TAXATION

Where does Federal Government get all their revenue? A) Individual Income Tax B) Corporate Income Tax C)Social Insurance Tax D) All of the above

D) All of the above

Which of the following taxes is regressive? A) Federal Insurance Contributions Act (FICA) B) excise tax C) property tax D) gift tax

A) Federal Insurance Contributions Act

All of the following are executive (administrative) sources of tax law except: A) Internal Revenue Code. B) Income Tax Regulations. C) Revenue Rulings. D) Revenue Procedures.

A) Internal Revenue Code.

Which of the following bonds do not generate tax-exempt Federal income? A) U.S. Treasury bonds B) bonds issued by fire districts C) school district bonds D) bonds issued by cities

A) U.S. Treasury bonds

The requirements for a payment to be considered as alimony include all of the following except: A) be made in cash or property. B) be made pursuant to a divorce, separation or a written agreement between the spouses. C) terminate at the death of the payee. D) not be designated as being other than alimony.

A) be made in cash or property.

Distributions from corporations to the shareholders in a nonliquidating distribution will usually be classified as a dividend up to the amount of the corporation's A) earnings and profits. B) retained earnings. C) taxable income for the year. D) stock basis

A) earnings and profits.

Arthur pays tax of $5,000 on taxable income of $50,000 while taxpayer Barbara pays tax of $12,000 on $120,000. The tax is a: A) progressive tax B) proportional tax C) regressive tax D) none of the above

B) proportional tax

Gift tax, sales tax, FICA - social security and income tax. What kind of Tax is the sales tax? A) progressive tax B) proportional tax C) regressive tax D) none of the above

C) regressive tax

Married couples will normally file jointly. Identify a situation where a married couple may prefer to file separately. A) The spouse with lower income has substantial medical expenses. B) A couple is separated and contemplating divorce. C) One spouse can be held responsible for the entire tax liability. D) All of the above.

D) All of the above.

Which of the following criteria is not required under the tax concept of income? A) There must be economic benefit. B) Income must be realized. C) Income must be recognized. D) Cash must be received.

D) Cash must be received.

All of the following items are included in gross income except: A) alimony received. B) rent income. C) interest earned on a bank account. D) child support payments received.

D) child support payments received.

Which of the following taxes is progressive? A) sales tax B) excise tax C) property tax D) federal income tax

D) federal income tax

Which of the following is not one of Adam Smith's canons of taxation? A) equity B) convenience C) certainty D) paid by all citizens

D) paid by all citizens

The term "tax law" includes: A. Internal Revenue Code B. Treasury Regulations C. Judicial decisions D. All of the above.

D. All of the above.

A cash-basis taxpayer can defer income recognition by refusing to accept payment. True or False

False

In common law states, all income is split evenly between the two spouses. True or False

False

In community property states, income from separate property owned before marriage is always considered separate income after marriage. True or False

False

The largest source of revenues for the federal government comes from

Individual Income Tax

A taxpayer had the following income and losses in the current year: Salary $55,000 Sold AT&T stock at a loss ($5,000) Lottery prize $4,500 Gambling winnings $8,000 Gambling losses ($5,000) What is the taxpayer's adjusted gross income (not taxable income)?

Minimum Capital loss that can be deducted from Income is $3,000. $55,000 - $3,000 + $4,500 + $8,000 = $64,500

Is a De minimis benefit excluded from gross income?

No, they are excluded from gross income

If a taxpayer's method of accounting does not clearly reflect income, the IRS may specify a different accounting method which must be used by the taxpayer. True or False

True

Which of the following is not an advantage of an LLC? a. The state statutes are uniform. b. There is flexibility with regard to taxation. c. It offers limited liability. d. It provides flexibility in terms of management and encourages foreign investors.

a. The state statutes are uniform.

Expenditure to be deducted there are certain criteria. What are they? Reasonable Necessary

ordinary and necessary