SOUTH WESTERN FEDERAL TAXATION
TEST BANK COMPLETE QUESTIONS AND
ANSWERS GUARANTEED TO PASS
PRACTICE SOLUTION
●● Which federal income tax structure imposes an increasing marginal
tax rate as the tax base increases?
Regressive tax
Incremental tax
Progressive tax
Proportional tax
Answer: Progressive
●● What would a graph look like for Progressive, Proportional,
Incremental, and Regressive tax structures?
Answer: Progressive- ascending
Proportional- flat line
Incremental- stair-steps
Regressive- descending
●● What describes a gift tax?
Tax on the retail sale of particular products
,Tax on the fair market value of wealth transfers
Tax on the retail price of goods and services
Tax on income earned by an individual
Answer: Tax on the fair market value of wealth transfers
●● What is a key element of an economy tax structure?
Attracts and stimulates investment
Helps ensure equality and ability to pay
Assists in reducing unemployment and inflation
Requires minimal compliance and administration costs
Answer: Requires minimal compliance and administration costs
●● Which objective of the federal tax law requires that a good tax
system minimizes the compliance and administration costs?
Equity
Convenience
Certainty
Economy
Answer: Economy
●● Consider how the tax burden should be distributed across taxpayers
Answer: Questions of Equity
,●● Means taxpayers should be able to determine when, where, and how
much to pay
Answer: Certainty
●● A tax system should minimize compliance and administration costs
Answer: Convenience
●● Which partnership item would flow through to an individual's tax
return?
Capital gains
Gross income
Partnership exemptions
Dividends received deduction
Answer: Capital Gains
●● An Eleventh Circuit client who files in the U.S. Court of Federal
Claims wants to know whether to include the terms of multiple options
to renew a sale-leaseback to calculate a deduction.
What is the authoritative reference?
A Second Circuit case which used disjunctive analysis
, A tax court decision which used economic substance
An Eleventh Circuit Case which analyzed sale-leaseback transactions
that generate tax deductions
A U.S. Court of Federal Claims case which analyzed sale-leaseback
transactions for operating equipment
Answer: A U.S. Court of Federal Claims case which analyzed sale-
leaseback transactions for operating equipment
●● Which tax rate calculation is an appropriate step in tax planning
strategy to reduce tax?
The average tax rate, because it represents the percent of tax on each
dollar
The tax-exempt tax rate, because effective tax planning utilizes tax
exempt bonds
The effective tax rate, because economic income is less broad than
taxable income
The marginal tax rate, because it represents the tax applicable to the next
taxable dollar
Answer: The marginal tax rate, because it represents the tax applicable
to the next taxable dollar
●● Where is a corporation's non-business income allocated when
computing the corporation's state taxable income?
TEST BANK COMPLETE QUESTIONS AND
ANSWERS GUARANTEED TO PASS
PRACTICE SOLUTION
●● Which federal income tax structure imposes an increasing marginal
tax rate as the tax base increases?
Regressive tax
Incremental tax
Progressive tax
Proportional tax
Answer: Progressive
●● What would a graph look like for Progressive, Proportional,
Incremental, and Regressive tax structures?
Answer: Progressive- ascending
Proportional- flat line
Incremental- stair-steps
Regressive- descending
●● What describes a gift tax?
Tax on the retail sale of particular products
,Tax on the fair market value of wealth transfers
Tax on the retail price of goods and services
Tax on income earned by an individual
Answer: Tax on the fair market value of wealth transfers
●● What is a key element of an economy tax structure?
Attracts and stimulates investment
Helps ensure equality and ability to pay
Assists in reducing unemployment and inflation
Requires minimal compliance and administration costs
Answer: Requires minimal compliance and administration costs
●● Which objective of the federal tax law requires that a good tax
system minimizes the compliance and administration costs?
Equity
Convenience
Certainty
Economy
Answer: Economy
●● Consider how the tax burden should be distributed across taxpayers
Answer: Questions of Equity
,●● Means taxpayers should be able to determine when, where, and how
much to pay
Answer: Certainty
●● A tax system should minimize compliance and administration costs
Answer: Convenience
●● Which partnership item would flow through to an individual's tax
return?
Capital gains
Gross income
Partnership exemptions
Dividends received deduction
Answer: Capital Gains
●● An Eleventh Circuit client who files in the U.S. Court of Federal
Claims wants to know whether to include the terms of multiple options
to renew a sale-leaseback to calculate a deduction.
What is the authoritative reference?
A Second Circuit case which used disjunctive analysis
, A tax court decision which used economic substance
An Eleventh Circuit Case which analyzed sale-leaseback transactions
that generate tax deductions
A U.S. Court of Federal Claims case which analyzed sale-leaseback
transactions for operating equipment
Answer: A U.S. Court of Federal Claims case which analyzed sale-
leaseback transactions for operating equipment
●● Which tax rate calculation is an appropriate step in tax planning
strategy to reduce tax?
The average tax rate, because it represents the percent of tax on each
dollar
The tax-exempt tax rate, because effective tax planning utilizes tax
exempt bonds
The effective tax rate, because economic income is less broad than
taxable income
The marginal tax rate, because it represents the tax applicable to the next
taxable dollar
Answer: The marginal tax rate, because it represents the tax applicable
to the next taxable dollar
●● Where is a corporation's non-business income allocated when
computing the corporation's state taxable income?
