Question 1

For gift tax purposes,a $14,000 annual exclusion per donee is permitted.

Accepted Answer

A) True 
 B)False

Question 2

The Senate equivalent of the House Ways and Means Committee is the Senate

Accepted Answer

A) Joint Committee on Taxation. 
B) Ways and Means Committee. 
C) Finance Committee. 
D) Joint Conference Committee. 
A) Joint Committee on Taxation. 
B) Ways and Means Committee. 
C) Finance Committee. 
D) Joint Conference Committee.

Question 3

Leonard established a trust for the benefit of his son.The principal amount of the trust is $400,000.The trust is projected to earn approximately 5% per year.In the current year,the trust earned $20,000.Expenses of $4,000 were incurred.Assume that $14,000 is distributed to Leonard's son.
a.How much income is taxed to the trust?
b.How much income is taxed to Leonard's son?

Accepted Answer

a.$20,000 income - $4,000 expe

Question 4

Vertical equity means that

Accepted Answer

A) taxpayers with the same amount of income should pay the same amount of tax. 
B) taxpayers with larger amounts of income should pay more tax than taxpayers with lower amounts of income. 
C) all taxpayers should pay the same tax. 
D) None of the above. 
A) taxpayers with the same amount of income should pay the same amount of tax. 
B) taxpayers with larger amounts of income should pay more tax than taxpayers with lower amounts of income. 
C) all taxpayers should pay the same tax. 
D) None of the above.

Question 5

When new tax legislation is being considered by Congress

Accepted Answer

A) the tax bill will usually originate in the Senate. 
B) different versions of the House and Senate bills are reconciled by the Speaker of the House and the President of the Senate. 
C) different versions of the House and Senate bills are reconciled by a Joint Conference Committee. 
D) after the President of the United States approves a tax bill,the Joint Conference Committee must then vote on passage of the bill. 
A) the tax bill will usually originate in the Senate. 
B) different versions of the House and Senate bills are reconciled by the Speaker of the House and the President of the Senate. 
C) different versions of the House and Senate bills are reconciled by a Joint Conference Committee. 
D) after the President of the United States approves a tax bill,the Joint Conference Committee must then vote on passage of the bill.

Question 6

A presidential candidate proposes replacing the income tax with a national sales tax.The sales tax would have a flat rate.Describe the impact of this change in terms of tax structure and equity.

Accepted Answer

The change would replace a progressive t

Question 7

What are the correct monthly rates for calculating failure to file and failure to pay penalties?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 8

When a change in the tax law is deemed necessary by Congress,the entire Internal Revenue Code must be revised.

Accepted Answer

A) True 
 B)False

Question 9

Explain how returns are selected for audit.

Accepted Answer

The IRS uses both computers and experien

Question 10

Which is not a component of tax practice?

Accepted Answer

A) providing clients tax refund advance loans 
B) tax research 
C) tax planning and consulting 
D) compliance 
A) providing clients tax refund advance loans 
B) tax research 
C) tax planning and consulting 
D) compliance

Question 11

Regressive tax rates decrease as the tax base increases.

Accepted Answer

A) True 
 B)False

Question 12

What is an important aspect of a limited liability partnership?

Accepted Answer

A) It is the same as a limited partnership where the general partner has unlimited liability. 
B) A partner has unlimited liability arising from his or her own acts of negligence or misconduct or similar acts of any person under his or her direct supervision,but does not have unlimited liability in other matters. 
C) All partners have limited liability regarding all partnership activities. 
D) All partners have unlimited liability. 
A) It is the same as a limited partnership where the general partner has unlimited liability. 
B) A partner has unlimited liability arising from his or her own acts of negligence or misconduct or similar acts of any person under his or her direct supervision,but does not have unlimited liability in other matters. 
C) All partners have limited liability regarding all partnership activities. 
D) All partners have unlimited liability.

Question 13

Jose dies in the current year and has a gross estate valued at $8,000,000.Over the past ten years Jose had made taxable gifts of $400,000.The estate incurs funeral and administrative expenses of $100,000 and also pays off Jose's debts which amount to $300,000.Jose bequeaths $500,000 to his wife.What is the amount of Jose's tax base,the amount on which the estate tax is computed?

Accepted Answer

A) $7,100,000 
B) $7,500,000 
C) $1,650,000 
D) $2,050,000 
A) $7,100,000 
B) $7,500,000 
C) $1,650,000 
D) $2,050,000

Question 14

A progressive tax rate structure is one where the rate of tax increases as the tax base increases.

Accepted Answer

A) True 
 B)False

Question 15

The tax law encompasses administrative and judicial interpretations,such as Treasury regulations,revenue rulings,revenue procedures,and court decisions,as well as statutes.

Accepted Answer

A) True 
 B)False

Question 16

Martha is self-employed in 2017.Her self employment income is $140,000.What is her self-employment tax?

Accepted Answer

A) $19,462 
B) $19,833 
C) $21,420 
D) None of the above. 
A) $19,462 
B) $19,833 
C) $21,420 
D) None of the above.

Question 17

Doug and Frank form a partnership,D and F Advertising,each contributing $50,000 to start the business.During the first year of operations,D and F earns $80,000,which is allocated $40,000 each to Doug and Frank.At the beginning of the second year,Doug sells his interest to Marcus for $90,000.What is the amount of Doug's taxable gain on the sale?

Accepted Answer

There is no gain on the sale.

Question 18

Which of the following taxes is progressive?

Accepted Answer

A) sales tax 
B) excise tax 
C) property tax 
D) federal income tax 
A) sales tax 
B) excise tax 
C) property tax 
D) federal income tax

Question 19

Paul makes the following property transfers in the current year: • $22,000 cash to his wife
• $34,000 cash to a qualified charity
• $220,000 house to his son
• $3,000 computer to an unrelated friend
The total of Paul's taxable gifts,assuming he does not elect gift splitting with his spouse,subject to the unified transfer tax is

Accepted Answer

A) $206,000. 
B) $214,000. 
C) $234,000. 
D) $279,000. 
A) $206,000. 
B) $214,000. 
C) $234,000. 
D) $279,000.

Question 20

A taxpayer's average tax rate is the tax rate applied to an incremental amount of taxable income that is added to the tax base.

Accepted Answer

A) True 
 B)False

Exam 17: An Introduction to Taxation

For gift tax purposes,a $14,000 annual exclusion per donee is permitted.

The Senate equivalent of the House Ways and Means Committee is the Senate

Vertical equity means that

When new tax legislation is being considered by Congress

A presidential candidate proposes replacing the income tax with a national sales tax.The sales tax would have a flat rate.Describe the impact of this change in terms of tax structure and equity.

What are the correct monthly rates for calculating failure to file and failure to pay penalties?

When a change in the tax law is deemed necessary by Congress,the entire Internal Revenue Code must be revised.

Explain how returns are selected for audit.

Which is not a component of tax practice?

Regressive tax rates decrease as the tax base increases.

What is an important aspect of a limited liability partnership?

A progressive tax rate structure is one where the rate of tax increases as the tax base increases.

The tax law encompasses administrative and judicial interpretations,such as Treasury regulations,revenue rulings,revenue procedures,and court decisions,as well as statutes.

Martha is self-employed in 2017.Her self employment income is $140,000.What is her self-employment tax?

Which of the following taxes is progressive?

A taxpayer's average tax rate is the tax rate applied to an incremental amount of taxable income that is added to the tax base.

Tax Research

Corporate Formations and Capital Structure

the Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Ustaxation of Foreign-Related Transactions

Determination of Tax

Gross Income: Inclusions

Gross Income: Exclusions

Property Transactions: Capital Gains and Losses

Deductions and Losses

Itemized Deductions

Losses and Bad Debts

Employee Expenses and Deferred Compensation

Depreciation, cost Recovery, amortization, and Depletion

Accounting Periods and Methods

Property Transactions: Nontaxable Exchanges

Property Transactions: Sec1231 and Recapture

Special Tax Computation Methods, tax Credits, and Payment of Tax

Tax Research

Corporations

Partnerships and S Corporations

Taxes and Investment Planning

Filters