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

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Question 61

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No state has offered an income tax amnesty program more than once.

A) True
B) False

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Question 62

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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?

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None. After a marital deductio...

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Question 63

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Even if property tax rates are not changed, the amount of ad valorem taxes imposed on realty may not remain the same.

The formula for the Federal income tax on corporations is the same as that applicable to individuals.

Indicate which, if any, statement is incorrect. State income taxes:

Characteristics of the "Fair Tax" i.e., national sales tax) include which, if any, of the following:

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:

Melinda has been referred to you by one of your clients. In the past, she has prepared her own income tax returns, but she has become overwhelmed by the increased complexity of the tax law. Consequently, Melinda wants you to prepare her return for calendar year 2018. In reviewing her 2017 return, you note that she has claimed as a deduction the entire cost of a business building that should have been capitalized and depreciated. What course of action should you follow?

Can a taxpayer start the 3-year statute of limitations on additional assessments by the IRS by filing his income tax return early i.e., before the due date)? Can the period be shortened by filing late i.e., after the due date)?

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 2018.

How do the net operating loss provisions in the tax law mitigate the effect of the annual accounting concept?

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?

Burt and Lisa are married and live in a common law state. Burt wants to make gifts to their four children in 2018. What is the maximum amount of the annual exclusion they will be allowed for these gifts?

For state income tax purposes, a majority of states allow a deduction for Federal income taxes.

A characteristic of FICA is that:

Which, if any, of the following provisions cannot be justified as mitigating the effect of the annual accounting period concept?

The objective of pay-as-you-go paygo) is to improve administrative feasibility.

In preparing a tax return, all questions on the return must be answered.

In preparing an income tax return, the use of a client's estimates is not permitted.

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.