TAX 4001 - Chapter 1 T/F Part 1

1.

1 point

An inheritance tax is a tax on a decedent’s right to pass property at death.

True

False

2.

1 point

In an office audit, the audit by the IRS takes place at the office of the taxpayer.

True

False

3.

1 point

One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from being accumulated within the family unit.

True

False

4.

1 point

The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution) levied tax rates from a low of 2% to a high of 6%.

True

False

5.

1 point

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

True

False

6.

1 point

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

True

False

7.

1 point

One of the motivations for making a gift is to save on income taxes.

True

False

8.

1 point

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 2014.

True

False

9.

1 point

Sales made by mail order are not exempt from the application of a general sales (or use) tax.

True

False

10.

1 point

Julius, a married taxpayer, makes gifts to each of his six children. A maximum of twelve annual exclusions could be allowed as to these gifts.

True

False

11.

1 point

A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no such taxes.

True

False

12.

1 point

For Federal income tax purposes, there never has been a general amnesty period.

True

False

13.

1 point

The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business use personalty.

True

False

14.

1 point

A major advantage of a flat tax type of income tax is its simplicity.

True

False

15.

1 point

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

True

False

16.

1 point

Not all of the states that impose a general sales tax also have a use tax.

True

False

17.

1 point

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

True

False

18.

1 point

The FICA tax (Medicare component) on wages is progressive since the tax due increases as wages increase.

True

False

19.

1 point

The value added tax (VAT) has not had wide acceptance in the international community.

True

False

20.

1 point

In 2014, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has not made a taxable gift.

True

False

21.

1 point

Like the Federal counterpart, the amount of the state excise taxes on gasoline varies from state to state.

True

False

22.

1 point

When a state decouples from a Federal tax provision, it means that this provision will not apply for state income tax purposes.

True

False

23.

1 point

A parent employs his twin daughters, age 17, in his sole proprietorship. The daughters are not subject to FICA coverage.

True

False

24.

1 point

Currently, the tax base for the Social Security component of the FICA is not limited to a dollar amount.

True

False

25.

1 point

The pay-as-you-go feature of the Federal income tax on individuals conforms to Adam Smith’s canon of certainty.

True

False

26.

1 point

Currently, the Federal income tax is less progressive than it ever has been in the past.

True

False

27.

1 point

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

True

False

28.

1 point

If more IRS audits are producing a greater number of no change results, this indicates increased compliance on the part of taxpayers.

True

False

29.

1 point

Two persons who live in the same state but in different counties may not be subject to the same general sales tax rate.

True

False

30.

1 point

Mona inherits her mother’s personal residence, which she converts to a furnished rent house.
These changes should affect the amount of ad valorem property taxes levied on the properties.

True

False

31.

1 point

There is a Federal excise tax on hotel occupancy.

True

False

32.

1 point

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

True

False

33.

1 point

On transfers by death, the Federal government relies on an estate tax, while states impose an estate tax, an inheritance tax, both taxes, or neither tax.

True

False

34.

1 point

A fixture will be subject to the ad valorem tax on personalty rather than the ad valorem tax on realty.

True

False

35.

1 point

Under state amnesty programs, all delinquent and unpaid income taxes are forgiven.

True

False

36.

1 point

Because the law is complicated, most individual taxpayers are not able to complete their Federal income tax returns without outside assistance.

True

False

37.

1 point

The IRS agent auditing the return will issue an RAR even if the taxpayer owes no additional taxes.

True

False

38.

1 point

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

True

False

39.

1 point

For state income tax purposes, a majority of states allow a deduction for Federal income taxes.

True

False

40.

1 point

A state income tax can be imposed on nonresident taxpayers who earn income within the state on an itinerant basis.

True

False

41.

1 point

The Federal excise tax on cigarettes is an example of a proportional tax.

True

False

42.

1 point

The amount of a taxpayer’s itemized deductions will increase the chance of being audited by the IRS.

True

False

43.

1 point

Under the usual state inheritance tax, two heirs, a cousin and a son of the deceased, would not be taxed at the same rate.

True

False

44.

1 point

The ratification of the Sixteenth Amendment to the U.S. Constitution was necessary to validate the Federal income tax on corporations.

True

False

45.

1 point

Even if property tax rates are not changed, the amount of ad valorem taxes imposed on realty may not remain the same.

True

False

46.

1 point

No state has offered an income tax amnesty program more than once.

True

False

47.

1 point

A Federal excise tax is no longer imposed on admission to theaters.

True

False

48.

1 point

The annual exclusion, currently $14,000, is available for gift and estate tax purposes.

True

False

49.

1 point

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

True

False

50.

1 point

Unlike FICA, FUTA requires that employers comply with state as well as Federal rules.

True

False