Question 1

What is a severance tax? How productive can it be in terms of generating revenue?

Accepted Answer

A severance tax is one imposed when natu...

Question 2

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 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 I)
N) H) and L)

Question 3

As a matter of administrative convenience, the IRS would prefer to have Congress decrease (rather than increase)
the amount of the standard deduction allowed to individual taxpayers.

Accepted Answer

A) True 
 B)False

Question 4

Match the statements that relate to each other. Note: Some choices may be used more than once.
-Late filing and statute limitations (deficiency situations)

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) C) and H)
N) H) and J)

Question 5

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

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) C) and E)
N) G) and K)

Question 6

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 these.F) None of the above
G) A) and C)

Question 7

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-Wherewithal to pay concept

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) D) and F)
N) A) and H)

Question 8

Using the following choices, 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 considerations
D)  Both a. and b.E) B) and C)
F) All of the above

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

A VAT (value added tax) :

Accepted Answer

A)   Is regressive in its effect.
B)   Has not proved popular outside of the United States.
C)   Is not a tax on consumption.
D)   Is used exclusively by third world (less developed)  countries.
E)   None of these.F) C) and D)
G) C) and E)

Question 12

The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business use personalty.

Accepted Answer

A) True 
 B)False

Question 13

The civil fraud penalty can entail large fines and possible incarceration.

Accepted Answer

A) True 
 B)False

Question 14

Provisions in the tax law that promote energy conservation and more use of alternative (nonfossil)  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) B) and E)
G) B) and D)

Question 15

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all.
-Tax on transfers at death (inheritance type)

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) A) and B)
N) D) and K)

Question 16

Using the following choices, show the justification for each provision of the tax law listed.
-A tax credit for amounts spent to furnish care for children while the parent is at work.

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 17

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)  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 L)
N) B) and L)

Question 18

Using the following choices, show the justification for each provision of the tax law listed.
-Additional depreciation deduction allowed for the year the asset is acquired.

Accepted Answer

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

Question 19

Using the following choices, show the justification for each provision of the tax law listed.
-Tax brackets are increased for inflation.

Accepted Answer

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

Question 20

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

Exam 1: Understanding and Working With the Federal Tax Law

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

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

Using the following choices, show the justification for each provision of the tax law listed. -A tax credit for amounts spent to furnish care for children while the parent is at work.

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. -Negligence penalty

Correct AnswerverifiedShow Answer

As a matter of administrative convenience, the IRS would prefer to have Congress decrease (rather than increase) the amount of the standard deduction allowed to individual taxpayers.

Correct AnswerverifiedShow Answer

Using the following choices, show the justification for each provision of the tax law listed. -Additional depreciation deduction allowed for the year the asset is acquired.

Correct AnswerverifiedShow Answer

A VAT (value added tax) :

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Match the statements that relate to each other. Note: Some choices may be used more than once. -Late filing and statute limitations (deficiency situations)

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The civil fraud penalty can entail large fines and possible incarceration.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What is a severance tax? How productive can it be in terms of generating revenue?

Correct AnswerverifiedA severance tax is one imposed when natu...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -Tax on transfers at death (inheritance type)

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

Match the statements that relate to each other. Note: Some choices may be used more than once or not at all. -Wherewithal to pay concept

Correct AnswerverifiedShow Answer

Using the following choices, show the justification for each provision of the tax law listed. -Tax brackets are increased for inflation.

Correct AnswerverifiedShow Answer

The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business use personalty.

Correct AnswerverifiedShow Answer

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A severance tax is one imposed when natu...
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