Question 1

On transfers by death, the Federal government relies on an estate tax, while states impose an estate tax, an inheritance tax, both taxes, or neither tax.

Accepted Answer

A) True 
 B)False

Question 2

Using the following choices, 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.
-Discriminant Index Function (DIF)

Accepted Answer

A)  Deferral of gains from involuntary conversions
B)  Carryforward of net operating losses
C)  "No change" is a possible result
D)  State income tax applied to a 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) E) and I)
N) F) and I) L

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)  Three years from date return is filed
B)  Three 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) Six yearsI) 45-day grace period allowed to IRSJ) No statute of limitations (period remains open) K) 75% of underpaymentL) No correct match providedM) D) and G)
N) B) and G)

Question 4

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 5

The objective of pay-as-you-go (paygo) is to improve administrative feasibility.

Accepted Answer

A) True 
 B)False

Question 6

Using the following choices, 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.
-Tax credits available for the purchase of a vehicle that uses alternative (nonfossil)  fuels.

Accepted Answer

A)  Deferral of gains from involuntary conversions
B)  Carryforward of net operating losses
C)  "No change" is a possible result
D)  State income tax applied to a 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) B) and D)
N) D) and F)

Question 7

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 8

In terms of probability, which of the following taxpayers would be least likely to be audited by the IRS?

Accepted Answer

A)  Taxpayer owns and operates a check-cashing service.
B)  Taxpayer is an employed electrician.
C)  Taxpayer just received a $3 million personal injury award as a result of a lawsuit.
D)  Taxpayer just won a $1 million slot machine jackpot at a Las Vegas casino.
E)  Taxpayer has been audited several times before.F) A) and D)
G) A) and C)

Question 9

The United States (either Federal, state, or local)  does not impose:

Accepted Answer

A)  Franchise taxes.
B)  Severance taxes.
C)  Occupational fees.
D)  Custom duties.
E)  Export duties.F) A) and B)
G) B) and D)

Question 10

The AICPA Statements on Standards for Tax Services are:

Accepted Answer

A)  Enforceable.
B)  Educational.
C)  Out of date.
D)  Do not exist.E) B) and D)
F) A) and D)

Question 11

If more IRS audits are producing a higher number of no change results, this indicates increased compliance on the part of taxpayers.

Accepted Answer

A) True 
 B)False

Question 12

Federal excise taxes that are no longer imposed include:

Accepted Answer

A)  Tax on air travel.
B)  Tax on wagering.
C)  Tax on the manufacture of sporting equipment.
D)  Tax on alcohol.
E)  None of these.F) A) and E)
G) None of the above

Question 13

The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.

Accepted Answer

A) True 
 B)False

Question 14

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 but not to corporations.
E)  None of these.F) C) and E)
G) A) and E)

Question 15

Match the statements that relate to each other.Note: Some choices may be used more than once.
-Field audit

Accepted Answer

A)  Three years from date return is filed
B)  Three 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) Six 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 F)
N) D) and E) G

Question 16

The annual exclusion, currently $15,000, is available for gift and estate tax purposes.

Accepted Answer

A) True 
 B)False

Question 17

No state may offer an income tax amnesty program more than once.

Accepted Answer

A) True 
 B)False  False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

The amount of a taxpayer's itemized deductions will increase the chance of being audited by the IRS.

Accepted Answer

A) True 
 B)False

Question 20

A characteristic of FICA is that:

Accepted Answer

A)  It does not apply when one spouse works for the other spouse.
B)  It is imposed only on the employer.
C)  It provides a modest source of income in the event of loss of employment.
D)  It is administered by both state and Federal governments.
E)  None of these.F) A) and D)
G) C) and D)

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

On transfers by death, the Federal government relies on an estate tax, while states impose an estate tax, an inheritance tax, both taxes, or neither tax.

Correct Answer
verified

Using the following choices, 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. -Discriminant Index Function (DIF)

Correct Answer
verified
L

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

Correct Answer
verified

The objective of pay-as-you-go (paygo) is to improve administrative feasibility.

Correct Answer
verified

Using the following choices, 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. -Tax credits available for the purchase of a vehicle that uses alternative (nonfossil) fuels.

Correct Answer
verified

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

Correct Answer
verified

In terms of probability, which of the following taxpayers would be least likely to be audited by the IRS?

Correct Answer
verified

The United States (either Federal, state, or local) does not impose:

Correct Answer
verified

The AICPA Statements on Standards for Tax Services are:

Correct Answer
verified

If more IRS audits are producing a higher number of no change results, this indicates increased compliance on the part of taxpayers.

Correct Answer
verified

Federal excise taxes that are no longer imposed include:

Correct Answer
verified

The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.

Correct Answer
verified

State income taxes generally can be characterized by:

Correct Answer
verified

Match the statements that relate to each other.Note: Some choices may be used more than once. -Field audit

Correct Answer
verified
G

The annual exclusion, currently $15,000, is available for gift and estate tax purposes.

Correct Answer
verified

No state may offer an income tax amnesty program more than once.

Correct Answer
verified
False

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

Correct Answer
verified

The amount of a taxpayer's itemized deductions will increase the chance of being audited by the IRS.

Correct Answer
verified

A characteristic of FICA is that:

Correct Answer
verified

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

On transfers by death, the Federal government relies on an estate tax, while states impose an estate tax, an inheritance tax, both taxes, or neither tax.

Correct AnswerverifiedShow Answer

Using the following choices, 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. -Discriminant Index Function (DIF)

Correct AnswerverifiedL

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

Correct AnswerverifiedShow Answer

The objective of pay-as-you-go (paygo) is to improve administrative feasibility.

Correct AnswerverifiedShow Answer

Using the following choices, 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. -Tax credits available for the purchase of a vehicle that uses alternative (nonfossil) fuels.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In terms of probability, which of the following taxpayers would be least likely to be audited by the IRS?

Correct AnswerverifiedShow Answer

The United States (either Federal, state, or local) does not impose:

Correct AnswerverifiedShow Answer

The AICPA Statements on Standards for Tax Services are:

Correct AnswerverifiedShow Answer

If more IRS audits are producing a higher number of no change results, this indicates increased compliance on the part of taxpayers.

Correct AnswerverifiedShow Answer

Federal excise taxes that are no longer imposed include:

Correct AnswerverifiedShow Answer

The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.

Correct AnswerverifiedShow Answer

State income taxes generally can be characterized by:

Correct AnswerverifiedShow Answer

Match the statements that relate to each other.Note: Some choices may be used more than once. -Field audit

Correct AnswerverifiedG

The annual exclusion, currently $15,000, is available for gift and estate tax purposes.

Correct AnswerverifiedShow Answer

No state may offer an income tax amnesty program more than once.

Correct AnswerverifiedFalse

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

Correct AnswerverifiedShow Answer

The amount of a taxpayer's itemized deductions will increase the chance of being audited by the IRS.

Correct AnswerverifiedShow Answer

A characteristic of FICA is that:

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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L

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
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Correct Answer
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G

Correct Answer
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False

Correct Answer
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Correct Answer
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Correct Answer
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