Question 1

Which of the following are the twopervasive judicial doctrines that often limit the taxpayer's ability toemploy effective planning techniques?

Accepted Answer

A) the progressive tax rate requirement and marginal rates 
B) business purpose and substance over form 
C) business purpose and changing tax jurisdiction 
D) all of these are judicial doctrines that limit effective tax planning 
A) the progressive tax rate requirement and marginal rates 
B) business purpose and substance over form 
C) business purpose and changing tax jurisdiction 
D) all of these are judicial doctrines that limit effective tax planning

Question 2

A proportional tax rate system represents:

Accepted Answer

A) a progressive tax rate structure 
B) a flat tax rate structure 
C) the U.S. federal income tax system 
D) none of these are correct 
A) a progressive tax rate structure 
B) a flat tax rate structure 
C) the U.S. federal income tax system 
D) none of these are correct

Question 3

With respect totax planning activities, the decision maker must compare the after-tax benefits with the pretax costs.

Accepted Answer

A) True 
 B)False

Question 4

The tax rate which is computed by simply dividing the total tax liability by the corresponding tax base is known as the:

Accepted Answer

A) capital gains tax rate 
B) average tax rate 
C) effective tax rate 
D) marginal tax rate 
A) capital gains tax rate 
B) average tax rate 
C) effective tax rate 
D) marginal tax rate

Question 5

When tax rates are constant, delaying income recognition or accelerating deductions can be beneficial.

Accepted Answer

A) True 
 B)False

Question 6

Any business-related expenses that are incurred in connection with the determination of a tax are deductible.

Accepted Answer

A) True 
 B)False

Question 7

A corporate taxpayer, whois subject toa marginal state and federal tax rate of 30 percent, is considering twomutually exclusive alternatives. Alternative A is tohire a public accounting firm at a cost of $5,000 toundertake research on a tax avoidance plan. If the plan is successful, it will save the corporation $4,900 in federal income taxes. The probability of success for the plan is 75 percent. Alternative B is tohire a marketing firm at a cost of $4,500 todevelop a new marketing strategy. If it is successful, the new marketing strategy would generate new revenues of $5,500. The probability of such success is 80 percent. 
Which alternative should the corporation choose?

Accepted Answer

The answer of A corporate taxpayer, whois subject toa marginal...

Question 8

Harrison is subject toa 40 percent overall marginal tax rate. Is he better off if he receives a tax-free fringe benefit of $4,000 than if he receives an equivalent increase in his salary? Why or why not?

Accepted Answer

Harrison  would be better off

Question 9

Taxpayers can always minimize their tax liability simply by moving income and assets out of one jurisdiction toanother.

Accepted Answer

A) True 
 B)False

Question 10

Taxpayers often can legally reduce their exposure totaxation by:

Accepted Answer

A) avoiding the recognition of taxable income 
B) deducting federal taxes 
C) not appearing before tax officials 
D) postponing deductions 
A) avoiding the recognition of taxable income 
B) deducting federal taxes 
C) not appearing before tax officials 
D) postponing deductions

Question 11

The tax rate that is the present value of the additional tax on one dollar of additional taxable income is referred toas the:

Accepted Answer

A) nominal tax rate 
B) effective tax rate 
C) before-tax cost 
D) none of these are correct 
A) nominal tax rate 
B) effective tax rate 
C) before-tax cost 
D) none of these are correct

Question 12

Where ATC = after-tax cost, BTC = before-tax cost, and MTR = marginal tax rate, the after-tax cost of tax planning can be expressed as:

Accepted Answer

A) ATC = BTC ×  (1 - MTR) 
B) a factor of the time value of money 
C) MTR × taxable income = ATC 
D) ATC = BTC ÷ (1 - MTR) 
A) ATC = BTC ×  (1 - MTR) 
B) a factor of the time value of money 
C) MTR × taxable income = ATC 
D) ATC = BTC ÷ (1 - MTR)

Question 13

Tax planning analyses should be based on the average tax rates that the individual will pay or save by adopting a particular course of action.

Accepted Answer

A) True 
 B)False

Question 14

The judicial doctrine "business purpose" can decrease the taxpayer's ability toemploy effective planning techniques.

Accepted Answer

A) True 
 B)False

Question 15

Taxpayers are rewarded more for finding ways tosave taxes than for earning an equal amount in the marketplace.

Accepted Answer

A) True 
 B)False

Question 16

The effective average tax rate can be found by dividing the total tax liability by the economic income.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following tax rate systems is applicable tothe U.S. individual income tax?

Accepted Answer

A) proportional tax rate system 
B) regressive tax rate system 
C) progressive tax rate system 
D) none of these are correct 
A) proportional tax rate system 
B) regressive tax rate system 
C) progressive tax rate system 
D) none of these are correct

Question 18

Spreading income among related taxpayers is one of the goals of tax planning behavior.

Accepted Answer

A) True 
 B)False

Which of the following are the twopervasive judicial doctrines that often limit the taxpayer's ability toemploy effective planning techniques?

A proportional tax rate system represents:

With respect totax planning activities, the decision maker must compare the after-tax benefits with the pretax costs.

The tax rate which is computed by simply dividing the total tax liability by the corresponding tax base is known as the:

When tax rates are constant, delaying income recognition or accelerating deductions can be beneficial.

Any business-related expenses that are incurred in connection with the determination of a tax are deductible.

Harrison is subject toa 40 percent overall marginal tax rate. Is he better off if he receives a tax-free fringe benefit of $4,000 than if he receives an equivalent increase in his salary? Why or why not?

Taxpayers can always minimize their tax liability simply by moving income and assets out of one jurisdiction toanother.

Taxpayers often can legally reduce their exposure totaxation by:

The tax rate that is the present value of the additional tax on one dollar of additional taxable income is referred toas the:

Where ATC = after-tax cost, BTC = before-tax cost, and MTR = marginal tax rate, the after-tax cost of tax planning can be expressed as:

Tax planning analyses should be based on the average tax rates that the individual will pay or save by adopting a particular course of action.

The judicial doctrine "business purpose" can decrease the taxpayer's ability toemploy effective planning techniques.

Taxpayers are rewarded more for finding ways tosave taxes than for earning an equal amount in the marketplace.

The effective average tax rate can be found by dividing the total tax liability by the economic income.

Which of the following tax rate systems is applicable tothe U.S. individual income tax?

Spreading income among related taxpayers is one of the goals of tax planning behavior.

Introduction Totax Practice and Ethics

Tax Research Methodology

Constitutional and Legislative Sources

Administrative Regulations and Rulings

Judicial Interpretations

Thomson Reuters Checkpoint

CCH Intelliconnect

Other Tax Services and Tax Periodicals

Multijurisdictional Taxes

Communicating Research Results

Working With the IRS

Tax Practice and Administration

Filters

Exam 11: Tax Planning

Which of the following are the twopervasive judicial doctrines that often limit the taxpayer's ability toemploy effective planning techniques?

A proportional tax rate system represents:

With respect totax planning activities, the decision maker must compare the after-tax benefits with the pretax costs.

The tax rate which is computed by simply dividing the total tax liability by the corresponding tax base is known as the:

When tax rates are constant, delaying income recognition or accelerating deductions can be beneficial.

Any business-related expenses that are incurred in connection with the determination of a tax are deductible.

Harrison is subject toa 40 percent overall marginal tax rate. Is he better off if he receives a tax-free fringe benefit of $4,000 than if he receives an equivalent increase in his salary? Why or why not?

Taxpayers can always minimize their tax liability simply by moving income and assets out of one jurisdiction toanother.

Taxpayers often can legally reduce their exposure totaxation by:

The tax rate that is the present value of the additional tax on one dollar of additional taxable income is referred toas the:

Where ATC = after-tax cost, BTC = before-tax cost, and MTR = marginal tax rate, the after-tax cost of tax planning can be expressed as:

Tax planning analyses should be based on the average tax rates that the individual will pay or save by adopting a particular course of action.

The judicial doctrine "business purpose" can decrease the taxpayer's ability toemploy effective planning techniques.

Taxpayers are rewarded more for finding ways tosave taxes than for earning an equal amount in the marketplace.

The effective average tax rate can be found by dividing the total tax liability by the economic income.

Which of the following tax rate systems is applicable tothe U.S. individual income tax?

Spreading income among related taxpayers is one of the goals of tax planning behavior.

Introduction Totax Practice and Ethics

Tax Research Methodology

Constitutional and Legislative Sources

Administrative Regulations and Rulings

Judicial Interpretations

Thomson Reuters Checkpoint

CCH Intelliconnect

Other Tax Services and Tax Periodicals

Multijurisdictional Taxes

Communicating Research Results

Working With the IRS

Tax Practice and Administration

Filters