exam ch 1,2,3

Calculator Which, if any, is not one of Adam Smith's canons of taxation? a. Economy b. Convenience c. Simplicity d. Equality e. Certainty

Simplicity

Calculator Taxes not imposed by the Federal government include: a. Tobacco excise tax. b. Tax on rental cars. c. Gas guzzler tax. d. Customs duties (tariffs on imports). e. None of these choices are correct.

Tax on rental cars The Federal government imposes an excise tax on tobacco, customs duties, and a gas guzzler tax. It does not impose a tax on rental cars.

Tony, age 15, is claimed as a dependent by his grandmother. During 2016, Tony had interest income from Boeing Corporation bonds of $1,000 and earnings from a part-time job of $800. Tony's taxable income is: a. $1,800 - $1,150 = $650 b. $1,800 - $800 - $1,050 = ($50) c. $1,800 d. $1,800 - $1,050 = $750 e. None of these choices are correct.

a. $1,800 - $1,150 = $650 Tony's standard deduction of $1,150 ($800 + $350) partially offsets his gross income of $1,800, resulting in taxable income of $650.

Merle is a widow, age 80 and blind, who is claimed as a dependent by her son. During 2016, she received $4,800 in Social Security benefits, $2,500 in bank interest, and $1,800 in cash dividends from stocks. Merle's taxable income is: a. $4,300 - $1,050 - $3,100 = $150 b. $4,300 - $1,050 - $1,550 = $1,700 c. $9,100 - $1,050 - $3,100 = $4,950 d. $4,300 - $3,100 = $1,200 e. None of these choices are correct.

a. $4,300 - $1,050 - $3,100 = $150 Although Merle has no earned income, she is entitled to a minimum regular standard deduction of $1,050. She also is allowed additional standard deductions for age and blindness of $3,100 ($1,550 + $1,550). At this level of income, the Social Security benefits are a nontaxable exclusion.

A qualifying child cannot include: a. A grandmother b. A nonresident alien c. A daughter who is away at college d. A married son who files a joint return e. A brother who is 28 years of age and disabled

a. A grandmother A grandmother does not meet the relationship test ("A grandmother"). A qualifying child can be a nonresident alien under the adopted child exception ("A nonresident alien"). The filing of a joint return is not fatal if filing is not required and its purpose is to obtain a tax refund ("A married son who files a joint return"). A temporary absence is permissible under the domicile test ("A daughter who is away at college"). A brother meets the relationship test, and disability waives the age test ("A brother who is 28 years of age and disabled").

Which, if any, of the following transactions will increase a taxing jurisdiction's revenue from the ad valorem tax imposed on real estate? a. A tax holiday issued 10 years ago has expired. b. A bankrupt motel is acquired by the Red Cross and is to be used to provide housing for homeless persons. c. A large property owner issues a conservation easement as to some of her land. d. A resident dies and leaves his farm to his church. e. None of these choices are correct.

a. A tax holiday issued 10 years ago has expired. Although a farm was probably subject to reduced valuation (due to its agricultural use), it will now be fully exempt since it is owned by a church ("A resident dies and leaves his farm to his church"). Property that is subject to a conservation easement is usually appraised at a lower value ("A large property owner issues a conservation easement as to some of her land"). The expiration of a tax holiday means that the property involved can now be taxed ("A tax holiday issued 10 years ago has expired"). The motel has been converted from business property to exempt charitable use ("A bankrupt motel is acquired by the Red Cross and is to be used to provide housing for homeless persons").

Ellen, age 12, lives in the same household with her father, grandfather, and uncle. The cost of maintaining the household is provided by her grandfather (40%) and her uncle (60%). Disregarding tie-breaker rules, Ellen is a qualifying child as to: a. All parties involved (i.e., father, grandfather, and uncle) b. Only her father c. Only her grandfather and uncle d. Only her uncle e. None of these choices are correct.

a. All parties involved (i.e., father, grandfather, and uncle) Under the abode and relationship tests, Ellen is a qualifying child as to all parties. The amount of support provided by each person is not relevant.

In addressing the importance of a Regulation, an IRS agent must: a. Give equal weight to the Code and the Regulations. b. Give more weight to the Code rather than to a Regulation. c. Give less weight to the Code rather than to a Regulation. d. Give more weight to the Regulation rather than to the Code. e. None of these choices are correct.

a. Give equal weight to the Code and the Regulations.

Federal tax legislation generally originates in what body? a. House Ways and Means Committee b. Senate Floor c. Internal Revenue Service d. Senate Finance Committee e. None of these choices are correct.

a. House Ways and Means Committee

During 2016, Lisa (age 66) furnished more than 50% of the support of the following persons: ∙ Lisa's current husband who has no income and is not claimed by someone else as a dependent. ∙ Lisa's stepson (age 19) who lives with her and earns $6,000 as a dance instructor. He dropped out of school a year ago. ∙ Lisa's ex-husband who does not live with her. The divorce occurred two years ago. ∙ Lisa's former brother-in-law who does not live with her. Presuming all other dependency tests are met, on a separate return how many personal and dependency exemptions may Lisa claim? a. Three b. Five c. Four d. Two e. None of these choices are correct.

a. Three All of the persons listed except the ex-husband meet either the relationship or member of the household tests. The current husband qualifies as he has no income and is not claimed as a dependent by someone else. The stepson does not avoid the gross income limitation of a qualifying relative. He is not a qualifying child under 19 years of age.

Property can be transferred within the family group by gift or at death. One motivation for preferring the gift approach is: a. To take advantage of the per donee annual exclusion. b. To take advantage of the higher unified transfer tax credit available under the gift tax. c. To shift income to higher bracket donees. d. To avoid a future decline in value of the property transferred. e. None of these choices are correct.

a. To take advantage of the per donee annual exclusion. The per donee annual exclusion is only available for gift tax purposes ("To take advantage of the per donee annual exclusion"). Ideally, gifts should involve property that is expected to appreciate in value ("To avoid a future decline in value of the property transferred"). A higher unified tax credit is not available for gift tax purposes ("To take advantage of the higher unified transfer tax credit available under the gift tax"). Usually the donor is trying to shift future income to lower bracket donees ("To shift income to higher bracket donees").

Calculator Taxes levied by all states include: a. Tobacco excise tax. b. General sales tax. c. Individual income tax. d. Inheritance tax. e. None of these choices are correct.

a. Tobacco excise tax. All states impose a tobacco excise tax. Most states impose individual income taxes and general sales taxes, and only some states impose inheritance taxes.

A taxpayer who loses in a U.S. District Court may appeal directly to the: a. U.S. Circuit Court of Appeals. b. U.S. Tax Court. c. U.S. Court of Federal Claims. d. U.S. Supreme Court. e. All of these choices are correct.

a. U.S. Circuit Court of Appeals. Appeals from a U.S. District Court go to the taxpayer's home circuit of the U.S. Circuit Court of Appeals.

During 2016, Sarah had the following transactions: Salary $ 80,000 Interest income on City of Baltimore bonds 1,000 Damages for personal injury (car accident) 100,000 Punitive damages (same car accident) 200,000 Cash dividends from Chevron Corporation stock 7,000 Sarah's AGI is: a. $285,000 b. $287,000 c. $185,000 d. $387,000 e. $187,000

b. $287,000 $80,000 (salary) + $200,000 (punitive damages) + $7,000 (cash dividends) = $287,000. The damages from personal injury and the municipal bond interest are nontaxable exclusions.

Which, if any, of the following transactions will decrease a taxing jurisdiction's ad valorem tax revenue imposed on real estate? a. A local university sells a dormitory that will be converted for use as an apartment building. b. A tax holiday is granted to an out-of-state business that is searching for a new factory site. c. A public school is razed and turned into a city park. d. An abandoned church is converted to a restaurant. e. None of these choices are correct.

b. A tax holiday is granted to an out-of-state business that is searching for a new factory site. "A tax holiday is granted to an out-of-state business that is searching for a new factory site" has an effect since the tax holiday was granted. "An abandoned church is converted to a restaurant" will increase taxes as the church was abandoned and previously exempt. "A public school is razed and turned into a city park" converts one tax-exempt property (i.e., school) into another (i.e., public park). "A local university sells a dormitory that will be converted for use as an apartment building" probably places the building on the tax rolls because it is no longer owned by a tax-exempt institution.

The U.S. (either Federal, state, or local) does not impose: a. Franchise taxes b. Export duties c. Occupational fees d. Custom duties e. Severance taxes

b. Export duties

Subtitle A of the Internal Revenue Code covers which of the following taxes? a. Employment taxes b. Income taxes c. Estate and gift taxes d. Excise taxes e. All of these choices are correct.

b. Income taxes

Which statement is not true with respect to a Regulation that interprets the tax law? a. Carries more legal force than a Revenue Ruling. b. Issued by the U.S. Congress. c. Issued by the U.S. Treasury Department. d. Designed to provide an interpretation of the tax law. e. All of these statements are true.

b. Issued by the U.S. Congress. Treasury Regulations are issued by the U.S. Treasury Department.

What administrative release deals with a proposed transaction rather than a completed transaction? a. Technical Advice Memorandum b. Letter Ruling c. Determination Letter d. Field Service Advice e. None of these choices are correct.

b. Letter Ruling

In § 212(1), the number (1) stands for the: a. Subparagraph designation. b. Paragraph designation. c. Section number. d. Subsection number. e. None of these choices are correct.

b. Paragraph designation.

A taxpayer may not appeal a case from which court: a. U.S. Court of Federal Claims b. Small Case Division of the U.S. Tax Court c. U.S. District Court d. U.S. Circuit Court of Appeals e. None of these choices are correct.

b. Small Case Division of the U.S. Tax Court

Regarding the rules applicable to filing of income tax returns, which, if any, of the following is an incorrect statement: a. Married persons who file separate returns can later (after the due date of the return) substitute a joint return. b. The usual test as to when a taxpayer must file a return is based on the total of the following: personal exemption + basic standard deduction + both additional standard deductions. c. Special filing requirement rules exist for taxpayers who are claimed as dependents of another. d. Married persons who file joint returns cannot later (after the due date of the return) substitute separate returns. e. None of these choices are correct.

b. The usual test as to when a taxpayer must file a return is based on the total of the following: personal exemption + basic standard deduction + both additional standard deductions. "The usual test as to when a taxpayer must file a return is based on the total of the following: personal exemption + basic standard deduction + both additional standard deductions" would be correct if it included only the additional standard deduction for age, as that for blindness is not considered.

Evan and Eileen Carter are husband and wife and file a joint return for 2016. Both are under 65 years of age. They provide more than half of the support of their daughter, Pamela (age 25), who is a full-time medical student. Pamela receives a $5,000 scholarship covering her tuition at college. They furnish all of the support of Belinda (Evan's grandmother), who is age 80 and lives in a nursing home. They also support Peggy (age 66), who is a friend of the family and lives with them. How many dependency exemptions may the Carters claim? a. Five b. Three c. Four d. Two e. None of these choices are correct.

b. Three Three (Pamela, Belinda, and Peggy). Pamela is not a qualifying child—although a full-time student, she is not under age 24. Pamela does meet the qualifying relative category as the type of scholarship aid she receives is nontaxable (the gross income test is satisfied). Belinda is not a member of the household but satisfies the relationship test. Peggy does not satisfy the relationship test but is a member of the household.

A jury trial is available in the following trial court: a. U.S. Circuit Court of Appeals b. U.S. District Court c. U.S. Court of Federal Claims d. U.S. Tax Court e. None of these choices are correct.

b. U.S. District Court

If a taxpayer decides not to pay a tax deficiency, he or she must go to which court? a. U.S. Court of Federal Claims b. U.S. Tax Court c. U.S. District Court d. Appropriate U.S. Circuit Court of Appeals e. None of these choices are correct.

b. U.S. Tax Court

Tax bills are handled by which committee in the U.S. House of Representatives? a. Finance Committee b. Ways and Means Committee c. Taxation Committee d. Budget Committee e. None of these choices are correct.

b. Ways and Means Committee

Burt and Lisa are married and live in a common law state. Burt wants to make gifts to their four children in 2016. What is the maximum amount of the annual exclusion they will be allowed for these gifts? a. $14,000 b. $56,000 c. $112,000 d. $28,000 e. None of these choices are correct.

c. $112,000 4 (number of donees) × $14,000 (annual exclusion) × 2 (number of donors) = $112,000. It is assumed that Lisa will make the election to split the gifts.

The Internal Revenue Code was first codified in what year? a. 1913 b. 1986 c. 1939 d. 1954 e. 1923

c. 1939

In which, if any, of the following situations may the individual not be claimed as a dependent of the taxpayer? a. A half-brother who does not live with the taxpayer and is a citizen and resident of Canada. b. A former spouse who lives with the taxpayer (divorce took place last year). c. A cousin who does not live with the taxpayer. d. A stepmother who does not live with the taxpayer. e. A married daughter who lives with the taxpayer.

c. A cousin who does not live with the taxpayer. Except in the year of divorce, a former spouse can qualify under the member of the household test ("A former spouse who lives with the taxpayer (divorce took place last year)"). The stepmother meets the relationship test ("A stepmother who does not live with the taxpayer"). A married daughter can be claimed as long as she does not violate the joint return test ("A married daughter who lives with the taxpayer"). In the case of the half brother, only Canada or Mexico can satisfy the residency test ("A half-brother who does not live with the taxpayer and is a citizen and resident of Canada"). A cousin does not satisfy the relationship test so must be a member of the household ("A cousin who does not live with the taxpayer").

Emily, whose husband died in December 2015, maintains a household in which her dependent mother lives. Which (if any) of the following is her filing status for the tax year 2016? (Note: Emily is the executor of her husband's estate.) a. Married, filing separately b. Married, filing jointly c. Head of household d. Surviving spouse e. Single

c. Head of household She does not qualify for surviving spouse status in 2016.

Which of the following types of Regulations has the highest tax validity? a. Temporary b. Interpretive c. Legislative d. Procedural e. None of these choices are correct.

c. Legislative

A use tax is imposed by: a. The Federal government and a majority of the states. b. The Federal government and all states. c. Most of the states and not the Federal government. d. All states and not the Federal government. e. None of these choices are correct.

c. Most of the states and not the Federal government. A use tax is a complement to a general sales tax. Consequently, it is imposed by most states because only a few states do not have a general sales tax. At this point, the Federal government has no general sales tax.

Which of the following taxpayers may file as a head of household in 2016? Ron provides all the support for his mother, Betty, who lives by herself in an apartment in Fort Lauderdale. Ron pays the rent and other expenses for the apartment and properly claims his mother as a dependent. Tammy provides over one-half the support for her 18-year old brother, Dan. Dan earned $4,200 in 2016 working at a fast food restaurant and is saving his money to attend college in 2017. Dan lives in Tammy's home. Joe's wife left him late in December of 2015. No legal action was taken and Joe has not heard from her in 2016. Joe supported his 6-year-old son, who lived with him throughout 2016. a. Tammy only b. Ron only c. Ron, Tammy, and Joe d. Joe only e. Ron and Joe only

c. Ron, Tammy, and Joe Ron may file as a head of household. His mother is not required to live in his household in order for him to qualify as a head of household. Tammy can claim Dan as a dependent because Dan is a qualifying child and is not subject to the gross income requirement. Joe can file as a head of household under the abandoned spouse rules.

Which, if any, of the following statements best describes the history of the Federal income tax? a. It did not exist during the Civil War. b. Both the Federal income tax on individuals and on corporations was held by the U.S. Supreme Court to be contrary to the U.S. Constitution. c. The Federal income tax on corporations was held by the U.S. Supreme Court to be allowable under the U.S. Constitution. d. The Federal income tax on individuals was held by the U.S. Supreme Court to be allowable under the U.S. Constitution. e. None of these choices are correct.

c. The Federal income tax on corporations was held by the U.S. Supreme Court to be allowable under the U.S. Constitution

Calculator The proposed flat tax: a. Would eliminate the income tax. b. Is a tax on consumption. c. Would simplify the income tax. d. Would tax the increment in value as goods move through the production and manufacturing stages to the marketplace. e. None of these choices are correct.

c. Would simplify the income tax. There is only a single rate. The tax base is simplified by taxing only limited types of income. Many deductions and credits would be eliminated.

Which of the following indicates that a decision has precedential value for future cases? a. Reenactment doctrine b.En banc c.Stare decisis d.Golsen doctrine e. None of these choices are correct.

c.Stare decisis

Sylvia, age 17, is claimed by her parents as a dependent. During 2016, she had interest income from a bank savings account of $2,000 and income from a part-time job of $4,200. Sylvia's taxable income is: a. $6,200 - $5,700 = $500 b. $6,200 - $1,000 = $5,200 c. $4,200 - $4,550 = $0 d. $6,200 - $4,550 = $1,650 e. None of these choices are correct.

d. $6,200 - $4,550 = $1,650 Sylvia's standard deduction is $4,200 (earned income) + $350 = $4,550. Thus, her taxable income is $1,650 ($6,200 - $4,550). She is not eligible for a personal exemption.

In 2016, Cindy had the following transactions: Salary $90,000 Short-term capital gain from a stock investment 4,000 Moving expense to change jobs (11,000) Received repayment of $20,000 loan she made to her sister in 2012 (includes no interest) 20,000 State income taxes (5,000) Cindy's AGI is: a. $94,000 b. $114,000 c. $98,000 d. $83,000 e. $103,000

d. $83,000 $90,000 (salary) + $4,000 (gain on stock investment) - $11,000 (moving expenses) = $83,000. The loan repayment of $20,000 is a return of capital and has no effect on gross income. State income taxes paid are a deduction from AGI (or a standard deduction) and has no impact on the determination of AGI.

Indicate which, if any, statement is incorrect. State income taxes: a. Can piggyback to the Federal version. b. Can decouple from the Federal version. c. Can provide occasional amnesty programs. d. Cannot apply to visiting nonresidents. e. None of these choices are correct.

d. Cannot apply to visiting nonresidents. Many states piggyback to the Federal system ("Can piggyback to the Federal version"). Some states, due to revenue shortfalls, have decoupled from various provisions of the Federal version ("Can decouple from the Federal version"). The "jock tax," although much criticized, is very much in being ("Cannot apply to visiting nonresidents"). Some states have had more than one amnesty period ("Can provide occasional amnesty programs").

A characteristic of FUTA is that: a. It is imposed solely on the employee. b. It is imposed on both employer and employee. c. It is applicable to spouses of employees but not to any children under age 18. d. Compliance requires following guidelines issued by both state and Federal regulatory authorities. e. None of these choices are correct.

d. Compliance requires following guidelines issued by both state and Federal regulatory authorities. FUTA is imposed only on the employer ("It is imposed on both employer and employee" and "It is imposed solely on the employee"). "It is applicable to spouses of employees but not to any children under age 18". refers to FICA. Because the administration of FUTA is shared by Federal and state governments, employers must comply with the rules issued by each ("Compliance requires following guidelines issued by both state and Federal regulatory authorities").

Kyle and Liza are married and under 65 years of age. During 2016, they furnish more than half of the support of their 19-year old daughter, May, who lives with them. She graduated from high school in May 2015. May earns $15,000 from a part-time job, most of which she sets aside for future college expenses. Kyle and Liza also provide more than half of the support of Kyle's cousin who lives with them. Liza's father, who died on January 3, 2016, at age 90, has for many years qualified as their dependent. How many personal and dependency exemptions should Kyle and Liza claim? a. Five b. Three c. Two d. Four e. None of these choices are correct.

d. Four Four (Kyle, Liza, cousin, and the father). May cannot be claimed because she is not a qualifying child and is subject to the gross income test. Kyle's cousin does not meet the relationship test but is a member of their household. It is assumed that Liza's father, as was true in the past, qualified as a dependent up to the point of death.

The Hutters filed a joint return for 2016. They provide more than 50% of the support of Carla, Melvin, and Aaron. Carla (age 18) is a cousin and earns $2,800 from a part-time job. Melvin (age 25) is their son and is a full-time law student. He received from the university a $3,800 scholarship for tuition. Aaron is a brother who is a citizen of Israel but resides in France. Carla and Melvin live with the Hutters. How many personal and dependency exemptions can the Hutters claim on their Federal income tax return? a. Three b. Two c. Five d. Four e. None of these choices are correct.

d. Four The Hutters can claim two personal exemptions and two dependency exemptions. Carla is a qualifying relative and passes the gross income test. Melvin is not a qualifying child due to age (not under 24) but is a qualifying relative. Melvin also meets the gross income test since this type of scholarship is nontaxable. Aaron meets neither the residency nor citizenship requirement.

Kyle, whose wife died in December 2013, filed a joint tax return for 2013. He did not remarry, but has continued to maintain his home in which his two dependent children live. What is Kyle's filing status in 2016? a. Married filing separately b. Single c. Surviving spouse d. Head of household e. None of these choices are correct.

d. Head of household Kyle, who filed a joint return in 2013, was entitled to file as a surviving spouse in 2014 and 2015. In 2016, he will be entitled to file as a head of household.

A VAT (value added tax): a. Has not proved popular outside of the U.S. b. Is used exclusively by third world (less developed) countries. c. Is not a tax on consumption. d. Is regressive in its effect. e. None of these choices are correct.

d. Is regressive in its effect. Both the VAT and a general sales tax are taxes on consumption ("Is not a tax on consumption") and are regressive in effect ("Is regressive in its effect"). The VAT has been adopted by many countries ("Has not proved popular outside of the U.S"), many of which (e.g., Japan, Denmark) are not third world countries ("Is used exclusively by third world (less developed) countries").

What statement is not true with respect to Temporary Regulations? a. Found in the Federal Register. b. Automatically expire within three years after the date of issuance. c. Issued as Proposed Regulations. d. May not be cited as precedent. e. All of these statements are true.

d. May not be cited as precedent.

Nelda is married to Chad, who abandoned her in early June of 2016. She has not seen or communicated with him since then. She maintains a household in which she and her two dependent children live. Which of the following statements about Nelda's filing status in 2016 is correct? a. Nelda can file a joint return with Chad. b. Nelda can file as a surviving spouse. c. Nelda can use the rates for single taxpayers. d. Nelda can file as a head of household. e. None of these statements are appropriate.

d. Nelda can file as a head of household. Nelda does meet the "abandoned spouse" rules. Therefore, she can file as a head of household.

The IRS will not acquiesce to the following tax decisions: a. U.S. Tax Court b. U.S. Court of Federal Claims c. U.S. District Court d. Small Case Division of the U.S. Tax Court e. All of these choices are correct.

d. Small Case Division of the U.S. Tax Court

Which, if any, of the following taxes are proportional (rather than progressive)? a. Federal estate tax b. Federal corporate income tax c. Federal gift tax d. State general sales tax e. All of these choices are correct.

d. State general sales tax Sales taxes are applied at a constant rate that does not progress.

Which item may not be cited as a precedent? a. U.S. District Court decision b. Temporary Regulations c. Regulations d. Technical Advice Memoranda e. None of these choices are correct.

d. Technical Advice Memoranda

State income taxes generally can be characterized by: a. No provision for withholding procedures. b. Allowance of a deduction for Federal income taxes paid. c. Applying only to individuals and not applying to corporations. d. The same date for filing as the Federal income tax. e. None of these choices are correct.

d. The same date for filing as the Federal income tax.

Which, if any, of the following is a typical characteristic of an ad valorem tax on personalty? a. Taxpayer compliance is greater for personal use property than for business use property. b. The tax on intangibles generates considerable revenue since it is difficult for taxpayers to avoid. c. Most states impose a tax on intangibles. d. The tax on automobiles sometimes considers the age of the vehicle. e. None of these choices are correct

d. The tax on automobiles sometimes considers the age of the vehicle. Taxpayer compliance is greater with business use property ("Taxpayer compliance is greater for personal use property than for business use property"). Very few states impose a tax on intangibles ("Most states impose a tax on intangibles") because it is easily avoided and does not generate much revenue ("The tax on intangibles generates considerable revenue since it is difficult for taxpayers to avoid").

Millie, age 80, is supported during the current year as follows: Percent of Support Weston (a son) 20% Faith (a daughter) 35% Jake (a cousin) 25% Brayden (unrelated close family friend) 20% During the year, Millie lives in an assisted living facility. Under a multiple support agreement, indicate which parties can qualify to claim Millie as a dependent. a. Weston, Faith, Jake, and Brayden b. Faith, Jake, and Brayden c. Faith d. Weston and Faith e. None of these choices are correct.

d. Weston and Faith Weston and Faith are the only persons who appear to qualify ("Weston and Faith"). They qualify because they contribute more than 10% of the support. Jake does not qualify because he satisfies neither the relationship nor member of the household tests. (This eliminates "Weston, Faith, Jake, and Brayden" and "Faith, Jake, and Brayden") Brayden does not meet the relationship test, and he does not satisfy the member of the household test. For a multiple support agreement to be effective, the qualifying individuals collectively must provide greater than 50% of the support.

Calculator Which of the following sources has the highest tax validity? a. Regulations b. Revenue Procedure c. Revenue Ruling d.Internal Revenue Code section e. None of these choices are correct.

d.Internal Revenue Code section

Which of these is not a correct citation to the Internal Revenue Code? a. Section 2(a)(1)(A) b. Section 211 c. Section 280B d. Section 1222(1) e. All of these are correct cites.

e. All of these are correct cites.

Which of the following is not an administrative source of tax law? a. Revenue Procedure b. General Counsel Memorandum c. Field Service Advice d. Technical Advice Memoranda e. All of these choices are administrative source

e. All of these choices are administrative sources.

Which of the following characteristics correctly describes the procedure for the phaseout of exemptions? a. The threshold amounts are different and depend on filing status (e.g., joint return, single). b. The threshold amounts are indexed for inflation each year. c. The phaseout procedure is known as a "stealth tax". d. For the phaseout procedure to be applied, a taxpayer's AGI must exceed the threshold amount. e. All of these choices are correct.

e. All of these choices are correct.

Federal excise taxes that are no longer imposed include: a. Tax on the manufacture of sporting equipment. b. Tax on wagering. c. Tax on air travel. d. Tax on alcohol. e. None of these choices are correct

e. None of these choices are correct.

Calculator Taxes levied by both states and the Federal government include: a. Franchise tax. b. General sales tax. c. Custom duties. d. Hotel occupancy tax. e. None of these choices are correct

e. None of these choices are correct. "General sales tax", "Hotel occupancy tax", and "Franchise tax" are levied at the state or local level. "Custom duties" is strictly a Federal levy.

Wilma, age 70 and single, is claimed as a dependent on her daughter's tax return. During 2016, she had interest income of $2,500 and $800 of earned income from babysitting. Wilma's taxable income is: a. $2,250 b. $700 c. $1,750 d. $900 e. None of these choices are correct.

e. None of these choices are correct. $3,300 gross income - greater of $1,050 or ($800 earned income + $350) - $1,550 (additional standard deduction for age 65 and older) = $600. She is not eligible for a personal exemption.

Calculator A characteristic of FICA is that: a. It provides a modest source of income in the event of loss of employment. b. It is administered by both state and Federal governments. c. It does not apply when one spouse works for the other spouse. d. It is imposed only on the employer. e. None of these choices are correct.

e. None of these choices are correct. FICA is imposed on both the employer and the employee ("It is imposed only on the employer"). Spouses who work for each other are not exempt from the tax ("It does not apply when one spouse works for the other spouse"). Its objective is retirement income, not loss of employment ("It provides a modest source of income in the event of loss of employment"). It is administered only by the Federal government ("It is administered by both state and Federal governments").