Question 1

A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no such taxes.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)   Nonrecognition of gain allowed for involuntary conversions.
B)   Net operating loss carryback and carryover provisions.
C)   Carry over of excess charitable contributions.
D)   Use of the installment method to recognize gain.
E)   Carry over of excess capital losses.F) A) and B)
G) A) and C)

Question 4

There is a Federal excise tax on hotel occupancy.

Accepted Answer

A) True 
 B)False  False

Question 5

Bjorn owns a 60% interest in an S corporation that earned $150,000 in 2014.He also owns 60% of the stock in a C corporation that earned $150,000 during the year.The S corporation distributed $30,000 to Bjorn and the C corporation paid dividends of $30,000 to Bjorn.How much income must Bjorn report from these businesses?

Accepted Answer

A)   $0 income from the S corporation and $30,000 income from the C corporation.
B)   $30,000 income from the S corporation and $30,000 of dividend income from the C corporation.
C)   $90,000 income from the S corporation and $0 income from the C corporation.
D)   $90,000 income from the S corporation and $30,000 income from the C corporation.
E)   None of the above.F) None of the above
G) A) and B)

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

A Federal deduction for state and local sales taxes paid.

Accepted Answer

The answer of A Federal deduction for state and local...

Question 8

A parent employs his twin daughters,age 17,in his sole proprietorship.The daughters are not subject to FICA coverage.

Accepted Answer

A) True 
 B)False

Question 9

The tax law allows an income tax deduction (or a credit)for foreign income taxes.Explain why.

Accepted Answer

The deduction (or a credit)for foreign income taxes can be justified on the grounds that it mitigates the double tax imposed on the same income.

Question 10

Juanita owns 60% of the stock in a C corporation that had a profit of $200,000 in 2014.Carlos owns a 60% interest in a partnership that had a profit of $200,000 during the year.The corporation distributed $45,000 to Juanita,and the partnership distributed $45,000 to Carlos.Which of the following statements relating to 2014 is incorrect?

Accepted Answer

A)   Juanita must report $120,000 of income from the corporation.
B)   The corporation must pay corporate tax on $200,000 of income.
C)   Carlos must report $120,000 of income from the partnership.
D)   The partnership is not subject to a Federal entity-level income tax.
E)   None of the above.F) None of the above
G) C) and D)

Question 11

Taxes levied by both states and the Federal government include:

Accepted Answer

A)   General sales tax.
B)   Custom duties.
C)   Hotel occupancy tax.
D)   Franchise tax.
E)   None of these.F) A) and B)
G) A) and C) E

Question 12

Which,if any,of the following provisions of the tax law cannot be justified as promoting administrative feasibility (simplifying the task of the IRS) ?

Accepted Answer

A)   Penalties are imposed for failure to file a return or pay a tax on time.
B)   Prepaid income is taxed in the year received and not in the year earned.
C)   Annual adjustments for indexation increases the amount of the standard deduction allowed.
D)   Casualty losses must exceed 10% of AGI to be deductible.
E)   A deduction is allowed for charitable contributions.F) B) and D)
G) All of the above

Question 13

Tomas owns a sole proprietorship,and Lucy is the sole shareholder of a C corporation.In the current year both businesses make a net profit of $60,000.Neither business distributes any funds to the owners in the year.For the current year,Tomas must report $60,000 of income on his individual tax return,but Lucy is not required to report any income from the corporation on her individual tax return.

Accepted Answer

A) True 
 B)False

Question 14

Taxes not imposed by the Federal government include:

Accepted Answer

A)   Tobacco excise tax.
B)   Customs duties (tariffs on imports) .
C)   Tax on rent cars.
D)   Gas guzzler tax.
E)   None of these.F) B) and D)
G) A) and D)

Question 15

A Federal deduction for state and local income taxes paid.

Accepted Answer

The answer of A Federal deduction for state and local...

Question 16

A provision in the law that compels accrual basis taxpayers to pay a tax on prepaid income in the year received and not when earned is consistent with generally accepted accounting principles.

Accepted Answer

A) True 
 B)False

Question 17

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) A) and B)
G) C) and E)

Question 18

Both economic and social considerations can be used to justify:

Accepted Answer

A)   Favorable tax treatment for accident and health plans provided for employees and financed by employers.
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)   Various tax credits,deductions,and exclusions that are designed to encourage taxpayers to obtain additional education.
D)   Allowance of a deduction for state and local income taxes paid.
E)   None of these.F) B) and E)
G) B) and D)

Question 19

Paige is the sole shareholder of Citron Corporation.During the year,Paige leases a building to Citron for a monthly rental of $80,000.If the fair rental value of the building is $60,000,what are the income tax consequences to the parties involved?

Accepted Answer

The rent charged by Paige is not "arms l...

Question 20

Tax brackets are increased for inflation.

Accepted Answer

The answer of Tax brackets are increased for inflation....

Exam 1: Introduction to Taxation

A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no such taxes.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

There is a Federal excise tax on hotel occupancy.

Correct Answer
verified
False

Correct Answer
verified

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

Correct Answer
verified

A Federal deduction for state and local sales taxes paid.

Correct Answer
verified

A parent employs his twin daughters,age 17,in his sole proprietorship.The daughters are not subject to FICA coverage.

Correct Answer
verified

The tax law allows an income tax deduction (or a credit)for foreign income taxes.Explain why.

Correct Answer
verified
The deduction (or a credit)for foreign income taxes can be justified on the grounds that it mitigates the double tax imposed on the same income.

Correct Answer
verified

Taxes levied by both states and the Federal government include:

Correct Answer
verified
E

Which,if any,of the following provisions of the tax law cannot be justified as promoting administrative feasibility (simplifying the task of the IRS) ?

Correct Answer
verified

Correct Answer
verified

Taxes not imposed by the Federal government include:

Correct Answer
verified

A Federal deduction for state and local income taxes paid.

Correct Answer
verified

A provision in the law that compels accrual basis taxpayers to pay a tax on prepaid income in the year received and not when earned is consistent with generally accepted accounting principles.

Correct Answer
verified

Taxes levied by all states include:

Correct Answer
verified

Both economic and social considerations can be used to justify:

Correct Answer
verified

Paige is the sole shareholder of Citron Corporation.During the year,Paige leases a building to Citron for a monthly rental of $80,000.If the fair rental value of the building is $60,000,what are the income tax consequences to the parties involved?

Correct Answer
verified
The rent charged by Paige is not "arms l...
View Answer

Tax brackets are increased for inflation.

Correct Answer
verified

Exam 1: Introduction to Taxation

A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no such taxes.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

There is a Federal excise tax on hotel occupancy.

Correct AnswerverifiedFalse

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A Federal deduction for state and local sales taxes paid.

Correct AnswerverifiedShow Answer

A parent employs his twin daughters,age 17,in his sole proprietorship.The daughters are not subject to FICA coverage.

Correct AnswerverifiedShow Answer

The tax law allows an income tax deduction (or a credit)for foreign income taxes.Explain why.

Correct AnswerverifiedThe deduction (or a credit)for foreign income taxes can be justified on the grounds that it mitigates the double tax imposed on the same income.

Correct AnswerverifiedShow Answer

Taxes levied by both states and the Federal government include:

Correct AnswerverifiedE

Which,if any,of the following provisions of the tax law cannot be justified as promoting administrative feasibility (simplifying the task of the IRS) ?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Taxes not imposed by the Federal government include:

Correct AnswerverifiedShow Answer

A Federal deduction for state and local income taxes paid.

Correct AnswerverifiedShow Answer

A provision in the law that compels accrual basis taxpayers to pay a tax on prepaid income in the year received and not when earned is consistent with generally accepted accounting principles.

Correct AnswerverifiedShow Answer

Taxes levied by all states include:

Correct AnswerverifiedShow Answer

Both economic and social considerations can be used to justify:

Correct AnswerverifiedShow Answer

Paige is the sole shareholder of Citron Corporation.During the year,Paige leases a building to Citron for a monthly rental of $80,000.If the fair rental value of the building is $60,000,what are the income tax consequences to the parties involved?

Correct AnswerverifiedThe rent charged by Paige is not "arms l...View AnswerShow Answer

Tax brackets are increased for inflation.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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False

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The deduction (or a credit)for foreign income taxes can be justified on the grounds that it mitigates the double tax imposed on the same income.

Correct Answer
verified

Correct Answer
verified
E

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The rent charged by Paige is not "arms l...
View Answer

Correct Answer
verified