Question 1

Which of the following statements is incorrect?

Accepted Answer

A)  Property taxes are levied on real estate.
B)  Excise taxes are assessed on items such as gasoline and telephone use.
C)  Gift taxes are imposed on the recipient of a gift.
D)  The estate tax is based on the fair market value of property at death or the alternate valuation date.

Question 2

Which is not a component of tax practice?

Accepted Answer

A)  providing clients tax refund advance loans
B)  tax research
C)  tax planning and consulting
D)  compliance

Question 3

Dividends paid from most U.S. corporations are taxed at the same rate as the recipients' salaries and wages.

Accepted Answer

A) True 
 B)False

Question 4

The federal income tax is the dominant form of taxation by the federal government.

Accepted Answer

A) True 
 B)False

Question 5

Vertical equity means that

Accepted Answer

A)  taxpayers with the same amount of income pay the same amount of tax.
B)  taxpayers with larger amounts of income should pay more tax than taxpayer's with lower amounts of income.
C)  all taxpayers should pay the same tax.
D)  none of the above.

Question 6

While federal and state income taxes as well as the federal gift and estate taxes are generally progressive in nature, property taxes are proportional.

Accepted Answer

A) True 
 B)False

Question 7

The marginal tax rate is useful in tax planning because it measures the tax effect of a proposed transaction.

Accepted Answer

A) True 
 B)False

Question 8

The Sixteenth Amendment permits the passage of a federal income tax.

Accepted Answer

A) True 
 B)False

Question 9

For gift tax purposes, a $14,000 annual exclusion per donee is permitted.

Accepted Answer

A) True 
 B)False

Question 10

Flow-through entities do not have to file tax returns since they are not taxable entities.

Accepted Answer

A) True 
 B)False

Question 11

Arthur pays tax of $5,000 on taxable income of $50,000 while taxpayer Barbara pays tax of $12,000 on $120,000. The tax is a

Accepted Answer

A)  progressive tax.
B)  proportional tax.
C)  regressive tax.
D)  None of the above.

Question 12

The largest source of revenues for the federal government comes from

Accepted Answer

A)  individual income taxes.
B)  corporate income taxes.
C)  Social Security and Medicare taxes (FIC
A)  .
D)  estate and gift taxes.

Question 13

Explain how returns are selected for audit.

Accepted Answer

The IRS uses both computers and experien...

Question 14

All of the following are executive (administrative) sources of tax law except

Accepted Answer

A)  Internal Revenue Code.
B)  Income Tax Regulations.
C)  Revenue Rulings.
D)  Revenue Procedures.

Question 15

The primary objective of the federal income tax law is to achieve various economic and social policy objectives.

Accepted Answer

A) True 
 B)False

Question 16

Describe the steps in the legislative process for major tax reform.

Accepted Answer

1. Treasury studies are prepared on need...

Question 17

When property is transferred, the gift tax is based on

Accepted Answer

A)  replacement cost of the transferred property.
B)  fair market value on the date of transfer.
C)  the transferor's original cost of the transferred property.
D)  the transferor's depreciated cost of the transferred property.

Question 18

Generally, the statute of limitations is three years from the later of the date the tax return is filed or the due date.

Accepted Answer

A) True 
 B)False

Question 19

In 2014, an estate is not taxable unless the sum of the taxable estate and taxable gifts made after 1976 exceeds

Accepted Answer

A)  $1,000,000.
B)  $3,500,000.
C)  $5,000,000.
D)  $5,340,000.

Question 20

The Senate equivalent of the House Ways and Means Committee is the Senate

Accepted Answer

A)  Joint Committee on Taxation.
B)  Ways and Means Committee.
C)  Finance Committee.
D)  Joint Conference Committee.

Exam 1: An Introduction to Taxation

Arthur pays tax of $5,000 on taxable income of $50,000 while taxpayer Barbara pays tax of $12,000 on $120,000. The tax is a

Correct AnswerverifiedShow Answer

The marginal tax rate is useful in tax planning because it measures the tax effect of a proposed transaction.

Correct AnswerverifiedShow Answer

Which is not a component of tax practice?

Correct AnswerverifiedShow Answer

Dividends paid from most U.S. corporations are taxed at the same rate as the recipients' salaries and wages.

Correct AnswerverifiedShow Answer

The primary objective of the federal income tax law is to achieve various economic and social policy objectives.

Correct AnswerverifiedShow Answer

Generally, the statute of limitations is three years from the later of the date the tax return is filed or the due date.

Correct AnswerverifiedShow Answer

The largest source of revenues for the federal government comes from

Correct AnswerverifiedShow Answer

Which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

The Senate equivalent of the House Ways and Means Committee is the Senate

Correct AnswerverifiedShow Answer

For gift tax purposes, a $14,000 annual exclusion per donee is permitted.

Correct AnswerverifiedShow Answer

Explain how returns are selected for audit.

Correct AnswerverifiedThe IRS uses both computers and experien...View AnswerShow Answer

Vertical equity means that

Correct AnswerverifiedShow Answer

While federal and state income taxes as well as the federal gift and estate taxes are generally progressive in nature, property taxes are proportional.

Correct AnswerverifiedShow Answer

Flow-through entities do not have to file tax returns since they are not taxable entities.

Correct AnswerverifiedShow Answer

The Sixteenth Amendment permits the passage of a federal income tax.

Correct AnswerverifiedShow Answer

When property is transferred, the gift tax is based on

Correct AnswerverifiedShow Answer

The federal income tax is the dominant form of taxation by the federal government.

Correct AnswerverifiedShow Answer

All of the following are executive (administrative) sources of tax law except

Correct AnswerverifiedShow Answer

In 2014, an estate is not taxable unless the sum of the taxable estate and taxable gifts made after 1976 exceeds

Correct AnswerverifiedShow Answer

Describe the steps in the legislative process for major tax reform.

Correct Answerverified1. Treasury studies are prepared on need...View AnswerShow Answer

Correct Answer
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The IRS uses both computers and experien...
View Answer

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1. Treasury studies are prepared on need...
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