DONE ACCT 341 Chapter 1

83. 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. The Federal income tax on corporations was held by the U.S. Supreme Court to be allowable under the U.S. Constitution.
c. The Federal income tax on individuals was held by the U.S. Supreme Court to be allowable under the U.S. Constitution.
d. 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.
e. None of these.
b
85. Which, if any, of the following taxes are proportional (rather than progressive)?
a. State general sales tax
b. Federal corporate income tax
c. Federal estate tax
d. Federal gift tax
e. All of these
a
86. 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 resident dies and leaves his farm to his church.
b. A large property owner issues a conservation easement as to some of her land.
c. A tax holiday issued 10 years ago has expired.
d. A bankrupt motel is acquired by the Red Cross and is to be used to provide housing for homeless persons.
e. None of these.
c
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87. Which, if any, of the following transactions will decrease a taxing jurisdiction’s ad valorem tax revenue imposed on real estate?
a. A tax holiday is granted to an out-of-state business that is searching for a new factory site.
b. An abandoned church is converted to a restaurant.
c. A public school is razed and turned into a city park.
d. A local university sells a dormitory that will be converted for use as an apartment building.
e. None of these.
a
88. 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 automobiles sometimes considers the age of the vehicle.
c. Most states impose a tax on intangibles.
d. The tax on intangibles generates considerable revenue since it is difficult for taxpayers to avoid.
e. None of these.
b
89. Federal excise taxes that are no longer imposed include:
a. Tax on air travel.
b. Tax on wagering.
c. Tax on the manufacture of sporting equipment.
d. Tax on alcohol.
e. None of these.
e
90. Taxes not imposed by the Federal government include:
a. Tobacco excise tax.
b. Customs duties (tariffs on imports).
c. Tax on rent cars.
d. Gas guzzler tax.
e. None of these.
c
91. Taxes levied by both states and the Federal government include:
a. General sales tax.
b. Custom duties.
c. Hotel occupancy tax.
d. Franchise tax.
e. None of these.
e
92. Taxes levied by all states include:
a. Tobacco excise tax.
b. Individual income tax.
c. Inheritance tax.
d. General sales tax.
e. None of these.
a
93. 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 these.
d
94. Burt and Lisa are married and live in a common law state. Burt wants to make gifts to their four children in 2014. What is the maximum amount of the annual exclusion they will be allowed for these gifts?
a. $14,000.
b. $28,000.
c. $56,000.
d. $112,000.
e. None of these.
d
95. 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 higher unified transfer tax credit available under the gift tax.
b. To avoid a future decline in value of the property transferred.
c. To take advantage of the per donee annual exclusion.
d. To shift income to higher bracket donees.
e. None of these.
c
96. Indicate which, if any, statement is incorrect. State income taxes:
a. Can piggyback to the Federal version.
b. Cannot apply to visiting nonresidents.
c. Can decouple from the Federal version.
d. Can provide occasional amnesty programs.
e. None of these.
b
97. State income taxes generally can be characterized by:
a. The same date for filing as the Federal income tax.
b. No provision for withholding procedures.
c. Allowance of a deduction for Federal income taxes paid.
d. Applying only to individuals and not applying to corporations.
e. None of these.
a
98. A characteristic of FICA is that:
a. It does not apply when one spouse works for the other spouse.
b. It is imposed only on the employer.
c. It provides a modest source of income in the event of loss of employment.
d. It is administered by both state and Federal governments.
e. None of these.
e
99. A characteristic of FUTA is that:
a. It is imposed on both employer and employee.
b. It is imposed solely on the employee.
c. Compliance requires following guidelines issued by both state and Federal regulatory authorities.
d. It is applicable to spouses of employees but not to any children under age 18.
e. None of these.
c
101. The proposed flat tax:
a. Would eliminate the income tax.
b. Would simplify the income tax.
c. Would tax the increment in value as goods move through the production and manufacturing stages to the marketplace.
d. Is a tax on consumption.
e. None of these.
b
102. A VAT (value added tax):
a. Is regressive in its effect.
b. Has not proved popular outside of the U.S.
c. Is not a tax on consumption.
d. Is used exclusively by third world (less developed) countries.
e. None of these.
a
113. Which, if any, of the following provisions cannot be justified as mitigating the effect of the annual accounting period concept?
a. Nonrecognition of gain allowed for involuntary conversions.
b. Net operating loss carryback and carryover provisions.
c. Carry over of excess charitable contributions.
d. Use of the installment method to recognize gain.
e. Carry over of excess capital losses.
a
115. A landlord leases property upon which the tenant makes improvements. The improvements are significant and are not made in lieu of rent. At the end of the lease, the value of the improvements are not income to the landlord. This rule is an example of:
a. A clear reflection of income result.
b. The tax benefit rule.
c. The arm’s length concept.
d. The wherewithal to pay concept.
e. None of these.
d

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