Individual Income Taxation Answers

1. TheUnitedStates(eitherFederal,state,orlocal)does notimpose:Exportduties 2. “Bracketcreep”isavoidedby:-Adjustingtheratebracketsforinflationannually. 3. Which,ifany,ofthefollowingisatypicalcharacteristicofanadvaloremtaxon personalty?-Thetaxonautomobilessometimesconsiderstheageofthevehicle. 4. Which,ifany,ofthefollowingstatementsbestdescribesthehistoryoftheFederal incometax?-TheFederalincometaxoncorporationswasheldbytheU.S.Supreme CourttobeallowableundertheU.S.Constitution. 5. Which,ifany,ofthefollowingprovisionsofthetaxlawcannotbejustifiedaspromoting administrativefeasibility(simplifyingthetaskoftheIRS)?-Adeductionisallowedfor charitablecontributions. 6. 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:-$4,000. 7. Whichofthefollowingtaxesispaidonlybytheemployer?-FUTA 8. JaneisthetaxdirectorforTangentSoftwareCorporation.Sheisunsurewhether TangentisrequiredtochargesalestaxwhensoftwareisprovidedtocustomersinState Xviathe“cloud.”Thisindicatesthatthesalestaxdoesnotmeettheprincipleof:- Certainty. 9. TaxesnotimposedbytheFederalgovernmentinclude:-Taxonrentalcars. 10. TaxesleviedbybothstatesandtheFederalgovernmentinclude:a.Generalsalestax.b. Customsduties.c.Hoteloccupancytax.d.Noneofthese. 11. TheAICPAStatementsonStandardsforTaxServicesare:-Enforceable. 12. Taxesleviedbyallstatesinclude:-Tobaccoexcisetax. 13. TaxesleviedbybothstatesandtheFederalgovernmentinclude: a.generalsalestaxb.customsdutiesc.hoteloccupancytaxd.Noneofthese 14. Twoyearsago,StateYenactedanewincometaxcreditforcollegeprepmaterials.The creditisavailabletoindividualsandisequalto40%ofthecostoftheitems.Thecredit maynotexceed$50inanyyear.StateY'sdirectoroffinancehasdiscoveredthisyear thattheamountofcreditclaimedisfarhigherthanexpected.Whichprincipleofgoodtax policymightnothavebeenconsideredindesigningthistaxthatcausedtheoriginalcost estimatetobetoolow?-Minimumtaxgap. 15. Socialconsiderationscanbeusedtojustify:-Allowanceofacreditforchildcare expenses. 16. Allowingataxcreditforcertainsolarenergypropertycanbejustified:-Aspromotinga governmentpolicytousealternativeenergysources. 17. Arationalefortheinstallmentsalemethodtaxruleis:-Abilitytopay 18. Indicatewhich,ifany,statementisincorrect.Stateincometaxes:-Cannotapplyto visitingnonresidents. 19. ThequoteengravedontheIRSbuildinginWashington,DC,attheentrancestates:- Taxesarewhatwepayforcivilizedsociety. 20. Stateincometaxesgenerallycanbecharacterizedby:-Thesamedateforfilingasthe Federalincometax. 21. Whichofthefollowingisacharacteristicoftheauditprocess?-Lessimportantissues arehandledbymeansofacorrespondenceaudit. 22. Federalexcisetaxesthatarenolongerimposedinclude:a.Taxonairtravel.b.Taxonwagering.c.Taxonalcohol.d.Noneofthese. 23. Characteristicsofthe“fairtax”(i.e.,nationalsalestax)includewhich,ifany,ofthe following:-AbolitionofallFederalincomeandpayrolltaxesaswellastheFederal estateandgifttaxes. 24. Acharacteristicofthefraudpenaltiesis:-Whencriminalfraudcanresultinafineanda prisonsentence. 25. AVAT(valueaddedtax):Isregressiveinitseffect. 26. Theproposedflattax:Isatypeofconsumptiontax. 27. Ausetaxisimposedby:MostofthestatesbutnottheFederalgovernment. 28. Beforeproposingthatthestate’ssalestaxbeexpandedtoincludefood,alegislator shouldaskwhether:Thestate’sconstitutionallowsforthistax. 29. Which,ifany,ofthefollowingtransactionswillincreaseataxingjurisdiction’srevenue fromtheadvaloremtaximposedonrealestate?Ataxholidayissued10yearsagohas expired. 30. AcharacteristicofFICAtaxisthat: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.Noneofthese. 31. Which,ifany,isnotoneofAdamSmith’scanons(principles)oftaxation?Simplicity 32. Provisionsinthetaxlawthatpromoteenergyconservationandmoreuseofalternative (nonfossil)fuelscanbejustifiedby:Economicandsocialconsiderations 33. Alandlordleasespropertyuponwhichthetenantmakesimprovements.The improvementsaresignificantandarenotmadeinlieuofrent.Attheendofthelease, thevalueoftheimprovementsarenotincometothelandlord.Thisruleisanexampleof: Thewherewithaltopayconcept’ 34. Botheconomicandsocialconsiderationscanbeusedtojustify:Varioustaxcredits, deductions,andexclusionsthataredesignedtoencouragetaxpayerstoobtain additionaleducation. 35. Regardingproperethicalaccountingguidelines,which,ifany,ofthefollowingiscorrect? Theuseofclientestimatesinpreparingareturnmaybeacceptable 36. Which,ifany,ofthefollowingtaxesareregressive (ratherthanprogressive)? State generalsalestax 37. Which,ifany,ofthefollowingtransactionswilldecreaseataxingjurisdiction’sad valoremtaxrevenueimposedonrealestate?Ataxholidayisgrantedtoanout-of-state businessthatissearchingforanewfactorysite. 38. Propertycanbetransferredwithinthefamilygroupbygiftoratdeath.Onemotivationfor preferringthegiftapproachis:Totakeadvantageoftheperdoneeannualexclusion. 39. AcharacteristicofFUTAisthat:Compliancerequiresfollowingguidelinesissuedbyboth stateandFederalregulatoryauthorities. 40. BurtandLisaaremarriedandliveinacommonlawstate.Theywanttomakegiftsto theirfourchildrenin2020.Whatisthemaximumamountoftheannualexclusionthey willbeallowedforthesegifts?15000perpersongifted.15000*4*2=120000.4isforthe fourpeopleandthe2becauseit'stwogifting$120,000. 41. WhichofthefollowingstatementsaboutaValueAddedTaxisfalse?TheUShas imposedaVATsince1913. 42. Taxfunctionsthataccountingandfinanceprofessionalsmayassistclientswithinclude allbutthefollowing:taxevasion 43. ?Notsurewhatquestionthiswentwith.Taxpayerisanemployedelectrician 44. Whichifanyofthefollowingprovisionscannotbejustifiedasmitigatingtheeffectofthe annualaccountingperiodconcept?Nonrecognitionofgainallowedforinvoluntary conversion 45. Federalexcisetaxesthatarenolongerimposedinclude:Noneofthese 46. Whatadministrativereleasedealswithaproposedtransactionratherthanacompleted transaction?LetterRuling 47. Whichcompanydoesnotpublishcitatorsfortaxpurposes?JohnWiley&Sons