Chapter 1 tf Income Tax
A Private Letter Ruling is considered to be tax authority only to the taxpayer to whom it is issued.
TRUE
A proportional tax rate structure is a tax where the tax rate remains at the same rate regardless of the tax base.
TRUE
All individual income tax returns follow the basic structure of the simplified tax formula.
TRUE
All paid tax preparers must follow the rules provided in Circular 230.
TRUE
Circular 230 applies only to paid tax preparers.
TRUE
For equivalent amounts of gross income, a single person will have a higher tax liability than will married persons filing jointly.
TRUE
IRS Regulations are by far the strongest administrative authority.
TRUE
If a taxpayer is covered by Medicare, they are deemed to have qualifying health care insurance coverage.
TRUE
Individuals with taxable income of $50,000 who file a Form 1040 should determine their tax liability with reference to the tax tables.
TRUE
Paid preparers must obtain a preparer tax identification number.
TRUE
The Sixteenth Amendment to the U.S. Constitution provides the legal and statutory authority for the administration and enforcement of income taxes.
TRUE
The U.S. individual income tax system is an example of a progressive tax rate structure.
TRUE
The amount of tax liability is affected by the filing status of the taxpayer.
TRUE
The average tax rate is the total tax liability divided by the taxable income.
TRUE
The definition of wages includes tips received.
TRUE
The tax liability of a single individual with taxable income of $89,542 is $15,661.
TRUE
The tax rate is applied against the tax base to determine the amount of tax liability.
TRUE
Joe is an employee of Adams Company. Joe properly completed his Form 1040 tax return and was required to pay the IRS $1,372 at the time of filing. Joe's tax liability for the year must be $1,372.
FALSE
Legislative regulations do not have the full effect of law.
FALSE
One major disadvantage the taxpayer has when filing a petition with the Tax Court is that the IRS's proposed tax assessment must be paid prior to trial.
FALSE
One of the criteria to file a Form 1040 is that the total taxable income of the taxpayer cannot exceed $100,000.
FALSE
Rev. Proc. 87-56 was the 87th Revenue Procedure issued in 1956.
FALSE
State and local taxes levied on either property or sales are examples of progressive taxes.
FALSE
Tax liability is calculated using taxable income. A standard deduction is then subtracted from the tax liability.
FALSE
Taxpayers normally pay almost all of their tax liability when they file their income tax return.
FALSE
The Affordable Care Act requires all individuals to have health care insurance coverage.
FALSE
The U.S. individual income tax system is an example of a proportional tax rate structure.
FALSE
The amount of tax liability calculated using the tax tables will always be the same as the amount calculated using the tax rate schedules.
FALSE
The courts issue Private Letter Rulings when a taxpayer requests a ruling on a certain tax situation.
FALSE
The marginal tax rate is the proportion of tax paid on the first dollar of taxable income.
FALSE
The marginal tax rate is the total tax liability divided by the taxable income.
FALSE
The simplified tax formula can only be used by individuals with simple income tax returns.
FALSE
There are two types of primary tax authority: statutory and judicial.
FALSE
To be eligible to file a Form 1040, the taxpayer can only have taxable wages.
FALSE
Typically, federal tax legislation is introduced in the Senate Finance Committee.
FALSE
Under a flat tax, the marginal tax rate and the average tax rate are different.
FALSE
Wages, salaries, and tips are compensation for services rendered. However, commissions, bonuses, and severance pay are not taxable.
FALSE
With a progressive rate structure, the average tax rate is always smaller than the marginal tax rate.
FALSE
With a regressive tax, the tax rate increases as the tax base gets larger.
FALSE
The average tax rate is the taxable income divided by the total tax liability.
FALS
A paid tax preparer who violates the provisions of Circular 230 can be subject to civil, but not criminal, penalties.
FALSE
A single taxpayer cannot file a Form 1040 if she is age 65 or older.
FALSE
At high levels of taxable income, the average tax rate and the marginal tax rate will always be the same.
FALSE
Circular 230 applies only to Certified Public Accountants and Enrolled Agents.
FALSE
Employers report wage income to employees on a Form W-3.
FALSE
Federal unemployment compensation benefits are not taxable.
FALSE
Individuals who file a Form 1040 should determine their tax liability with reference to a tax rate schedule.
FALSE
