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

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Question 51

True/False

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A major disadvantage of a flat tax type of income tax is its complexity.

A) True
B) False

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Question 52

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Which,if any,is not one of Adam Smith's canons of taxation?

A) Economy.
B) Certainty.
C) Simplicity.
D) Convenience.
E) Equality.

F) D) and E)
G) A) and C)

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Question 53

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

How do the net operating loss provisions in the tax law mitigate the effect of the annual accounting concept?

The formula for the Federal income tax on corporations is not the same as that applicable to individuals.

The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the U.S.

The Federal income tax on corporations generates more revenue than the Federal income tax on individuals.

State income taxes generally can be characterized by:

The Federal income tax is based on a pay-as-you-go system and has become a "mass tax." Explain this statement.

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?

If an income tax return is not filed by a taxpayer,there is no statute of limitations on assessments of tax by the IRS.

The principal objective of the FICA tax is to provide some measure of retirement security.

The Federal estate and gift taxes are examples of progressive taxes.

The tax on hotel occupancy is subject to both Federal and state excise taxes.

Even though a client refuses to correct an error on a past return,it may be possible for a practitioner to continue to prepare returns for the client.

Under Clint's will,all of his property passes to either the Lutheran Church or to his wife.No Federal estate tax will be due on Clint's death in 2011.

Taxes not imposed by the Federal government include:

Tracy has just been audited and the IRS agent has issued an RAR that assesses a large deficiency.Since Tracy disagrees with the result,her next step is to go to court.Do you agree?

Which,if any,of the following provisions of the tax law cannot be justified as promoting administrative feasibility (simplifying the task of the IRS) ?

How are "stealth taxes" justified and how are they structured?