FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

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

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

True/False

Review LaterAdd Note

Review Later

Various tax provisions encourage the creation of certain types of retirement plans. Such provisions can be justified on both economic and social grounds.

A) True
B) False

Correct Answer

verified

Show Answer

Question 32

Multiple Choice

Review LaterAdd Note

Review Later

A rationale for the installment method tax rule is:

A) Ability to pay.
B) Equity and fairness.
C) Simplicity.
D) Revenue neutrality.

E) B) and D)
F) All of the above

Correct Answer

verified

Show Answer

Question 33

True/False

Review LaterAdd Note

As a matter of administrative convenience, the IRS would prefer to have Congress decrease rather than increase) the amount of the standard deduction allowed to individual taxpayers.

In 2016, Deborah became 65 years old. In 2017 she added a swimming pool, and in 2018 she converted the residence to rental property and moved into an assisted living facility. Since 2015, Deborah's ad valorem property taxes have decreased once and increased twice. Explain.

A fixture will be subject to the ad valorem tax on personalty rather than the ad valorem tax on realty.

The tax law provides various tax credits, deductions, and exclusions that are designed to encourage taxpayers to obtain additional education. These provisions can be justified on both economic and equity grounds.

The quote engraved on the IRS building in Washington, DC, at the entrance states:

Taxes not imposed by the Federal government include:

Briana lives in one state and works in the adjoining state. Both states tax the income she earns from her job. Does Briana have any relief from this apparent double taxation of the same income?

Jane is the tax director for Tangent Software Corporation. She is unsure whether Tangent is required to charge sales tax when software is provided to customers in State X via the "cloud." This indicates that the sales tax does not meet the principle of:

Sally's neighbor often brags that his employer often pays him in cash "off the books" to save him taxes. Sally is tired of hearing this and contacts the IRS to report the neighbor. If this tip results in taxes collected by the IRS, Sally will likely receive an award of a portion of the tax and penalties collected.

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

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

Under state amnesty programs, all delinquent and unpaid income taxes are forgiven.

Taxes levied by both states and the Federal government include:

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

Some states use their state income tax return as a means of collecting unpaid sales and use taxes.

Two years ago, State Y enacted a new income tax credit for college prep materials. The credit is available to individuals and is equal to 40 percent of the cost of the items. The credit may not exceed $50 in any year. The State Y Director of Finance has discovered this year that the amount of credit claimed is far higher than expected. Which principle of good tax policy might not have been considered in designing this tax which caused the original cost estimate to be too low?

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

Like the Federal counterpart, the amount of the state excise taxes on gasoline varies from state to state.