FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 1: An Introduction to Taxation and Understanding the Federal Tax Law

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

True/False

Review LaterAdd Note

Review Later

Jason's business warehouse is destroyed by fire.As the insurance proceeds exceed the basis of the property, a gain results.If Jason shortly reinvests the proceeds in a new warehouse, no gain is recognized due to the application of the wherewithal to pay concept.

A) True
B) False

Correct Answer

verified

Show Answer

Question 62

Essay

Review LaterAdd Note

Review Later

In terms of revenue neutrality, comment on a tax cut enacted by Congress that:

Correct Answer

verified

Show Answer

Question 63

Multiple Choice

Review LaterAdd Note

Taxes not imposed by the Federal government include:

Using the choices provided below, show the justification for each provision of the tax law listed.Note: In some cases, more than one answer is appropriate.

If a taxpayer files early (i.e., before the due date of the return), the statute of limitations on assessments begins on the date the return is due.

Your client, Connie, won $12,000 in a football office pool. She sees no reason to include it in her income for several reasons. First, the amount won will not be reported to the IRS. Second, as an average income employee, she is unlikely to be audited by the IRS. Third, she feels that she has probably lost this much in other past office pools. How do you respond?

In terms of probability, which of the following taxpayers would be least likely to be audited by the IRS?

States impose either a state income tax or a general sales tax, but not both types of taxes.

Briana lives in one state and works in the adjoining state.Both states tax the income she earns from her job.Does Briana have any relief from this apparent double taxation of the same income?

Brayden files his Federal income tax return by April 15, but does not pay the tax.Although he expects to pay interest on the large amount of tax he still owes, he feels that the timely filing has avoided any penalties.Is Brayden's assumption correct?

Several years ago, Lucas purchased extra grazing land for his ranch at a cost of $120,000.In 2012, the land is condemned by the state for development as a highway maintenance depot.Under the condemnation award, Lucas receives $300,000 for the land.Within the same year, he replaces the property with other grazing land.What is Lucas's tax situation if the replacement land cost:

Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals.

Stealth taxes have the effect of generating additional taxes from all taxpayers.

Provisions in the tax law that promote energy conservation and more use of alternative (non-fossil) fuels can be justified by:

For omissions from gross income in excess of 25% of that reported, there is no statute of limitations on additional income tax assessments by the IRS.

To lessen, or eliminate, the effect of multiple taxation, a taxpayer who is subject to both foreign and U.S.income taxes on the same income is allowed either a deduction or a credit for the foreign tax paid.

What are the pros and cons of the following state and local tax provisions?

A VAT (value added tax) :

Some states use their state income tax return as a means of collecting unpaid sales and use taxes.

The formula for the Federal income tax on corporations is the same as that applicable to individuals.