ACC 330 Exam 1 True/False
A tax meets the standard of efficiency if it generates enough revenue to pay for the public goods and services provided by the government
False
A tax meets the standard of sufficiency if it is easy for people to pay the tax
False
Losses realized on the sale of personal use assets are deductible
False
Payment of a tax entitles the payer to a specific good or service from the government
False
Tax avoidance is the reduction of a person's tax liability through illegal means
False
Tax liability divided by taxable income equals marginal tax rate
False
Under 2018 law, an individual's taxable income equals adjusted gross income less the greater of the standard deduction or itemized deductions less the exemption amount
False
the tax cost of a transaction represents a cash inflow
False
The tax cost of a transaction depends on the taxpayers average tax rate for the year
False (marginal tax rate)
The goal of tax planning is to reduce tax costs or increase tax savings as much as posisble
False (the goal is to maximize NPV)
A convenient tax has low compliance costs for taxpayers and low collection and enforcement costs for the government
True
A dollar today is always worth more than a dollar not available until a future period
True
A static forecast of the revenue effect of a tax rate change assumes that the tax base does not change
True
A tax with a graduated rate structure must have at least two brackets of base
True
An above-the-line deduction reduces both adjusted gross income and taxable income
True
An itemized deduction doesn't result in any tax savings in a year in which the individual taxpayer takes the standard deduction
True
Congress provides an indirect subsidy to charities by allowing an itemized deduction for charitable contributions
True
Gains realized on the sale of personal use assets are taxable
True
Horizontal equity means that two taxpayers with similar economic conditions pay roughly the same amount of tax
True
Income shifting generally occurs between related parties
True
Net cash flow from a transaction equals the difference between cash received and cash disbursed in a transaction
True
The federal income tax system provides incentives for individual taxpayers to meet their housing needs by purchasing instead of renting a home
True
The individual income tax rate schedule is progressive
True
The rate at which an item of income is taxed depends on the character of the income
True
The standard deduction for single individuals is one-half the standard deduction for married individuals filing jointly
True
The substance over form doctrine allows the IRS to look through the legal formalities of a transaction to determine its true economic condition
True
The tax rates for individuals who qualify as head-of-household are lower than the tax rates for single individuals
True
The tax savings from a transaction represents a cash inflow
True
The theory of distributional justice is a rationale for a progressive income tax system
True
Tax systems with regressive rate structures result in a proportionally heavier tax burden on persons with smaller tax bases
True`
