

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

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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 20

Using the choices provided below, show the justification for each provision of the tax law listed.
-Tax credits available for the purchase of a vehicle that uses alternative (non-fossil)  fuels.

Accepted Answer

A)  Economic considerations
B)  Social considerations
C)  Equity considerationsD) None of the above
E) All of the above

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

State and local governments are sometimes forced to find ways to generate additional revenue. Comment on the pros and cons of the following procedures: a. Decouple what would be part of the piggyback format of the state income tax. b. Tax amnesty provisions. c. Internet shaming.

Correct Answer
verified
a. The decoupling process is easily acco...
View Answer

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

Correct Answer
verified

The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution) levied tax rates from a low of 2% to a high of 6%.

Correct Answer
verified

Which, if any, of the following statements best describes the history of the Federal income tax?

Correct Answer
verified

In cases of doubt, courts have held that tax relief provisions should be broadly construed in favor of taxpayers.

Correct Answer
verified

The payasyougo feature of the Federal income tax on individuals conforms to Adam Smith's canon of certainty.

Correct Answer
verified

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -Excise tax on tobacco

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

Using the choices provided below, show the justification for each provision of the tax law listed. -A deduction for qualified tuition paid to obtain higher education.

Correct Answer
verified

If fraud is involved, there is no time limit on the assessment of a deficiency by the IRS.

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

Match the statements that relate to each other. Note: Some choices may be used more than once. -Interest due on refund

Correct Answer
verified

Using the choices provided below, show the justification for each provision of the tax law listed. -A Federal deduction for state and local sales taxes paid.

Correct Answer
verified

David files his tax return 45 days after the due date. Along with the return, David remits a check for $40,000 which is the balance of the tax owed. Disregarding the interest element, David's total failure to file and to pay penalties are:

Correct Answer
verified

Using the choices provided below, show the justification for each provision of the tax law listed. -Tax credits available for the purchase of a vehicle that uses alternative (non-fossil) fuels.

Correct Answer
verified

One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from being accumulated within the family unit.

Correct Answer
verified

Correct Answer
verified
As a practitioner, you cannot play the a...
View Answer

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

Correct Answer
verified

To lessen, or eliminate, the effect of multiple taxation, a taxpayer who is subject to both foreign and U.S. income taxes on the same income is allowed either a deduction or a credit for the foreign tax paid.

Correct Answer
verified

For state income tax purposes, a majority of states allow a deduction for Federal income taxes.

Correct Answer
verified

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

State and local governments are sometimes forced to find ways to generate additional revenue. Comment on the pros and cons of the following procedures: a. Decouple what would be part of the piggyback format of the state income tax. b. Tax amnesty provisions. c. Internet shaming.

Correct Answerverifieda. The decoupling process is easily acco...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution) levied tax rates from a low of 2% to a high of 6%.

Correct AnswerverifiedShow Answer

Which, if any, of the following statements best describes the history of the Federal income tax?

Correct AnswerverifiedShow Answer

In cases of doubt, courts have held that tax relief provisions should be broadly construed in favor of taxpayers.

Correct AnswerverifiedShow Answer

The pay­as­you­go feature of the Federal income tax on individuals conforms to Adam Smith's canon of certainty.

Correct AnswerverifiedShow Answer

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -Excise tax on tobacco

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

Using the choices provided below, show the justification for each provision of the tax law listed. -A deduction for qualified tuition paid to obtain higher education.

Correct AnswerverifiedShow Answer

If fraud is involved, there is no time limit on the assessment of a deficiency by the IRS.

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

Match the statements that relate to each other. Note: Some choices may be used more than once. -Interest due on refund

Correct AnswerverifiedShow Answer

Using the choices provided below, show the justification for each provision of the tax law listed. -A Federal deduction for state and local sales taxes paid.

Correct AnswerverifiedShow Answer

David files his tax return 45 days after the due date. Along with the return, David remits a check for $40,000 which is the balance of the tax owed. Disregarding the interest element, David's total failure to file and to pay penalties are:

Correct AnswerverifiedShow Answer

Using the choices provided below, show the justification for each provision of the tax law listed. -Tax credits available for the purchase of a vehicle that uses alternative (non-fossil) fuels.

Correct AnswerverifiedShow Answer

One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from being accumulated within the family unit.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedAs a practitioner, you cannot play the a...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

To lessen, or eliminate, the effect of multiple taxation, a taxpayer who is subject to both foreign and U.S. income taxes on the same income is allowed either a deduction or a credit for the foreign tax paid.

Correct AnswerverifiedShow Answer

For state income tax purposes, a majority of states allow a deduction for Federal income taxes.

Correct AnswerverifiedShow Answer

Correct Answer
verified
a. The decoupling process is easily acco...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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The payasyougo feature of the Federal income tax on individuals conforms to Adam Smith's canon of certainty.

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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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
verified
As a practitioner, you cannot play the a...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified