Individual Income Taxation - Quizzes for Class

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. 23. A characteristic of the fraud penalties is: - When criminal fraud can result in a fine and a prison sentence. 23. A VAT (value added tax): Is regressive in its effect. 23. The proposed flat tax: Is a type of consumption tax. 23. A use tax is imposed by: Most of the states but not the Federal government. 23. 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. 23. 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. 23. 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. 23. Which, if any, is not one of Adam Smith’s canons (principles) of taxation? Simplicity 23. 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 23. 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’ 23. 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. 23. 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 23. Which, if any, of the following taxes are regressive (rather than progressive)? State general sales tax 23. 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. 23. 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. 23. A characteristic of FUTA is that: Compliance requires following guidelines issued by both state and Federal regulatory authorities. 23. 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. 23. Which of the following statements about a Value Added Tax is false? The US has imposed a VAT since 1913. 23. Tax functions that accounting and finance professionals may assist clients with include all but the following: tax evasion 23. ? Not sure what question this went with. Taxpayer is an employed electrician 23. 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 23. Federal excise taxes that are no longer imposed include: None of these 23. What administrative release deals with a proposed transaction rather than a completed transaction? Letter Ruling 23. Which company does not publish citators for tax purposes? John Wiley & Sons 23. Tax bills are handled by which committee in the U.S. House of Representatives? Ways and Means Committee 23. When searching on an electronic (online) tax service, which approach is more frequently used? Keyword approach 23. If a taxpayer decides not to pay a tax deficiency, he or she must go to which court? U.S. Tax Court 23. Which is not a primary source of tax law? Prop. Reg. § 1.752-4T(f). 23. Which of the following is not an administrative source of tax law? Code § 199A 23. Which statement is not true with respect to a Regulation that interprets the tax law? Issued by the U.S. Congress 23. Which of the following indicates that a decision has precedential value for future cases? Stare decisis 23. Which publisher offers the United States Tax Reporter? Commerce Clearing House 23. Which Regulations have the force and effect of law? Legislative Regulations 23. The Internal Revenue Code was first codified in what year? 1939 23. Federal tax legislation generally originates in which of the following? House Ways and Means Committee 23. In terms of probability, which of the following taxpayers would be least likely to be audited by the IRS? Taxpayer is an employed electrician. 23. In § 212(1), the number (1) stands for the: Paragraph designation. 23. Which is a primary source of tax law? Serverino R. Nico, Jr., 67 T.C. 647 (1977). 23. Which statement is incorrect with respect to taxation on the CPA exam? There are no longer task-based simulations on the exam