Question 1

The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the U.S.

Accepted Answer

A) True 
 B)False

Question 2

What are the pros and cons of the following state and local tax provisions?
a.An ad valorem property tax holiday made available to a manufacturing plant that is relocating.
b.Hotel occupancy tax and a rental car surcharge.
c.A back-to-school sales tax holiday.

Accepted Answer

a.Such a holiday is designed to attract ...

Question 3

Because the law is complicated,most individual taxpayers are not able to complete their Federal income tax returns without outside assistance.

Accepted Answer

A) True 
 B)False

Question 4

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

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 I)
N) B) and C)

Question 5

A state income tax can be imposed on nonresident taxpayers who earn income within the state on an itinerant basis.

Accepted Answer

A) True 
 B)False

Question 6

Match the statements that relate to each other.Note: Some choices may be used more than once.
-Late filing and statute limitations (deficiency situations)

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) C) and G)
N) J) and L)

Question 7

Jason's business warehouse is destroyed by fire.As the insurance proceeds exceed the basis of the property,a gain results.If Jason shortly reinvests the proceeds in a new warehouse,no gain is recognized due to the application of the wherewithal to pay concept.

Accepted Answer

A) True 
 B)False

Question 8

Without obtaining an extension,Pam files her income tax return 55 days after the due date.With her return,she pays an additional tax of $60,000.Disregarding any interest element,what is Pam's penalty for failure to pay and to file?

Accepted Answer

$6,000.Disregarding the intere...

Question 9

How do the net operating loss provisions in the tax law mitigate the effect of the annual accounting concept?

Accepted Answer

Without the allowance of carryback and/o...

Question 10

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

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) G) and J)
N) B) and L)

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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

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) A) and L)
N) C) and E)

Question 13

When Congress enacts a tax cut that is phased in over a period of years,revenue neutrality is achieved.

Accepted Answer

A) True 
 B)False

Question 14

States impose either a state income tax or a general sales tax,but not both types of taxes.

Accepted Answer

A) True 
 B)False

Question 15

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 16

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

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) F) and H)
N) B) and F)

Question 17

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 18

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

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 E)
N) D) and J)

Question 19

On his 2014 income tax return,Andrew omitted income and overstated deductions to the extent that his income tax was understated by $500,000.Disregarding any interest element,what is Andrew's penalty if the understatement was due to:
a.Negligence.
b.Civil fraud.
c.Criminal fraud.

Accepted Answer

a.$100,000 (20% × $5...

Question 20

No state has offered an income tax amnesty program more than once.

Accepted Answer

A) True 
 B)False

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

On his 2014 income tax return,Andrew omitted income and overstated deductions to the extent that his income tax was understated by $500,000.Disregarding any interest element,what is Andrew's penalty if the understatement was due to: a.Negligence. b.Civil fraud. c.Criminal fraud.

Correct Answerverifieda.$100,000 (20% × $5...View AnswerShow Answer

No state has offered an income tax amnesty program more than once.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

How do the net operating loss provisions in the tax law mitigate the effect of the annual accounting concept?

Correct AnswerverifiedWithout the allowance of carryback and/o...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

What are the pros and cons of the following state and local tax provisions? a.An ad valorem property tax holiday made available to a manufacturing plant that is relocating. b.Hotel occupancy tax and a rental car surcharge. c.A back-to-school sales tax holiday.

Correct Answerverifieda.Such a holiday is designed to attract ...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Because the law is complicated,most individual taxpayers are not able to complete their Federal income tax returns without outside assistance.

Correct AnswerverifiedShow Answer

The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the U.S.

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 state income tax can be imposed on nonresident taxpayers who earn income within the state on an itinerant basis.

Correct AnswerverifiedShow Answer

Without obtaining an extension,Pam files her income tax return 55 days after the due date.With her return,she pays an additional tax of $60,000.Disregarding any interest element,what is Pam's penalty for failure to pay and to file?

Correct Answerverified$6,000.Disregarding the intere...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Jason's business warehouse is destroyed by fire.As the insurance proceeds exceed the basis of the property,a gain results.If Jason shortly reinvests the proceeds in a new warehouse,no gain is recognized due to the application of the wherewithal to pay concept.

Correct AnswerverifiedShow Answer

Match the statements that relate to each other.Note: Some choices may be used more than once. -Late filing and statute limitations (deficiency situations)

Correct AnswerverifiedShow Answer

States impose either a state income tax or a general sales tax,but not both types of taxes.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When Congress enacts a tax cut that is phased in over a period of years,revenue neutrality is achieved.

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

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a.$100,000 (20% × $5...
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Without the allowance of carryback and/o...
View Answer

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a.Such a holiday is designed to attract ...
View Answer

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$6,000.Disregarding the intere...
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Correct Answer
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