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

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Question 71

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A use tax is imposed by:

A) The Federal government and all states.
B) The Federal government and a majority of the states.
C) All states and not the Federal government.
D) Most of the states and not the Federal government.
E) None of the above.

F) B) and D)
G) B) and E)

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Question 72

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A lack of compliance in the payment of use taxes can be resolved by several means.In this regard,comment on the following:

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Question 73

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Morgan inherits her father's personal residence including all of the furnishings.She plans to add a swimming pool and sauna to the property and rent it as a furnished house.What are some of the ad valorem property tax problems Morgan can anticipate?

Characteristics of the "Fair Tax" (i.e.,national sales tax) include which,if any,of the following:

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?

In 2012,José,a widower,sells land (fair market value of $100,000)to his daughter,Linda,for $50,000.José has made a taxable gift of $50,000.

The U.S.(either Federal,state,or local) does not impose:

Various tax provisions encourage the creation of certain types of retirement plans.Such provisions can be justified on both economic and equity grounds.

Both economic and social considerations can be used to justify:

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.

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

Paige is the sole shareholder of Citron Corporation.During the year,Paige leases a building to Citron for a monthly rental of $80,000.If the fair rental value of the building is $60,000,what are the income tax consequences to the parties involved?

For individual taxpayers,the interest rate for income tax refunds (overpayments)is not the same as that applicable to assessments (underpayments).

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

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

As it is consistent with the wherewithal to pay concept,the tax law requires a seller to recognize gain in the years the proceeds from the installment sale are collected.

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

A calendar year taxpayer files his 2011 Federal income tax return on March 5,2012.The return reflects an overpayment of $6,000,and the taxpayer requests a refund of this amount.The refund is paid on May 18,2012.The refund need not include interest.

Noah dies in 2012 with an estate worth $12 million.Under his will,$6 million passes to his wife while $6 million goes to his church.What is Noah's Federal estate tax result?

Due to the population change,the Goose Creek School District has decided to close one of its high schools.Since it has no further need of the property,the school is listed for sale.The two bids it receives are as follows: The United Methodist Church would use the property to establish a sectarian middle school.Planet,a well-known car dealership,would revamp the property and operate it as a branch location. If you were a member of the School District board,what factors would you consider in evaluating the two bids?