Question 1

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:

Accepted Answer

A)  The wherewithal to pay concept.
B)  The tax benefit rule.
C)  The arm's length concept.
D)  A clear reflection of income result.
E)  None of the above.F) B) and D)
G) A) and E)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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 4

Although the law is complicated,most individual taxpayers are able to complete their Federal income tax returns without outside assistance.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A)  Federal corporate income tax.
B)  Federal gift tax.
C)  Federal estate tax.
D)  Federal employment taxes (i.e. ,FICA,FUT
A)  .
E)  All of the above.F) C) and D)
G) A) and D)

Question 6

Sales made by mail order are exempt from the application of a general sales (or use)tax.

Accepted Answer

A) True 
 B)False

Question 7

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 2010.In reviewing her 2009 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?

Accepted Answer

You should recommend to Melinda that an ...

Question 8

Currently,the tax base for the Medicare component of the FICA is limited to a dollar amount.

Accepted Answer

A) True 
 B)False

Question 9

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 the manufacture of automobiles that have poor gas mileage ratings.
E)  None of the above.F) None of the above
G) B) and D)

Question 10

Social considerations can be used to justify:

Accepted Answer

A)  Allowing a Federal income tax deduction for state and local sales taxes.
B)  Allowing excess capital losses to be carried over to other years.
C)  Allowing accelerated amortization for the cost of installing pollution control facilities.
D)  Allowance of a credit for child care expenses.
E)  None of the above.F) A) and B)
G) A) and C)

Question 11

Both economic and social considerations can be used to justify:

Accepted Answer

A)  Various tax credits,deductions,and exclusions that are designed to encourage taxpayers to obtain additional education.
B)  Disallowance of any deduction for expenditures deemed to be contrary to public policy (e.g. ,fines,penalties,illegal kickbacks,bribes to government officials) .
C)  Favorable tax treatment for accident and health plans provided for employees and financed by employers.
D)  Allowance of a deduction for state and local income taxes paid.
E)  None of the above.F) B) and C)
G) C) and E)

Question 12

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

Accepted Answer

If equality is measured by abi...

Question 13

Provisions in the tax law that promote energy conservation and more use of alternative (non-fossil) fuels can be justified by:

Accepted Answer

A)  Political considerations.
B)  Promoting administrative feasibility.
C)  Economic and social considerations.
D)  Encouragement of small business.
E)  None of the above.F) C) and E)
G) A) and E)

Question 14

Amy is the sole shareholder of Garnet Corporation.During the year,Amy leases a building to Garnet for a monthly rental of $40,000.If the fair rental value of the building is $30,000,what are the income tax consequences to the parties involved?

Accepted Answer

The rent charged by Amy is not "arms len...

Question 15

Canceling a scheduled sales tax holiday has proven to be an easy way to generate more state and local revenue.

Accepted Answer

A) True 
 B)False

Question 16

Unlike the Federal counterpart,the state excise taxes on gasoline do vary from state to state.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Julius,a married taxpayer,makes gifts to each of his six children.A maximum of six annual exclusions could be allowed as to these gifts.

Accepted Answer

A) True 
 B)False

Question 19

A characteristic of the fraud penalties is:

Accepted Answer

A)  Civil fraud can result in a fine and a prison sentence.
B)  When negligence and civil fraud apply to a deficiency,the civil fraud penalty predominates.
C)  The criminal fraud penalty is 75% of the deficiency attributable to the fraud.
D)  The IRS has the same burden of proof in the case of criminal fraud than with civil fraud.
E)  None of the above.F) A) and B)
G) A) and C)

Question 20

Which,if any,of the following statements best describes the history of the Federal income tax?

Accepted Answer

A)  It existed during the Civil War.
B)  The Federal income tax on corporations was held by the U.S.Supreme Court to be contrary to the U.S.Constitution.
C)  The Federal income tax on individuals was held by the U.S.Supreme Court to be allowable under the U.S.Constitution.
D)  Both the Federal income tax on individuals and on corporations was held by the U.S.Supreme Court to be contrary to the U.S.Constitution.
E)  None of the above.F) C) and D)
G) A) and C)

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

Currently,the tax base for the Medicare component of the FICA is limited to a dollar amount.

Correct Answer
verified

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

Correct Answer
verified

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:

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified
You should recommend to Melinda that an ...
View Answer

Although the law is complicated,most individual taxpayers are able to complete their Federal income tax returns without outside assistance.

Correct Answer
verified

A characteristic of the fraud penalties is:

Correct Answer
verified

Social considerations can be used to justify:

Correct Answer
verified

Amy is the sole shareholder of Garnet Corporation.During the year,Amy leases a building to Garnet for a monthly rental of $40,000.If the fair rental value of the building is $30,000,what are the income tax consequences to the parties involved?

Correct Answer
verified
The rent charged by Amy is not "arms len...
View Answer

Canceling a scheduled sales tax holiday has proven to be an easy way to generate more state and local revenue.

Correct Answer
verified

Sales made by mail order are exempt from the application of a general sales (or use)tax.

Correct Answer
verified

Federal excise taxes that are no longer imposed include:

Correct Answer
verified

Provisions in the tax law that promote energy conservation and more use of alternative (non-fossil) fuels can be justified by:

Correct Answer
verified

Unlike the Federal counterpart,the state excise taxes on gasoline do vary from state to state.

Correct Answer
verified

Both economic and social considerations can be used to justify:

Correct Answer
verified

Which,if any,of the following statements best describes the history of the Federal income tax?

Correct Answer
verified

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

Correct Answer
verified

Julius,a married taxpayer,makes gifts to each of his six children.A maximum of six annual exclusions could be allowed as to these gifts.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified
If equality is measured by abi...
View Answer

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

Currently,the tax base for the Medicare component of the FICA is limited to a dollar amount.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedYou should recommend to Melinda that an ...View AnswerShow Answer

Although the law is complicated,most individual taxpayers are able to complete their Federal income tax returns without outside assistance.

Correct AnswerverifiedShow Answer

A characteristic of the fraud penalties is:

Correct AnswerverifiedShow Answer

Social considerations can be used to justify:

Correct AnswerverifiedShow Answer

Amy is the sole shareholder of Garnet Corporation.During the year,Amy leases a building to Garnet for a monthly rental of $40,000.If the fair rental value of the building is $30,000,what are the income tax consequences to the parties involved?

Correct AnswerverifiedThe rent charged by Amy is not "arms len...View AnswerShow Answer

Canceling a scheduled sales tax holiday has proven to be an easy way to generate more state and local revenue.

Correct AnswerverifiedShow Answer

Sales made by mail order are exempt from the application of a general sales (or use)tax.

Correct AnswerverifiedShow Answer

Federal excise taxes that are no longer imposed include:

Correct AnswerverifiedShow Answer

Provisions in the tax law that promote energy conservation and more use of alternative (non-fossil) fuels can be justified by:

Correct AnswerverifiedShow Answer

Unlike the Federal counterpart,the state excise taxes on gasoline do vary from state to state.

Correct AnswerverifiedShow Answer

Both economic and social considerations can be used to justify:

Correct AnswerverifiedShow Answer

Which,if any,of the following statements best describes the history of the Federal income tax?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Julius,a married taxpayer,makes gifts to each of his six children.A maximum of six annual exclusions could be allowed as to these gifts.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedIf equality is measured by abi...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
You should recommend to Melinda that an ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The rent charged by Amy is not "arms len...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
If equality is measured by abi...
View Answer