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

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Question 91

True/False

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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 2014.

A) True
B) False

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Question 92

Multiple Choice

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A use tax is imposed by:

A) The Federal government and all states.
B) The Federal government and a majority of the states.
C) All states and not the Federal government.
D) Most of the states and not the Federal government.
E) None of these.

F) All of the above
G) None of the above

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Question 93

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The IRS is required to redetermine the interest rate on underpayments and overpayments once a year.

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)?

Match the statements that relate to each other.Note: Some choices may be used more than once. -Field audit

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.

Burt and Lisa are married and live in a common law state.Burt wants to make gifts to their four children in 2014.What is the maximum amount of the annual exclusion they will be allowed for these gifts?

Stealth taxes have the effect of generating additional taxes from all taxpayers.

A Federal excise tax is no longer imposed on admission to theaters.

The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.

Upon audit by the IRS,Faith is assessed a deficiency of $40,000 of which $25,000 is attributable to negligence.The 20% negligence penalty will apply to $25,000.

The Federal estate and gift taxes are examples of progressive taxes.

Under the usual state inheritance tax,two heirs,a cousin and a son of the deceased,would not be taxed at the same rate.

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

For individual taxpayers,the interest rate for income tax refunds (overpayments)is the same as that applicable to assessments (underpayments).

Unlike FICA,FUTA requires that employers comply with state as well as Federal rules.

The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business use personalty.

A calendar year taxpayer files his 2013 Federal income tax return on March 5,2014.The return reflects an overpayment of $6,000,and the taxpayer requests a refund of this amount.The refund is paid on May 16,2014.The refund need not include interest.

Which,if any,of the following taxes are proportional (rather than progressive) ?

To mitigate the effect of the annual accounting period concept,the tax law permits the carryforward to other years of the excess charitable contributions of a particular year.