ACCT 3221 Income Tax Chapters 1-7 Test Bank exam complete
questions and correct detailed answers (verified answers)
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
2. 84. Which, if any, is not one of Adam Smith's canons of taxation?
a. Economy
b. Certainty
c. Convenience
d. Simplicity
e. Equality: d
3. 85. Which, if any, of the following taxes are proportional (rather than progres-
sive)?
a. State general sales tax
b. Federal corporate income tax
c. Federal estate tax
d. Federal gift tax
e. All of these: a
4. 86. Which, if any, of the following transactions will increase a taxing jurisdic-
tion'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
, ACCT 3221 Income Tax Chapters 1-7 Test Bank exam complete
questions and correct detailed answers (verified answers)
5. 87. Which, if any, of the following transactions will decrease a taxing jurisdic-
tion'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
6. 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
7. 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
8. 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
9. 91. Taxes levied by both states and the Federal government include:
a. General sales tax.
, ACCT 3221 Income Tax Chapters 1-7 Test Bank exam complete
questions and correct detailed answers (verified answers)
b. Custom duties.
c. Hotel occupancy tax.
d. Franchise tax.
e. None of these.: e
10. 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
11. 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
12. 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
13. 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
, ACCT 3221 Income Tax Chapters 1-7 Test Bank exam complete
questions and correct detailed answers (verified answers)
14. 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
15. 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
16. 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
17. 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
18. 100. The U.S. (either Federal, state, or local) does not impose:
a. Franchise taxes.
b. Severance taxes.
c. Occupational fees.
d. Custom duties.
e. Export duties.: e
questions and correct detailed answers (verified answers)
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
2. 84. Which, if any, is not one of Adam Smith's canons of taxation?
a. Economy
b. Certainty
c. Convenience
d. Simplicity
e. Equality: d
3. 85. Which, if any, of the following taxes are proportional (rather than progres-
sive)?
a. State general sales tax
b. Federal corporate income tax
c. Federal estate tax
d. Federal gift tax
e. All of these: a
4. 86. Which, if any, of the following transactions will increase a taxing jurisdic-
tion'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
, ACCT 3221 Income Tax Chapters 1-7 Test Bank exam complete
questions and correct detailed answers (verified answers)
5. 87. Which, if any, of the following transactions will decrease a taxing jurisdic-
tion'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
6. 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
7. 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
8. 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
9. 91. Taxes levied by both states and the Federal government include:
a. General sales tax.
, ACCT 3221 Income Tax Chapters 1-7 Test Bank exam complete
questions and correct detailed answers (verified answers)
b. Custom duties.
c. Hotel occupancy tax.
d. Franchise tax.
e. None of these.: e
10. 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
11. 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
12. 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
13. 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
, ACCT 3221 Income Tax Chapters 1-7 Test Bank exam complete
questions and correct detailed answers (verified answers)
14. 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
15. 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
16. 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
17. 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
18. 100. The U.S. (either Federal, state, or local) does not impose:
a. Franchise taxes.
b. Severance taxes.
c. Occupational fees.
d. Custom duties.
e. Export duties.: e
