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Exam 1: Introduction to Taxation

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Question 41

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The Federal excise tax on cigarettes is an example of a proportional tax.

A) True
B) False

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Question 42

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Under state amnesty programs, all delinquent and unpaid income taxes are forgiven.

A) True
B) False

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Question 43

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Logan dies with an estate worth $20 million.Under his will, $10 million passes to his wife while $10 million goes to his church.What is Logan's Federal estate tax result?

The value added tax VAT) has not had wide acceptance in the international community.

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.

Due to the population change, the Goose Creek School District has decided to close one of its high schools.Since it has no further need of the property, the school is listed for sale.The two bids it receives are as follows: The United Methodist Church would use the property to establish a sectarian middle school.Planet, a well-known car dealership, would revamp the property and operate it as a branch location. If you were a member of the School District board, what factors would you consider in evaluating the two bids?

Property can be transferred within the family group by gift or at death.One motivation for preferring the gift approach is:

States impose either a state income tax or a general sales tax, but not both types of taxes.

The U.S.either Federal, state, or local) does not impose:

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.

The FICA tax Medicare component) on wages is progressive since the tax due increases as wages increase.

The tax law contains various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain additional education.On what grounds can these provisions be justified?

Orange Corporation, a calendar year C corporation, owns stock in White Corporation and has net operating income of $400,000 for the current year.White Corporation pays Orange a dividend of $60,000.What amount of dividends received deduction may Orange claim if it owns 45% of White stock assuming Orange's dividends received deduction is not limited by its taxable income) ?

Which of the following taxes is only paid by the employer?

There is a Federal excise tax on hotel occupancy.

Morgan inherits her father's personal residence including all of the furnishings.She plans to add a swimming pool and sauna to the property and rent it as a furnished house.What are some of the ad valorem property tax issues Morgan can anticipate?

The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the U.S.

A use tax is imposed by:

Various tax provisions encourage the creation of certain types of retirement plans.Such provisions can be justified on both economic and social grounds.

In the current year, Azul Corporation, a calendar year C corporation, received a dividend of $30,000 from Naranja Corporation.Azul owns 25% of the Naranja Corporation stock.Assuming it is not subject to the taxable income limitation, Azul's dividends received deduction is $19,500.