Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Stealth taxes have the effect of generating additional taxes from higher income taxpayers.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)   To take advantage of the per donee annual exclusion.
B)   To avoid a future decline in value of the property transferred.
C)   To take advantage of the higher unified transfer tax credit available under the gift tax.
D)   To shift income to higher bracket donees.
E)   None of the above.F) None of the above
G) A) and B)

Question 4

Taxes levied by both states and the Federal government include:

Accepted Answer

A)   General sales tax.
B)   Custom duties.
C)   Hotel occupancy tax.
D)   Franchise tax.
E)   None of the above.F) B) and C)
G) A) and E)

Question 5

The tax law allows,under certain conditions,deferral of gain recognition for involuntary conversions.

Accepted Answer

The answer of The tax law allows,under certain conditions,deferral of...

Question 6

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.

Accepted Answer

A) True 
 B)False

Question 7

Currently,the tax base for the Medicare component of the FICA is not limited to a dollar amount.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

One of the motivations for making a gift is to save on income taxes.

Accepted Answer

A) True 
 B)False

Question 10

A tax cut enacted by Congress that contains a sunset provision will make the tax cut permanent.

Accepted Answer

A) True 
 B)False

Question 11

Which,if any,of the following is a typical characteristic of an ad valorem tax on personalty?

Accepted Answer

A)   Taxpayer compliance is greater for personal use property than for business use property.
B)   The tax on automobiles sometimes considers the age of the vehicle.
C)   Most states impose a tax on intangibles.
D)   The tax on intangibles generates considerable revenue since it is difficult for taxpayers to avoid.
E)   None of the above.F) A) and D)
G) A) and E)

Question 12

A state income tax can be imposed on nonresident taxpayers who earn income within the state or on an itinerant basis.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is a characteristic of the audit process?

Accepted Answer

A)   Most taxpayer audits involve "special" agents.
B)   Self-employed taxpayers are less likely to be selected for audit than employed taxpayers.
C)   Less important issues are handled by means of a correspondence audit.
D)   If a taxpayer disagrees with the IRS auditor's finding, the only resort is to the courts.
E)   None of the above.F) D) and E)
G) None of the above

Question 14

Federal excise taxes that are no longer imposed include:

Accepted Answer

A)   Tax on air travel.
B)   Tax on wagering.
C)   Tax on the manufacture of sporting equipment.
D)   Tax on jewelry.
E)   None of the above.F) A) and D)
G) A) and E)

Question 15

Under a state inheritance tax,two heirs,a cousin and a son of the deceased,would be taxed at the same rate.

Accepted Answer

A) True 
 B)False

Exam 1: An Introduction to Taxation and Understanding the Federal Tax Law

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.

Correct Answer
verified

Taxes levied by both states and the Federal government include:

Correct Answer
verified

Under a state inheritance tax,two heirs,a cousin and a son of the deceased,would be taxed at the same rate.

Correct Answer
verified

A state income tax can be imposed on nonresident taxpayers who earn income within the state or on an itinerant basis.

Correct Answer
verified

Which,if any,of the following is a typical characteristic of an ad valorem tax on personalty?

Correct Answer
verified

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

Correct Answer
verified

A tax cut enacted by Congress that contains a sunset provision will make the tax cut permanent.

Correct Answer
verified

The tax law allows,under certain conditions,deferral of gain recognition for involuntary conversions.

Correct Answer
verified

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

Correct Answer
verified

Currently,the tax base for the Medicare component of the FICA is not limited to a dollar amount.

Correct Answer
verified

Stealth taxes have the effect of generating additional taxes from higher income taxpayers.

Correct Answer
verified

One of the motivations for making a gift is to save on income taxes.

Correct Answer
verified

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

Correct Answer
verified

Federal excise taxes that are no longer imposed include:

Correct Answer
verified

Which of the following is a characteristic of the audit process?

Correct Answer
verified

Exam 1: An Introduction to Taxation and Understanding the Federal Tax Law

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.

Correct AnswerverifiedShow Answer

Taxes levied by both states and the Federal government include:

Correct AnswerverifiedShow Answer

Under a state inheritance tax,two heirs,a cousin and a son of the deceased,would be taxed at the same rate.

Correct AnswerverifiedShow Answer

A state income tax can be imposed on nonresident taxpayers who earn income within the state or on an itinerant basis.

Correct AnswerverifiedShow Answer

Which,if any,of the following is a typical characteristic of an ad valorem tax on personalty?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A tax cut enacted by Congress that contains a sunset provision will make the tax cut permanent.

Correct AnswerverifiedShow Answer

The tax law allows,under certain conditions,deferral of gain recognition for involuntary conversions.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Currently,the tax base for the Medicare component of the FICA is not limited to a dollar amount.

Correct AnswerverifiedShow Answer

Stealth taxes have the effect of generating additional taxes from higher income taxpayers.

Correct AnswerverifiedShow Answer

One of the motivations for making a gift is to save on income taxes.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Federal excise taxes that are no longer imposed include:

Correct AnswerverifiedShow Answer

Which of the following is a characteristic of the audit process?

Correct AnswerverifiedShow Answer

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