Question 1

The tax law allows,under certain conditions,deferral of gain recognition for involuntary conversions.
a.What is the justification for this relief measure?
b.What happens if the proceeds are not entirely reinvested?

Accepted Answer

a.By recognizing that the taxpayer's rel...

Question 2

The Federal income tax is based on a pay­as­you­go system and has become a "mass tax." Explain this statement.

Accepted Answer

The pay-as-you-go system is present in t...

Question 3

Match the statements that relate to each other.Note: Some choices may be used more than once or not at all.
-Jock tax

Accepted Answer

A)  Deferral of gains from involuntary conversions
B)  Carryback and carryforward of net operating losses
C)  "No change" is one possible result
D)  State income tax applied to visiting nonresident
E)  IRS special agentF) Undoing the "piggyback" resultG) Ideal budget goal as to new tax legislationH) Every state that has a general sales tax has oneI) Imposed by all states and the Federal governmentJ) Imposed by some states but not the Federal governmentK) Imposed only by the Federal governmentL) No correct match providedM) F) and K)
N) B) and H)

Question 4

Brayden files his Federal income tax return by April 15,but does not pay the tax.Although he expects to pay interest on the large amount of tax he still owes,he feels that the timely filing has avoided any penalties.Is Brayden's assumption correct?

Accepted Answer

Although Brayden has avoided t...

Question 5

State and local governments are sometimes forced to find ways to generate additional revenue.Comment on the pros and cons of the following procedures:
a.Decouple what would be part of the piggyback format of the state income tax.
b.Tax amnesty provisions.
c.Internet shaming.

Accepted Answer

a.The decoupling process is easily accom...

Question 6

In connection with facilitating the function of the IRS in the administration of the tax laws,comment on the utility of the following:
a.An increase in the amount of the standard deduction.
b.Dollar and percentage limitations on the deduction of personal casualty losses.
c.Availability of interest and penalties for taxpayer noncompliance.

Accepted Answer

a.An increase in the amount of the stand...

Question 7

In terms of Adam Smith's canons of taxation,how does the Federal income tax fare as far as economy is concerned?

Accepted Answer

Economy is present only if the...

Question 8

Taxes levied by all states include:

Accepted Answer

A)  Tobacco excise tax.
B)  Individual income tax.
C)  Inheritance tax.
D)  General sales tax.
E)  None of these.F) None of the above
G) A) and B)

Question 9

Congress reacts to judicial decisions that interpret the tax law in different ways.When it approves of a decision,Congress may act to amend the Code to incorporate the holding.When it disapproves,Congress may amend the Code to nullify its effect.Give an example of each one of these congressional reactions.

Accepted Answer

Congress approved of the judicial conclu...

Question 10

Two persons who live in the same state but in different counties may not be subject to the same general sales tax rate.

Accepted Answer

A) True 
 B)False

Question 11

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 these.F) A) and C)
G) B) and E)

Question 12

Regarding proper ethical guidelines,which (if any) of the following is correct?

Accepted Answer

A)  The use of client estimates in preparing a return may be acceptable.
B)  Under no circumstances should a question on a tax return be left unanswered.
C)  If a client has made a mistake in a prior year's return and refuses to correct it,you should withdraw from the engagement.
D)  If the exact amount of a deduction is not certain so as to increase the appearance of greater certainty.
E)  None of these.F) C) and D)
G) B) and D)

Question 13

The tax law contains various provisions that encourage home ownership.
a.On what basis can this objective be justified?
b.Are there any negative considerations? Explain.

Accepted Answer

a.Home ownership can be justified on economic and social grounds.
b.Granting tax advantages to persons who are purchasing their homes places the taxpayers who rent at a disadvantage.The result is inequality in treatment.

Question 14

Match the statements that relate to each other.Note: Some choices may be used more than once or not at all.
-Excise tax on tobacco

Accepted Answer

A)  Deferral of gains from involuntary conversions
B)  Carryback and carryforward of net operating losses
C)  "No change" is one possible result
D)  State income tax applied to visiting nonresident
E)  IRS special agentF) Undoing the "piggyback" resultG) Ideal budget goal as to new tax legislationH) Every state that has a general sales tax has oneI) Imposed by all states and the Federal governmentJ) Imposed by some states but not the Federal governmentK) Imposed only by the Federal governmentL) No correct match providedM) D) and J)
N) C) and E)

Question 15

Match the statements that relate to each other.Note: Some choices may be used more than once.
-Interest due on refund

Accepted Answer

A)  3 years from date return is filed
B)  3 years from due date of return
C)  20% of underpayment
D)  5% per month (25% limit) 
E)  0.5% per month (25% limit) F) Conducted at IRS officeG) Conducted at taxpayer's officeH) 6 yearsI) 45-day grace period allowed to IRSJ) No statute of limitations (period remains open) K) 75% of underpaymentL) No correct match providedM) G) and H)
N) B) and G)

Question 16

Using the choices provided below,show the justification for each provision of the tax law listed.
-More rapid expensing for tax purposes of the costs of installing pollution control devices.

Accepted Answer

A)  Economic considerations
B)  Social considerations
C)  Equity considerationsD) None of the above
E) A) and B) A

Question 17

Your client,Connie,won $12,000 in a football office pool.She sees no reason to include it in her income for several reasons.First,the amount won will not be reported to the IRS.Second,as an average income employee,she is unlikely to be audited by the IRS.Third,she feels that she has probably lost this much in other past office pools.How do you respond?

Accepted Answer

As a practitioner,you cannot play the au...

Question 18

Mona inherits her mother's personal residence,which she converts to a furnished rent house.These changes should affect the amount of ad valorem property taxes levied on the properties.

Accepted Answer

A) True 
 B)False  True

Question 19

When interest is charged on a deficiency,any part of a month counts as a full month.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

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

The tax law allows,under certain conditions,deferral of gain recognition for involuntary conversions. a.What is the justification for this relief measure? b.What happens if the proceeds are not entirely reinvested?

Correct Answer
verified
a.By recognizing that the taxpayer's rel...
View Answer

The Federal income tax is based on a payasyougo system and has become a "mass tax." Explain this statement.

Correct Answer
verified
The pay-as-you-go system is present in t...
View Answer

Match the statements that relate to each other.Note: Some choices may be used more than once or not at all. -Jock tax

Correct Answer
verified

Brayden files his Federal income tax return by April 15,but does not pay the tax.Although he expects to pay interest on the large amount of tax he still owes,he feels that the timely filing has avoided any penalties.Is Brayden's assumption correct?

Correct Answer
verified
Although Brayden has avoided t...
View Answer

State and local governments are sometimes forced to find ways to generate additional revenue.Comment on the pros and cons of the following procedures: a.Decouple what would be part of the piggyback format of the state income tax. b.Tax amnesty provisions. c.Internet shaming.

Correct Answer
verified
a.The decoupling process is easily accom...
View Answer

Correct Answer
verified
a.An increase in the amount of the stand...
View Answer

In terms of Adam Smith's canons of taxation,how does the Federal income tax fare as far as economy is concerned?

Correct Answer
verified
Economy is present only if the...
View Answer

Taxes levied by all states include:

Correct Answer
verified

Correct Answer
verified
Congress approved of the judicial conclu...
View Answer

Two persons who live in the same state but in different counties may not be subject to the same general sales tax rate.

Correct Answer
verified

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

Correct Answer
verified

Regarding proper ethical guidelines,which (if any) of the following is correct?

Correct Answer
verified

The tax law contains various provisions that encourage home ownership. a.On what basis can this objective be justified? b.Are there any negative considerations? Explain.

Correct Answer
verified
a.Home ownership can be justified on economic and social grounds. b.Granting tax advantages to persons who are purchasing their homes places the taxpayers who rent at a disadvantage.The result is inequality in treatment.

Match the statements that relate to each other.Note: Some choices may be used more than once or not at all. -Excise tax on tobacco

Correct Answer
verified

Match the statements that relate to each other.Note: Some choices may be used more than once. -Interest due on refund

Correct Answer
verified

Using the choices provided below,show the justification for each provision of the tax law listed. -More rapid expensing for tax purposes of the costs of installing pollution control devices.

Correct Answer
verified
A

Correct Answer
verified
As a practitioner,you cannot play the au...
View Answer

Mona inherits her mother's personal residence,which she converts to a furnished rent house.These changes should affect the amount of ad valorem property taxes levied on the properties.

Correct Answer
verified
True

When interest is charged on a deficiency,any part of a month counts as a full month.

Correct Answer
verified

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

Correct Answer
verified

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

The tax law allows,under certain conditions,deferral of gain recognition for involuntary conversions. a.What is the justification for this relief measure? b.What happens if the proceeds are not entirely reinvested?

Correct Answerverifieda.By recognizing that the taxpayer's rel...View AnswerShow Answer

The Federal income tax is based on a pay­as­you­go system and has become a "mass tax." Explain this statement.

Correct AnswerverifiedThe pay-as-you-go system is present in t...View AnswerShow Answer

Match the statements that relate to each other.Note: Some choices may be used more than once or not at all. -Jock tax

Correct AnswerverifiedShow Answer

Brayden files his Federal income tax return by April 15,but does not pay the tax.Although he expects to pay interest on the large amount of tax he still owes,he feels that the timely filing has avoided any penalties.Is Brayden's assumption correct?

Correct AnswerverifiedAlthough Brayden has avoided t...View AnswerShow Answer

State and local governments are sometimes forced to find ways to generate additional revenue.Comment on the pros and cons of the following procedures: a.Decouple what would be part of the piggyback format of the state income tax. b.Tax amnesty provisions. c.Internet shaming.

Correct Answerverifieda.The decoupling process is easily accom...View AnswerShow Answer

Correct Answerverifieda.An increase in the amount of the stand...View AnswerShow Answer

In terms of Adam Smith's canons of taxation,how does the Federal income tax fare as far as economy is concerned?

Correct AnswerverifiedEconomy is present only if the...View AnswerShow Answer

Taxes levied by all states include:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedCongress approved of the judicial conclu...View AnswerShow Answer

Two persons who live in the same state but in different counties may not be subject to the same general sales tax rate.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Regarding proper ethical guidelines,which (if any) of the following is correct?

Correct AnswerverifiedShow Answer

The tax law contains various provisions that encourage home ownership. a.On what basis can this objective be justified? b.Are there any negative considerations? Explain.

Correct Answerverifieda.Home ownership can be justified on economic and social grounds. b.Granting tax advantages to persons who are purchasing their homes places the taxpayers who rent at a disadvantage.The result is inequality in treatment.

Match the statements that relate to each other.Note: Some choices may be used more than once or not at all. -Excise tax on tobacco

Correct AnswerverifiedShow Answer

Match the statements that relate to each other.Note: Some choices may be used more than once. -Interest due on refund

Correct AnswerverifiedShow Answer

Using the choices provided below,show the justification for each provision of the tax law listed. -More rapid expensing for tax purposes of the costs of installing pollution control devices.

Correct AnswerverifiedA

Correct AnswerverifiedAs a practitioner,you cannot play the au...View AnswerShow Answer

Mona inherits her mother's personal residence,which she converts to a furnished rent house.These changes should affect the amount of ad valorem property taxes levied on the properties.

Correct AnswerverifiedTrue

When interest is charged on a deficiency,any part of a month counts as a full month.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified
a.By recognizing that the taxpayer's rel...
View Answer

The Federal income tax is based on a payasyougo system and has become a "mass tax." Explain this statement.

Correct Answer
verified
The pay-as-you-go system is present in t...
View Answer

Correct Answer
verified

Correct Answer
verified
Although Brayden has avoided t...
View Answer

Correct Answer
verified
a.The decoupling process is easily accom...
View Answer

Correct Answer
verified
a.An increase in the amount of the stand...
View Answer

Correct Answer
verified
Economy is present only if the...
View Answer

Correct Answer
verified

Correct Answer
verified
Congress approved of the judicial conclu...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a.Home ownership can be justified on economic and social grounds. b.Granting tax advantages to persons who are purchasing their homes places the taxpayers who rent at a disadvantage.The result is inequality in treatment.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified
As a practitioner,you cannot play the au...
View Answer

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified