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Exam 1: Introduction to Taxation

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Question 51

Multiple Choice

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Social considerations can be used to justify:

A) Allowance of a credit for child care expenses.
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) Allowing a Federal income tax deduction for state and local sales taxes.
E) None of these.

F) C) and E)
G) A) and E)

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Question 52

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

A) True
B) False

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Question 53

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The annual exclusion,currently $14,000,is available for gift and estate tax purposes.

Under Clint's will,all of his property passes to either the Lutheran Church or to his wife.No Federal estate tax will be due on Clint's death in 2015.

Additional depreciation deduction allowed for the year the asset is acquired.

Burt and Lisa are married and live in a common law state.Burt wants to make gifts to their four children in 2015.What is the maximum amount of the annual exclusion they will be allowed for these gifts?

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

Contributions to charitable organizations are deductible.

Pablo,a sole proprietor,sold stock held as an investment for a $40,000 long-term capital gain.Pablo's marginal tax rate is 33%.Loon Corporation,a C corporation,sold stock held as an investment for a $40,000 long-term capital gain.Loon's marginal tax rate is 35%.What tax rates are applicable to these capital gains?

An inheritance tax is a tax on a decedent's right to pass property at death.

The Federal estate and gift taxes are examples of progressive taxes.

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.

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

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:

Sales made by mail order are not exempt from the application of a general sales (or use)tax.

Under the usual state inheritance tax,two heirs,a cousin and a son of the deceased,would not be taxed at the same rate.

State income taxes generally can be characterized by:

Double taxation of corporate income results because dividend distributions are included in a shareholder's gross income but are not deductible by the corporation.

A deduction for qualified tuition paid to obtain higher education.