71. When
\nCongress enacts a tax cut that is phased in over a period of years, revenue
\nneutrality is achieved.
\na. True
\nb. False<\/p>\n
?
\n72. A tax cut
\nenacted by Congress that contains a sunset provision will make the tax cut
\ntemporary.
\na. True
\nb. False<\/p>\n
73. The tax
\nlaw provides various tax credits, deductions, and exclusions that are designed
\nto encourage taxpayers to obtain additional education. These provisions can be
\njustified on both economic and equity grounds.
\na. True
\nb. False<\/p>\n
74. Various
\ntax provisions encourage the creation of certain types of retirement plans.
\nSuch provisions can be justified on both economic and social grounds.
\na. True
\nb. False<\/p>\n
75. To lessen,
\nor eliminate, the effect of multiple taxation, a taxpayer who is subject to
\nboth foreign and U.S. income taxes on the same income is allowed either a
\ndeduction or a credit for the foreign tax paid.
\na. True
\nb. False<\/p>\n
76. To
\nmitigate the effect of the annual accounting period concept, the tax law
\npermits the carryforward to other years of the excess charitable contributions
\nof a particular year.
\na. True
\nb. False<\/p>\n
77. Jason\u00e2\u0080\u0099s
\nbusiness warehouse is destroyed by fire. As the insurance proceeds exceed the
\nbasis of the property, a gain results. If Jason shortly reinvests the proceeds
\nin a new warehouse, no gain is recognized due to the application of the
\nwherewithal to pay concept.
\na. True
\nb. False<\/p>\n
78. As it is
\nconsistent with the wherewithal to pay concept, the tax law requires a seller
\nto recognize gain in the year the installment sale occurs.
\na. True
\nb. False<\/p>\n
79. Stealth
\ntaxes have the effect of generating additional taxes from all taxpayers.
\na. True
\nb. False<\/p>\n
80. A
\nprovision in the law that compels accrual basis taxpayers to pay a tax on
\nprepaid income in the year received and not when earned is consistent with
\ngenerally accepted accounting principles.
\na. True
\nb. False<\/p>\n
81. As a
\nmatter of administrative convenience, the IRS would prefer to have Congress
\ndecrease (rather than increase) the amount of the standard deduction allowed to
\nindividual taxpayers.
\na. True
\nb. False<\/p>\n
82. In cases
\nof doubt, courts have held that tax relief provisions should be broadly construed
\nin favor of taxpayers.
\na. True
\nb. False<\/p>\n
ANSWER: False
\nRATIONALE: Such
\nprovisions should be narrowly construed in favor of taxpayers.<\/p>\n
83. On
\noccasion, Congress has to enact legislation that clarifies the tax law in order
\nto change a result reached by the U.S. Supreme Court.
\na. True
\nb. False<\/p>\n
?
\n84. Which, if
\nany, of the following statements best describes the history of the Federal
\nincome tax?
\na. It did
\nnot exist during the Civil War.
\nb. The
\nFederal income tax on corporations was held by the U.S. Supreme Court to be
\nallowable under the U.S. Constitution.
\nc. The
\nFederal income tax on individuals was held by the U.S. Supreme Court to be
\nallowable under the U.S. Constitution.
\nd. Both the
\nFederal income tax on individuals and on corporations was held by the U.S.
\nSupreme Court to be contrary to the U.S. Constitution.
\ne. None of
\nthe above.<\/p>\n
85. Which, if
\nany, is not one of Adam Smith\u00e2\u0080\u0099s canons of taxation?
\na. Economy.
\nb. Certainty.
\nc. Convenience.
\nd. Simplicity.
\ne. Equality.<\/p>\n
86. Which, if
\nany, of the following taxes are proportional (rather than progressive)?
\na. State
\ngeneral sales tax.
\nb. Federal
\ncorporate income tax.
\nc. Federal
\nestate tax.
\nd. Federal
\ngift tax.
\ne. All of
\nthe above.<\/p>\n
87. Which, if
\nany, of the following transactions will increase a taxing jurisdiction\u00e2\u0080\u0099s
\nrevenue from the ad valorem tax imposed on real estate?
\na. A
\nresident dies and leaves his farm to his church.
\nb. A large
\nproperty owner issues a conservation easement as to some of her land.
\nc. A tax
\nholiday issued 10 years ago has expired.
\nd. A
\nbankrupt motel is acquired by the Red Cross and is to be used to provide
\nhousing for homeless persons.
\ne. None of
\nthe above.<\/p>\n
88. Which, if
\nany, of the following transactions will decrease a taxing jurisdiction\u00e2\u0080\u0099s ad
\nvalorem tax revenue imposed on real estate?
\na. A tax
\nholiday is granted to an out-of-state business that is searching for a new
\nfactory site.
\nb. An
\nabandoned church is converted to a restaurant.
\nc. A public
\nschool is razed and turned into a city park.
\nd. A local
\nuniversity sells a dormitory that will be converted for use as an apartment
\nbuilding.
\ne. None of
\nthe above.<\/p>\n
89. Which, if
\nany, of the following is a typical characteristic of an ad valorem tax on
\npersonalty?
\na. Taxpayer
\ncompliance is greater for personal use property than for business use property.
\nb. The tax
\non automobiles sometimes considers the age of the vehicle.
\nc. Most
\nstates impose a tax on intangibles.
\nd. The tax
\non intangibles generates considerable revenue since it is difficult for
\ntaxpayers to avoid.
\ne. None of
\nthe above.<\/p>\n
90. Federal
\nexcise taxes that are no longer imposed include:
\na. Tax on
\nair travel.
\nb. Tax on
\nwagering.
\nc. Tax on
\nthe manufacture of sporting equipment.
\nd. Tax on
\nalcohol.
\ne. None of
\nthe above.<\/p>\n
91. Taxes not
\nimposed by the Federal government include:
\na. Tobacco
\nexcise tax.
\nb. Customs
\nduties (tariffs on imports).
\nc. Tax on
\nrent cars.
\nd. Gas
\nguzzler tax.
\ne. None of
\nthe above.<\/p>\n
92. Taxes
\nlevied by both states and the Federal government include:
\na. General
\nsales tax.
\nb. Custom
\nduties.
\nc. Hotel
\noccupancy tax.
\nd. Franchise
\ntax.
\ne. None of
\nthe above.<\/p>\n
93. Taxes
\nlevied by all states include:
\na. Tobacco
\nexcise tax.
\nb. Individual
\nincome tax.
\nc. Inheritance
\ntax.
\nd. General
\nsales tax.
\ne. None of
\nthe above.<\/p>\n
94. A use tax
\nis imposed by:
\na. The
\nFederal government and all states.
\nb. The
\nFederal government and a majority of the states.
\nc. All
\nstates and not the Federal government.
\nd. Most of the
\nstates and not the Federal government.
\ne. None of
\nthe above.<\/p>\n
95. Burt and
\nLisa are married and live in a common law state. Burt wants to make gifts to
\ntheir four children in 2014. What is the maximum amount of the annual exclusion
\nthey will be allowed for these gifts?
\na. $14,000.
\nb. $28,000.
\nc. $56,000.
\nd. $112,000.
\ne. None of the above.<\/p>\n
?
\n96. Property
\ncan be transferred within the family group by gift or at death. One motivation
\nfor preferring the gift approach is:
\na. To take
\nadvantage of the higher unified transfer tax credit available under the gift
\ntax.
\nb. To avoid
\na future decline in value of the property transferred.
\nc. To take
\nadvantage of the per donee annual exclusion.
\nd. To shift
\nincome to higher bracket donees.
\ne. None of
\nthe above.<\/p>\n
97. Indicate
\nwhich, if any, statement is incorrect. State income taxes:
\na. Can
\npiggyback to the Federal version.
\nb. Cannot
\napply to visiting nonresidents.
\nc. Can
\ndecouple from the Federal version.
\nd. Can
\nprovide occasional amnesty programs.
\ne. None of
\nthe above.<\/p>\n
98. State
\nincome taxes generally can be characterized by:
\na. The same
\ndate for filing as the Federal income tax.
\nb. No
\nprovision for withholding procedures.
\nc. Allowance
\nof a deduction for Federal income taxes paid.
\nd. Applying
\nonly to individuals and not applying to corporations.
\ne. None of
\nthe above.
\n99. A
\ncharacteristic of FICA is that:
\na. It does
\nnot apply when one spouse works for the other spouse.
\nb. It is
\nimposed only on the employer.
\nc. It
\nprovides a modest source of income in the event of loss of employment.
\nd. It is
\nadministered by both state and Federal governments.
\ne. None of
\nthe above.<\/p>\n
100. A
\ncharacteristic of FUTA is that:
\na. It is
\nimposed on both employer and employee.
\nb. It is
\nimposed solely on the employee.
\nc. Compliance
\nrequires following guidelines issued by both state and Federal regulatory
\nauthorities.
\nd. It is
\napplicable to spouses of employees but not to any children under age 18.
\ne. None of
\nthe above.<\/p>\n","protected":false},"excerpt":{"rendered":"
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