TAX3761 EXAM PRATICE AND REVIEW ( 2025-2026
) | GRADED A+ |100% GUARANTEED QUESTIONS
AND REVISED ANSWERS NOW AVAILABLE
IMPORTANT INSTRUCTIONS:
Assumptions:
1. All amounts exclude Value-Added Tax (VAT) unless specifically stated otherwise.
2. The VAT rate increased from 14% to 15% from 1 April 2018.
3. All persons mentioned are residents of the Republic of South Africa unless stated
otherwise.
4. SARS = South African Revenue Service.
5. All transactions are conducted with registered VAT vendors, unless specifically stated
other- wise.
6. Valid tax invoices and required documentation are obtained for all transactions.
The answering of this paper:
1. This is a closed-book exam.
2. This paper consists of two (2) questions with subsections, i.e., a and b.
3. All questions and sub-sections must be answered.
4. Each sub-section must be commenced on a new (separate) page.
5. All workings, where applicable, must be shown. Where an amount is subject to a
limitation, clearly
,indicate the application of the limitation. Where any item does not form part of gross
income, is exempt from
tax or not allowable as a deduction, this must specifically be indicated, and a short reason
should be provided.
6. All amounts must be rounded to the nearest Rand.
Which statement is true about federal income taxes?
A) They are regressive
B) They are proportional
C) They are progressive
D) They are voluntary
Answer: C) They are progressive
Rationale: Federal income taxes take a higher percentage from higher incomes, making
them progressive rather than regressive or proportional.
Consumption taxes are:
A) Taxes on income
B) Taxes on property
C) Taxes on goods and services
D) Taxes on wages
Answer: C) Taxes on goods and services
Rationale: Consumption taxes, such as sales tax or excise tax, are collected when people
buy goods or services.
Local taxes are generally used to pay for:
A) National defense
B) Education, parks, roads, police, fire, and health departments
C) Federal debt
D) Social Security
Answer: B) Education, parks, roads, police, fire, and health departments
Rationale: Local taxes fund community services directly affecting residents’ daily lives.
Who must file income taxes in the U.S.?
A) Only businesses
B) Only individuals
C) Both businesses and individuals
D) Only people earning over $50,000
Answer: C) Both businesses and individuals
Rationale: Both entities are required by law to report taxable income to the IRS.
,Revenue bills in the U.S. must:
A) Pass the House and Senate and be signed by the President
B) Only pass the Senate
C) Only pass the House
D) Be approved by state governments
Answer: A) Pass the House and Senate and be signed by the President
Rationale: All federal revenue bills originate in the House of Representatives and require
approval by both chambers and the President to become law.
When government spends more than it collects in revenue, it results in:
A) A surplus
B) A deficit
C) Balanced budget
D) Inflation
Answer: B) A deficit
Rationale: A deficit occurs when expenditures exceed revenues, while a surplus is the
opposite.
Are U.S. citizens required to file tax returns voluntarily?
A) True
B) False
Answer: A) True
Rationale: The U.S. tax system relies on voluntary compliance, though failure to file is
illegal.
If you file a joint tax return, can you take an exemption for your spouse?
A) Yes
B) No
Answer: A) Yes
Rationale: Married couples filing jointly may claim exemptions for both spouses, reducing
taxable income.
Which statement is true about head-of-household filing status?
A) Only married taxpayers qualify
B) Only single parents qualify
C) Anyone can qualify
D) Only taxpayers with dependents qualify
Answer: D) Only taxpayers with dependents qualify
Rationale: Head-of-household status is for unmarried individuals who pay more than half
the cost of maintaining a home for dependents.
Are all forms of income taxable?
A) True
, B) False
Answer: B) False
Rationale: Certain forms of income, such as life insurance benefits and gifts, are exempt
from federal taxation.
Gross income is:
A) The same as taxable income
B) Income on which you pay tax
C) Total income before adjustments or deductions
D) Income after exemptions
Answer: C) Total income before adjustments or deductions
Rationale: Gross income includes all income received from any source before deductions,
credits, or exemptions.
Do individuals over 65 automatically avoid filing a tax return?
A) True
B) False
Answer: B) False
Rationale: Age alone does not exempt someone from filing; income thresholds and other
factors determine filing requirements.
Which IRS form is most likely used for a first-time filer?
A) Form 1040EZ or 1040A
B) Form W-2
C) Form 1099
D) Schedule C
Answer: A) Form 1040EZ or 1040A
Rationale: These forms are simplified for individuals with straightforward income
situations.
Even if you hire a tax preparer, who is responsible for the accuracy of your tax return?
A) The tax preparer
B) The IRS
C) The taxpayer
D) The state government
Answer: C) The taxpayer
Rationale: Legally, taxpayers are responsible for supplying complete and accurate
information, even when using a professional preparer.
By law, who may use tax preparation software?
A) Only professionals
B) Anyone
C) Only accountants
) | GRADED A+ |100% GUARANTEED QUESTIONS
AND REVISED ANSWERS NOW AVAILABLE
IMPORTANT INSTRUCTIONS:
Assumptions:
1. All amounts exclude Value-Added Tax (VAT) unless specifically stated otherwise.
2. The VAT rate increased from 14% to 15% from 1 April 2018.
3. All persons mentioned are residents of the Republic of South Africa unless stated
otherwise.
4. SARS = South African Revenue Service.
5. All transactions are conducted with registered VAT vendors, unless specifically stated
other- wise.
6. Valid tax invoices and required documentation are obtained for all transactions.
The answering of this paper:
1. This is a closed-book exam.
2. This paper consists of two (2) questions with subsections, i.e., a and b.
3. All questions and sub-sections must be answered.
4. Each sub-section must be commenced on a new (separate) page.
5. All workings, where applicable, must be shown. Where an amount is subject to a
limitation, clearly
,indicate the application of the limitation. Where any item does not form part of gross
income, is exempt from
tax or not allowable as a deduction, this must specifically be indicated, and a short reason
should be provided.
6. All amounts must be rounded to the nearest Rand.
Which statement is true about federal income taxes?
A) They are regressive
B) They are proportional
C) They are progressive
D) They are voluntary
Answer: C) They are progressive
Rationale: Federal income taxes take a higher percentage from higher incomes, making
them progressive rather than regressive or proportional.
Consumption taxes are:
A) Taxes on income
B) Taxes on property
C) Taxes on goods and services
D) Taxes on wages
Answer: C) Taxes on goods and services
Rationale: Consumption taxes, such as sales tax or excise tax, are collected when people
buy goods or services.
Local taxes are generally used to pay for:
A) National defense
B) Education, parks, roads, police, fire, and health departments
C) Federal debt
D) Social Security
Answer: B) Education, parks, roads, police, fire, and health departments
Rationale: Local taxes fund community services directly affecting residents’ daily lives.
Who must file income taxes in the U.S.?
A) Only businesses
B) Only individuals
C) Both businesses and individuals
D) Only people earning over $50,000
Answer: C) Both businesses and individuals
Rationale: Both entities are required by law to report taxable income to the IRS.
,Revenue bills in the U.S. must:
A) Pass the House and Senate and be signed by the President
B) Only pass the Senate
C) Only pass the House
D) Be approved by state governments
Answer: A) Pass the House and Senate and be signed by the President
Rationale: All federal revenue bills originate in the House of Representatives and require
approval by both chambers and the President to become law.
When government spends more than it collects in revenue, it results in:
A) A surplus
B) A deficit
C) Balanced budget
D) Inflation
Answer: B) A deficit
Rationale: A deficit occurs when expenditures exceed revenues, while a surplus is the
opposite.
Are U.S. citizens required to file tax returns voluntarily?
A) True
B) False
Answer: A) True
Rationale: The U.S. tax system relies on voluntary compliance, though failure to file is
illegal.
If you file a joint tax return, can you take an exemption for your spouse?
A) Yes
B) No
Answer: A) Yes
Rationale: Married couples filing jointly may claim exemptions for both spouses, reducing
taxable income.
Which statement is true about head-of-household filing status?
A) Only married taxpayers qualify
B) Only single parents qualify
C) Anyone can qualify
D) Only taxpayers with dependents qualify
Answer: D) Only taxpayers with dependents qualify
Rationale: Head-of-household status is for unmarried individuals who pay more than half
the cost of maintaining a home for dependents.
Are all forms of income taxable?
A) True
, B) False
Answer: B) False
Rationale: Certain forms of income, such as life insurance benefits and gifts, are exempt
from federal taxation.
Gross income is:
A) The same as taxable income
B) Income on which you pay tax
C) Total income before adjustments or deductions
D) Income after exemptions
Answer: C) Total income before adjustments or deductions
Rationale: Gross income includes all income received from any source before deductions,
credits, or exemptions.
Do individuals over 65 automatically avoid filing a tax return?
A) True
B) False
Answer: B) False
Rationale: Age alone does not exempt someone from filing; income thresholds and other
factors determine filing requirements.
Which IRS form is most likely used for a first-time filer?
A) Form 1040EZ or 1040A
B) Form W-2
C) Form 1099
D) Schedule C
Answer: A) Form 1040EZ or 1040A
Rationale: These forms are simplified for individuals with straightforward income
situations.
Even if you hire a tax preparer, who is responsible for the accuracy of your tax return?
A) The tax preparer
B) The IRS
C) The taxpayer
D) The state government
Answer: C) The taxpayer
Rationale: Legally, taxpayers are responsible for supplying complete and accurate
information, even when using a professional preparer.
By law, who may use tax preparation software?
A) Only professionals
B) Anyone
C) Only accountants
