Question 1

Which of the following taxes represents the largest portion of U.S. Federal Tax revenues?

Accepted Answer

A)  Employment taxes 
B)  Corporate income taxes 
C)  Individual income taxes 
D)  Estate and gift taxes 
E)  None of these 
A)  Employment taxes 
B)  Corporate income taxes 
C)  Individual income taxes 
D)  Estate and gift taxes 
E)  None of these

Question 2

In a regressive tax rate system, the marginal tax rate will often be greater than the average tax rate.

Accepted Answer

A) True 
 B)False

Question 3

For each of the following, determine if each is a tax and why or why not.
a. $2.50 toll paid on the Florida Turnpike
b. $300 ticket for reckless driving
c. 1% local surcharge on hotel rooms to fund public roadways
d. 2% city surcharge on wages earned in the city of Philadelphia

Accepted Answer

a. not a tax because receiving a specifi

Question 4

Which of the following is not one of the basic tax rate structures?

Accepted Answer

A)  Proportional 
B)  Equitable 
C)  Regressive 
D)  Progressive 
E)  All of these are different kinds of the basic tax rate structures 
A)  Proportional 
B)  Equitable 
C)  Regressive 
D)  Progressive 
E)  All of these are different kinds of the basic tax rate structures

Question 5

Regressive tax rate structures are typically considered to be vertically equitable.

Accepted Answer

A) True 
 B)False

Question 6

Margaret was issued a $150 speeding ticket. This is:

Accepted Answer

A)  A tax because payment is required by law 
B)  A tax because the payment is not related to any specific benefit received from the government agency collecting the ticket 
C)  Not a tax because it is considered a fine intended to punish illegal behavior 
D)  A tax because it is imposed by a government agency 
E)  Not a tax because Margaret could have avoided payment if she did not speed 
A)  A tax because payment is required by law 
B)  A tax because the payment is not related to any specific benefit received from the government agency collecting the ticket 
C)  Not a tax because it is considered a fine intended to punish illegal behavior 
D)  A tax because it is imposed by a government agency 
E)  Not a tax because Margaret could have avoided payment if she did not speed

Question 7

Sin taxes are:

Accepted Answer

A)  Taxes assessed by religious organizations 
B)  Taxes assessed on certain illegal acts 
C)  Taxes assessed to discourage less desirable behavior 
D)  Taxes assessed to fund a specific purpose 
E)  None of these 
A)  Taxes assessed by religious organizations 
B)  Taxes assessed on certain illegal acts 
C)  Taxes assessed to discourage less desirable behavior 
D)  Taxes assessed to fund a specific purpose 
E)  None of these

Question 8

If Manny earns an additional $35,000 in taxable income in year 2014, what is his marginal tax rate (rounded) on this income?

Accepted Answer

A)  22.49% 
B)  28.00% 
C)  25.91% 
D)  25.00% 
E)  None of these 
A)  22.49% 
B)  28.00% 
C)  25.91% 
D)  25.00% 
E)  None of these

Question 9

Horizontal equity is defined in terms of taxpayers in similar situations whereas vertical equity is defined in terms of taxpayers in different situations.

Accepted Answer

A) True 
 B)False

Question 10

A common example of an employment related tax is the Medicare tax.

Accepted Answer

A) True 
 B)False

Question 11

One benefit of a sin tax (e.g., a tax on cigarettes) is that it should increase the demand for the products being taxed.

Accepted Answer

A) True 
 B)False

Question 12

In a proportional (flat) tax rate system, the marginal tax rate will always equal the average tax rate.

Accepted Answer

A) True 
 B)False

Question 13

The effective tax rate, in general, provides a better depiction of a taxpayer's tax burden than the average tax rate.

Accepted Answer

A) True 
 B)False

Question 14

Common examples of sin taxes include the taxes imposed on airline tickets and gasoline.

Accepted Answer

A) True 
 B)False

Question 15

A flat tax is an example of a graduated tax system.

Accepted Answer

A) True 
 B)False

Question 16

The ultimate economic burden of a tax is best captured by:

Accepted Answer

A)  The marginal tax rate 
B)  The effective tax rate 
C)  The average tax rate 
D)  The proportional tax rate 
E)  None of these is correct 
A)  The marginal tax rate 
B)  The effective tax rate 
C)  The average tax rate 
D)  The proportional tax rate 
E)  None of these is correct

Question 17

Which of the following represents the largest percentage of state tax revenue?

Accepted Answer

A)  Sales tax 
B)  Individual income tax 
C)  Other 
D)  Property tax 
E)  None of these 
A)  Sales tax 
B)  Individual income tax 
C)  Other 
D)  Property tax 
E)  None of these

Question 18

Employers often withhold federal income taxes directly from worker's paychecks. This is an example of which principle in practice?

Accepted Answer

A)  Convenience 
B)  Certainty 
C)  Economy 
D)  Equity 
E)  None of these 
A)  Convenience 
B)  Certainty 
C)  Economy 
D)  Equity 
E)  None of these

Question 19

Bart is contemplating starting his own business. His new business would operate as a sole proprietorship and would require hiring several employees. Describe the employment-related taxes that Bart should be aware of as he starts his new business as a self-employed business owner.

Accepted Answer

Employment taxes consist of the Old Age,

Question 20

What is Leonardo and Theresa's effective tax rate for year 2014 (rounded)?

Accepted Answer

A)  15.00% 
B)  18.63% 
C)  21.28% 
D)  28.00% 
E)  None of these 
A)  15.00% 
B)  18.63% 
C)  21.28% 
D)  28.00% 
E)  None of these

Exam 1: An Introduction to Tax

Which of the following taxes represents the largest portion of U.S. Federal Tax revenues?

In a regressive tax rate system, the marginal tax rate will often be greater than the average tax rate.

For each of the following, determine if each is a tax and why or why not. a. $2.50 toll paid on the Florida Turnpike b. $300 ticket for reckless driving c. 1% local surcharge on hotel rooms to fund public roadways d. 2% city surcharge on wages earned in the city of Philadelphia

Which of the following is not one of the basic tax rate structures?

Regressive tax rate structures are typically considered to be vertically equitable.

Margaret was issued a $150 speeding ticket. This is:

Sin taxes are:

If Manny earns an additional $35,000 in taxable income in year 2014, what is his marginal tax rate (rounded) on this income?

Horizontal equity is defined in terms of taxpayers in similar situations whereas vertical equity is defined in terms of taxpayers in different situations.

A common example of an employment related tax is the Medicare tax.

One benefit of a sin tax (e.g., a tax on cigarettes) is that it should increase the demand for the products being taxed.

In a proportional (flat) tax rate system, the marginal tax rate will always equal the average tax rate.

The effective tax rate, in general, provides a better depiction of a taxpayer's tax burden than the average tax rate.

Common examples of sin taxes include the taxes imposed on airline tickets and gasoline.

A flat tax is an example of a graduated tax system.

The ultimate economic burden of a tax is best captured by:

Which of the following represents the largest percentage of state tax revenue?

Employers often withhold federal income taxes directly from worker's paychecks. This is an example of which principle in practice?

Bart is contemplating starting his own business. His new business would operate as a sole proprietorship and would require hiring several employees. Describe the employment-related taxes that Bart should be aware of as he starts his new business as a self-employed business owner.

What is Leonardo and Theresa's effective tax rate for year 2014 (rounded)?

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The US Taxation of Multinational Transactions

Transfer Taxes and Wealth Planning of the Cfa Institute

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