Comprehensive, 37th Edition
William H. Hoffman, Jr., David M. Maloney, William A. Raabe, James C. Young
ISBN-10: 1285178505
ISBN-13: 9781285178509
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Additional Test Bank Items Angel 7.4 test bank Blackboard 6-9 test bank Corporations Practice Set Solutions Individual Practice Set Solutions Instructor PowerPoints Instructor's Guide Solutions Manual (PDF) Solutions Manual (in Word) Solutions to Appendix E - All Problems Solutions to Appendix E - Problem 1 Solutions to Appendix E - Problem 2 Solutions to Appendix E - Problem 3 Solutions to Appendix E - Problem 4 Solutions to Appendix E - Problem 5 Solutions to Appendix E - Problem 6 Solutions to Appendix E - Problem 7 Solutions to Appendix E - Problem 8 Solutions to Appendix E - Problem 9 the sample of the solutions manual and test bank (in Word)
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1. COMPREHENSIVE
VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AND (1.0 point)
The ratification of the Sixteenth Amendment to the U.S. Constitution was necessary to validate the Federal income tax on corporations.
The ratification of the Sixteenth Amendment to the U.S. Constitution was necessary to validate the Federal income tax on corporations.
a. True
*b. False
2. COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO
TAXATION AN 2 (1.0 point)
Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals.
Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals.
a. True
*b. False
3. COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO
TAXATION AN 3 (1.0 point)
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%.
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%.
*a. True
b. False
4. COMPREHENSIVE
VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN 4 (1.0 point)
The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.
The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.
*a. True
b. False
5. COMPREHENSIVE
VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN 5 (1.0 point)
The pay-as-you-go feature of the Federal income tax on individuals conforms to Adam Smith’s canon of certainty.
The pay-as-you-go feature of the Federal income tax on individuals conforms to Adam Smith’s canon of certainty.
a. True
*b. False
6. COMPREHENSIVE
VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN 6 (1.0 point)
Because the law is complicated, most individual taxpayers are not able to complete their Federal income tax returns without outside assistance.
Because the law is complicated, most individual taxpayers are not able to complete their Federal income tax returns without outside assistance.
*a. True
b. False
7. COMPREHENSIVE
VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN 7 (1.0 point)
The FICA tax (Medicare component) on wages is progressive since the tax due increases as wages increase.
The FICA tax (Medicare component) on wages is progressive since the tax due increases as wages increase.
a. True
*b. False
8. COMPREHENSIVE
VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN 8 (1.0 point)
The Federal estate and gift taxes are examples of progressive taxes.
The Federal estate and gift taxes are examples of progressive taxes.
*a. True
b. False
9. COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO
TAXATION AN 9 (1.0 point)
The Federal excise tax on cigarettes is an example of a proportional tax.
The Federal excise tax on cigarettes is an example of a proportional tax.
*a. True
b. False
10.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN10 (1.0 point)
Currently, the Federal income tax is less progressive than it ever has been in the past.
Currently, the Federal income tax is less progressive than it ever has been in the past.
a. True
*b. False
11.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN11 (1.0 point)
Mona inherits her mother’s personal residence, which she converts to a furnished rent house. These changes should affect the amount of ad valorem property taxes levied on the properties.
Mona inherits her mother’s personal residence, which she converts to a furnished rent house. These changes should affect the amount of ad valorem property taxes levied on the properties.
*a. True
b. False
12.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN12 (1.0 point)
A fixture will be subject to the ad valorem tax on personalty rather than the ad valorem tax on realty.
A fixture will be subject to the ad valorem tax on personalty rather than the ad valorem tax on realty.
a. True
*b. False
13.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN13 (1.0 point)
Even if property tax rates are not changed, the amount of ad valorem taxes imposed on realty may not remain the same.
Even if property tax rates are not changed, the amount of ad valorem taxes imposed on realty may not remain the same.
*a. True
b. False
14.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN14 (1.0 point)
The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business use personalty.
The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business use personalty.
*a. True
b. False
15.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN15 (1.0 point)
A Federal excise tax is no longer imposed on admission to theaters.
A Federal excise tax is no longer imposed on admission to theaters.
*a. True
b. False
16.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN16 (1.0 point)
There is a Federal excise tax on hotel occupancy.
There is a Federal excise tax on hotel occupancy.
a. True
*b. False
17.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN17 (1.0 point)
The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the U.S.
The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the U.S.
a. True
*b. False
18.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN18 (1.0 point)
Like the Federal counterpart, the amount of the state excise taxes on gasoline varies from state to state.
Like the Federal counterpart, the amount of the state excise taxes on gasoline varies from state to state.
a. True
*b. False
19.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN19 (1.0 point)
Not all of the states that impose a general sales tax also have a use tax.
Not all of the states that impose a general sales tax also have a use tax.
a. True
*b. False
20.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN20 (1.0 point)
Sales made by mail order are not exempt from the application of a general sales (or use) tax.
Sales made by mail order are not exempt from the application of a general sales (or use) tax.
*a. True
b. False
21.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN21 (1.0 point)
Two persons who live in the same state but in different counties may not be subject to the same general sales tax rate.
Two persons who live in the same state but in different counties may not be subject to the same general sales tax rate.
*a. True
b. False
22.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN22 (1.0 point)
States impose either a state income tax or a general sales tax, but not both types of taxes.
States impose either a state income tax or a general sales tax, but not both types of taxes.
a. True
*b. False
23.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN23 (1.0 point)
A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no such taxes.
A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no such taxes.
a. True
*b. False
24.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN24 (1.0 point)
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.
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.
*a. True
b. False
25.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN25 (1.0 point)
An inheritance tax is a tax on a decedent’s right to pass property at death.
An inheritance tax is a tax on a decedent’s right to pass property at death.
a. True
*b. False
26. COMPREHENSIVE
VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN26 (1.0 point)
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.
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.
*a. True
b. False
27.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN27 (1.0 point)
Under Clint’s will, all of his property passes to either the Lutheran Church or to his wife. No Federal estate tax will be due on Clint’s death in 2013.
Under Clint’s will, all of his property passes to either the Lutheran Church or to his wife. No Federal estate tax will be due on Clint’s death in 2013.
*a. True
b. False
28.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN28 (1.0 point)
Under the usual state inheritance tax, two heirs, a cousin and a son of the deceased, would not be taxed at the same rate.
Under the usual state inheritance tax, two heirs, a cousin and a son of the deceased, would not be taxed at the same rate.
*a. True
b. False
29.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN29 (1.0 point)
The annual exclusion, currently $14,000, is available for gift and estate tax purposes.
The annual exclusion, currently $14,000, is available for gift and estate tax purposes.
a. True
*b. False
30.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN30 (1.0 point)
In 2012, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has made a taxable gift of $50,000.
In 2012, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has made a taxable gift of $50,000.
a. True
*b. False
31.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN31 (1.0 point)
Julius, a married taxpayer, makes gifts to each of his six children. A maximum of twelve annual exclusions could be allowed as to these gifts.
Julius, a married taxpayer, makes gifts to each of his six children. A maximum of twelve annual exclusions could be allowed as to these gifts.
*a. True
b. False
32.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN32 (1.0 point)
One of the motivations for making a gift is to save on income taxes.
One of the motivations for making a gift is to save on income taxes.
*a. True
b. False
33.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN33 (1.0 point)
The formula for the Federal income tax on corporations is the same as that applicable to individuals.
The formula for the Federal income tax on corporations is the same as that applicable to individuals.
a. True
*b. False
34.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN34 (1.0 point)
A state income tax can be imposed on nonresident taxpayers who earn income within the state or on an itinerant basis.
A state income tax can be imposed on nonresident taxpayers who earn income within the state or on an itinerant basis.
*a. True
b. False
35. COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO
TAXATION AN35 (1.0 point)
For state income tax purposes, a majority of states allow a deduction for Federal income taxes.
For state income tax purposes, a majority of states allow a deduction for Federal income taxes.
a. True
*b. False
36. COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO
TAXATION AN36 (1.0 point)
Some states use their state income tax return as a means of collecting unpaid sales and use taxes.
Some states use their state income tax return as a means of collecting unpaid sales and use taxes.
*a. True
b. False
37.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN37 (1.0 point)
No state has offered an income tax amnesty program more than once.
No state has offered an income tax amnesty program more than once.
a. True
*b. False
38.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN38 (1.0 point)
For Federal income tax purposes, there never has been a general amnesty period.
For Federal income tax purposes, there never has been a general amnesty period.
*a. True
b. False
39. COMPREHENSIVE
VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN39 (1.0 point)
Under state amnesty programs, all delinquent and unpaid income taxes are forgiven.
Under state amnesty programs, all delinquent and unpaid income taxes are forgiven.
a. True
*b. False
40.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN40 (1.0 point)
When a state decouples from a Federal tax provision, it means that this provision will not apply for state income tax purposes.
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
41.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN41 (1.0 point)
The principal objective of the FUTA tax is to provide some measure of retirement security.
The principal objective of the FUTA tax is to provide some measure of retirement security.
a. True
*b. False
42.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN42 (1.0 point)
Currently, the tax base for the Social Security component of the FICA is not limited to a dollar amount.
Currently, the tax base for the Social Security component of the FICA is not limited to a dollar amount.
a. True
*b. False
43.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN43 (1.0 point)
A parent employs his twin daughters, age 17, in his sole proprietorship. The daughters are not subject to FICA coverage.
A parent employs his twin daughters, age 17, in his sole proprietorship. The daughters are not subject to FICA coverage.
*a. True
b. False
44.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN44 (1.0 point)
Unlike FICA, FUTA requires that employers comply with state as well as Federal rules.
Unlike FICA, FUTA requires that employers comply with state as well as Federal rules.
*a. True
b. False
45.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN45 (1.0 point)
A major advantage of a flat tax type of income tax is its simplicity.
A major advantage of a flat tax type of income tax is its simplicity.
*a. True
b. False
46.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN46 (1.0 point)
The value added tax (VAT) has not had wide acceptance in the international community.
The value added tax (VAT) has not had wide acceptance in the international community.
a. True
*b. False
47. COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO
TAXATION AN47 (1.0 point)
If more IRS audits are producing a greater number of no change results, this indicates increased compliance on the part of taxpayers.
If more IRS audits are producing a greater number of no change results, this indicates increased compliance on the part of taxpayers.
a. True
*b. False
48.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN48 (1.0 point)
The amount of a taxpayer’s itemized deductions will increase the chance of being audited by the IRS.
The amount of a taxpayer’s itemized deductions will increase the chance of being audited by the IRS.
*a. True
b. False
49.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN49 (1.0 point)
In an office audit, the audit by the IRS takes place at the office of the taxpayer.
In an office audit, the audit by the IRS takes place at the office of the taxpayer.
a. True
*b. False
50.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN50 (1.0 point)
The IRS agent auditing the return will issue an RAR even if the taxpayer owes no additional taxes.
The IRS agent auditing the return will issue an RAR even if the taxpayer owes no additional taxes.
*a. True
b. False
51.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN51 (1.0 point)
If a “special agent” becomes involved in the audit of a return, this indicates that the IRS suspects that fraud is involved.
If a “special agent” becomes involved in the audit of a return, this indicates that the IRS suspects that fraud is involved.
*a. True
b. False
52.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN52 (1.0 point)
If a taxpayer files early (i.e., before the due date of the return), the statute of limitations on assessments begins on the date the return is filed.
If a taxpayer files early (i.e., before the due date of the return), the statute of limitations on assessments begins on the date the return is filed.
a. True
*b. False
53.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN53 (1.0 point)
For omissions from gross income in excess of 25% of that reported, there is no statute of limitations on additional income tax assessments by the IRS.
For omissions from gross income in excess of 25% of that reported, there is no statute of limitations on additional income tax assessments by the IRS.
a. True
*b. False
54.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN54 (1.0 point)
If an income tax return is not filed by a taxpayer, there is no statute of limitations on assessments of tax by the IRS.
If an income tax return is not filed by a taxpayer, there is no statute of limitations on assessments of tax by the IRS.
*a. True
b. False
55.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN55 (1.0 point)
If fraud is involved, there is no time limit on the assessment of a deficiency by the IRS.
If fraud is involved, there is no time limit on the assessment of a deficiency by the IRS.
*a. True
b. False
56.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN56 (1.0 point)
The IRS is required to redetermine the interest rate on underpayments and overpayments once a year.
The IRS is required to redetermine the interest rate on underpayments and overpayments once a year.
a. True
*b. False
57. COMPREHENSIVE
VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN57 (1.0 point)
A calendar year taxpayer files his 2012 Federal income tax return on March 5, 2013. The return reflects an overpayment of $6,000, and the taxpayer requests a refund of this amount. The refund is paid on May 17, 2013. The refund need not include interest.
A calendar year taxpayer files his 2012 Federal income tax return on March 5, 2013. The return reflects an overpayment of $6,000, and the taxpayer requests a refund of this amount. The refund is paid on May 17, 2013. The refund need not include interest.
*a. True
b. False
58.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN58 (1.0 point)
For individual taxpayers, the interest rate for income tax refunds (overpayments) is the same as that applicable to assessments (underpayments).
For individual taxpayers, the interest rate for income tax refunds (overpayments) is the same as that applicable to assessments (underpayments).
*a. True
b. False
59.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN59 (1.0 point)
During any month in which both the failure to file penalty and the failure to pay penalty apply, the failure to file penalty is increased by the amount of the failure to pay penalty.
During any month in which both the failure to file penalty and the failure to pay penalty apply, the failure to file penalty is increased by the amount of the failure to pay penalty.
a. True
*b. False
60.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN60 (1.0 point)
When interest is charged on a deficiency, any part of a month counts as a full month.
When interest is charged on a deficiency, any part of a month counts as a full month.
a. True
*b. False
61.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN61 (1.0 point)
For the negligence penalty to apply, the underpayment must be caused by intentional disregard of rules and regulations without intent to defraud.
For the negligence penalty to apply, the underpayment must be caused by intentional disregard of rules and regulations without intent to defraud.
*a. True
b. False
62.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN62 (1.0 point)
Upon audit by the IRS, Faith is assessed a deficiency of $40,000 of which $25,000 is attributable to negligence. The 20% negligence penalty will apply to $25,000.
Upon audit by the IRS, Faith is assessed a deficiency of $40,000 of which $25,000 is attributable to negligence. The 20% negligence penalty will apply to $25,000.
*a. True
b. False
63.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN63 (1.0 point)
If the tax deficiency is attributable to fraud, the negligence penalty will not be imposed.
If the tax deficiency is attributable to fraud, the negligence penalty will not be imposed.
*a. True
b. False
64.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN64 (1.0 point)
The civil fraud penalty can entail large fines and possible incarceration.
The civil fraud penalty can entail large fines and possible incarceration.
a. True
*b. False
65.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN65 (1.0 point)
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.
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.
*a. True
b. False
66.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN66 (1.0 point)
In preparing an income tax return, the use of a client’s estimates is not permitted.
In preparing an income tax return, the use of a client’s estimates is not permitted.
a. True
*b. False
67.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN67 (1.0 point)
In preparing a tax return, all questions on the return must be answered.
In preparing a tax return, all questions on the return must be answered.
a. True
*b. False
68. COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO
TAXATION AN68 (1.0 point)
A CPA firm in California sends many of its less complex tax returns to be prepared by a group of accountants in India. If certain procedures are followed, this outsourcing of tax return preparation is proper.
A CPA firm in California sends many of its less complex tax returns to be prepared by a group of accountants in India. If certain procedures are followed, this outsourcing of tax return preparation is proper.
*a. True
b. False
69. COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO
TAXATION AN69 (1.0 point)
The objective of pay-as-you-go (paygo) is to achieve revenue neutrality.
The objective of pay-as-you-go (paygo) is to achieve revenue neutrality.
*a. True
b. False
70.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN70 (1.0 point)
When Congress enacts a tax cut that is phased in over a period of years, revenue neutrality is achieved.
When Congress enacts a tax cut that is phased in over a period of years, revenue neutrality is achieved.
a. True
*b. False
71. COMPREHENSIVE
VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN71 (1.0 point)
A tax cut enacted by Congress that contains a sunset provision will make the tax cut temporary.
A tax cut enacted by Congress that contains a sunset provision will make the tax cut temporary.
*a. True
b. False
72.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN72 (1.0 point)
The tax law provides various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain additional education. These provisions can be justified on both economic and equity grounds.
The tax law provides various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain additional education. These provisions can be justified on both economic and equity grounds.
a. True
*b. False
73. COMPREHENSIVE
VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN73 (1.0 point)
Various tax provisions encourage the creation of certain types of retirement plans. Such provisions can be justified on both economic and social grounds.
Various tax provisions encourage the creation of certain types of retirement plans. Such provisions can be justified on both economic and social grounds.
*a. True
b. False
74.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN74 (1.0 point)
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.
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.
*a. True
b. False
75. COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO
TAXATION AN75 (1.0 point)
To mitigate the effect of the annual accounting period concept, the tax law permits the carryforward to other years of the excess charitable contributions of a particular year.
To mitigate the effect of the annual accounting period concept, the tax law permits the carryforward to other years of the excess charitable contributions of a particular year.
*a. True
b. False
76.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN76 (1.0 point)
Jason’s business warehouse is destroyed by fire. As the insurance proceeds exceed the basis of the property, a gain results. If Jason shortly reinvests the proceeds in a new warehouse, no gain is recognized due to the application of the wherewithal to pay concept.
Jason’s business warehouse is destroyed by fire. As the insurance proceeds exceed the basis of the property, a gain results. If Jason shortly reinvests the proceeds in a new warehouse, no gain is recognized due to the application of the wherewithal to pay concept.
*a. True
b. False
77.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN77 (1.0 point)
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.
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.
a. True
*b. False
78.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN78 (1.0 point)
Stealth taxes have the effect of generating additional taxes from all taxpayers.
Stealth taxes have the effect of generating additional taxes from all taxpayers.
a. True
*b. False
79.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN79 (1.0 point)
A provision in the law that compels accrual basis taxpayers to pay a tax on prepaid income in the year received and not when earned is consistent with generally accepted accounting principles.
A provision in the law that compels accrual basis taxpayers to pay a tax on prepaid income in the year received and not when earned is consistent with generally accepted accounting principles.
a. True
*b. False
80.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN80 (1.0 point)
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.
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.
a. True
*b. False
81.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN81 (1.0 point)
In cases of doubt, courts have held that tax relief provisions should be broadly construed in favor of taxpayers.
In cases of doubt, courts have held that tax relief provisions should be broadly construed in favor of taxpayers.
a. True
*b. False
82.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN82 (1.0 point)
On occasion, Congress has to enact legislation that clarifies the tax law in order to change a result reached by the U.S. Supreme Court.
On occasion, Congress has to enact legislation that clarifies the tax law in order to change a result reached by the U.S. Supreme Court.
*a. True
b. False
83.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN83 (1.0 point)
Which, if any, of the following statements best describes the history of the Federal income tax?
Which, if any, of the following statements best describes the history of the Federal income tax?
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.
84.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN84 (1.0 point)
Which, if any, is not one of Adam Smith’s canons of taxation?
Which, if any, is not one of Adam Smith’s canons of taxation?
a. Economy.
b. Certainty.
c. Convenience.
*d. Simplicity.
e. Equality.
85.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN85 (1.0 point)
Which, if any, of the following taxes are proportional (rather than progressive)?
Which, if any, of the following taxes are proportional (rather than progressive)?
*a. State general sales tax.
b. Federal corporate income tax.
c. Federal estate tax.
d. Federal gift tax.
e. All of the above.
86.
COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO TAXATION AN86 (1.0 point)
Which, if any, of the following transactions will increase a taxing jurisdiction’s revenue from the ad valorem tax imposed on real estate?
Which, if any, of the following transactions will increase a taxing jurisdiction’s revenue from the ad valorem tax imposed on real estate?
a. A resident dies and leaves his farm to his church.
b. A large property owner issues a conservation easement as to some of her land.
*c. A tax holiday issued 10 years ago has expired.
d. A bankrupt motel is acquired by the Red Cross and is to be used to provide housing for homeless persons.
e. None of the above.
87. COMPREHENSIVE VOLUME--CHAPTER 1—AN INTRODUCTION TO
TAXATION AN87 (1.0 point)
Which, if any, of the following transactions will decrease a taxing jurisdiction’s ad valorem tax revenue imposed on real estate?
Which, if any, of the following transactions will decrease a taxing jurisdiction’s ad valorem tax revenue imposed on real estate?
*a. A tax holiday is granted to an out-of-state business that is searching
for a new factory site.
b. An abandoned church is converted to a restaurant.
c. A public school is razed and turned into a city park.
d. A local university sells a dormitory that will be converted for use as an apartment building.
e. None of the above.
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