Exam 1: Taxes and Taxing Jurisdictions

Mr.Dodd resides in a state with a 6% sales and use tax.He recently traveled to another state to buy furniture and paid that state's 4% sales tax.Which of the following statements is true?

A business that operates in more than one state is required to pay state income tax only to the state in which it is incorporated.

Fewer than half of the state governments depend on gambling as a source of revenue.

Acme Inc.'s federal income tax increased by $100,000 this year.As a result,Acme reduced the annual dividend paid on its common stock by $100,000.Who bears the incidence of the corporate tax increase?

Richton Company operates its business solely in Jurisdiction H,which levies a 6% sales and use tax.This year,Richton paid $1,438,000 to purchase tangible property from a dealer located in Jurisdiction W.This purchase was subject to W's 3.5% sales tax.The property was shipped to Richton's office in Jurisdiction H for use in its business.Compute Richton's sales or use tax with respect to this transaction.

When did the federal income tax become a permanent tax?

A tax is intended to deter or punish unacceptable behavior.

Company N operates a mail order business out of its headquarters in Tulsa,Oklahoma.This year,it mailed $892,000 worth of product to customers residing in Oklahoma and $489,300 worth of product to customers residing in Missouri.Which of the following statements is true?

The federal government imposed the first income tax to raise money to fight the War of 1812.

The U.S.House Ways and Means Committee is responsible for drafting new federal tax legislation.

The federal government does not levy property taxes or a general sales tax.

Treasury regulations are tax laws written by the Treasury Department.

The U.S.government has jurisdiction to tax individuals who are not U.S.citizens but who earn income from a source within the United States.

The city of Springvale imposes a net income tax on businesses operating within its jurisdiction.The tax equals 1% of income up to $100,000 and 1.5% of income in excess of $100,000.The Springvale Bar and Grill generated $782,000 net income this year.Compute its city income tax.

Ad valorem property taxes are the major source of revenue for local governments.

Which of the following is/are not a primary source of authority for the tax law?

A state government may levy either a sales tax or a use tax on consumers but not both.

Mr.Smith resides in a state with a 6% sales and use tax.He recently traveled to another state to buy furniture and paid that state's 7% sales tax.Which of the following statements is true?

Which of the following federal taxes is earmarked for a specific purpose?

Both the U.S.House of Representatives and the U.S.Senate must vote to approve a new federal tax bill before the bill is signed into law by the President.