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

Essay

Review LaterAdd Note

Review Later

State and local governments are sometimes forced to find ways to generate additional revenue.Comment on the pros and cons of the following procedures:

Correct Answer

verified

Show Answer

Question 62

Essay

Review LaterAdd Note

Review Later

Two months after the burglary of his personal residence,Eric is audited by the IRS.Among the items taken in the burglary was a shoe box containing approximately $50,000 in cash.Eric is the owner and operator of a cash-and-carry liquor store.Eric wonders why he was audited.Can you help explain?

Correct Answer

verified

Although Eric's audit by the IRS could b...

View Answer

Show Answer

Question 63

Essay

Review LaterAdd Note

Under what conditions is it permissible,from an ethical standpoint,for a CPA firm to outsource tax return preparation to a third party?

A safe and easy way for a taxpayer to avoid local and state sales taxes is to have the purchase sent to an address in another state that levies no such taxes.

A tax cut enacted by Congress that contains a sunset provision will make the tax cut temporary.

The tax law contains various provisions that encourage home ownership.

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

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

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?

As a matter of administrative convenience,the IRS would prefer to have Congress increase (rather than decrease)the amount of the standard deduction allowed to individual taxpayers.

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

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%.

Which,if any,of the following transactions will decrease a taxing jurisdiction's ad valorem tax revenue imposed on real estate?

The tax law provides various tax credits,deductions,and exclusions that are designed to encourage taxpayers to obtain additional education.These provisions can be justified on both economic and social grounds.

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

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.

Federal excise taxes that are no longer imposed include:

In 1985,Roy leased real estate to Drab Corporation for 20 years.Drab Corporation made significant capital improvements to the property.In 2005,Roy decides not to renew the lease and vacates the property.At that time,the value of the improvements is $800,000.Roy sells the real estate in 2012 for $1,200,000 of which $900,000 is attributable to the improvements.How and when is Roy taxed on the improvements made by Drab Corporation?

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

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. a. Economic considerations b. Social considerations c. Equity considerations