Page 1
jcmx
,TABLEOFCONTENTS
Chapter1:AnIntroductiontoTaxationandUnderstandingtheFederalTaxLaw Chapter2: WorkingwiththeTa mx mx
xLawjc
Chapter03:Tax FormulaandTax Determination Chapter 04:GrossInco
m
x xm mx m
x m
x mx mx mx
me:ConceptsandInclusions Chapter05:G rossIncome:Exclusions m
x mx mx
Chapter06:DeductionsandLosses:InGeneral
Chapter 07: Deductions and Losses: Certain Business Expenses Chapter
mx mx mx mx mx mx mx m x mx
08: Depreciation, Cost Recovery, Amortization, and Depletion Chapter 09: D
mx mx mx mx mx mx mx mx mx
eductions: Employee and Self-Employed-
mx mx mx
Related Expense Chapter 10: Deductions and Losses: Certain Itemized De
mx mx mx mx mx mx mx mx mx mx
ductions Chapter11:InvestorLosses Chapter12:AlternativeMinimumT
m
x m x
ax Chapter13:Tax CreditsandPayment Procedures
mx 2 2
Chapter14:PropertyTransactions:DeterminationofGainorLoss and jc m x m x Chap m
x ter 15: Property Transactions: Nontaxable Exchanges
mx mx mx mx mx
Chapter 16: Property Transactions: Capital Gains and Losses Chapter 1
mx mx mx mx mx mx mx mx mx
7:Property Transactions: 1231and Recapture Provisions Chapter18
mx mx mx mx mx
:AccountingPeriodsandMethods Chapter19:DeferredC jc mx
ompensation Chapter 20:Corporations and Partnerships
mx mx mx mx
Page 2
jcmx
, Chapter 01 2025 Individuals
mx mx mx
Answers2at2the2end2of2each2chapter
Indicate whether the statement is2 true or false.
jc mx mx mx m x mx mx
1. Sales made over the internet are not exempt from the application of a general sales (or use) tax.
mx mx mx mx mx mx mx mx mx mx jc mx mx jc mx mx mx mx
a. True
b. False
2. Upon auditby the IRS,Faith is assessed adeficiency of $40,000 of which $25,000 is attributableto negligence.
mx jc mx jc mx jc mx mx mx mx mx mx mx jc jc
The 20% negligence penalty will applyto$25,000.
mx mx jc mx jc
a. True
b. False
3.Ultimately,mosttaxes are paid byindividuals. jc jc jc
a. True
b. False
4. Even if property tax rates are not changed, the amount of ad valorem taxes imposed on realty may not remainthe same.
mx mx mx mx jc jc mx mx mx mx jc mx mx mx mx mx mx mx mx jc mx
a. True
b. False
5. The principal objective of the FUTA2tax is to provide some measure of retirement security.
mx mx mx mx mx mx m x jc jc mx jc mx mx jc
a. True
b. False
6. If more IRS audits are producing a higher number of no change results, this indicates increased compliance onthe
mx mx mx jc mx mx mx mx mx mx mx jc mx mx mx mx mx mx m x p
a rt of taxpayers.
mx mx mx
a. True
b. False
7. A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state thatlev ies n
mx jc mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx jc mx jc jc mx mx mx mx mx
o such taxes.
mx mx
a. True
b. False
m 8. A2calendar year taxpayer files his 2023 Federal income tax return on March 4, 2024. The return reflects an overpay
x mx mx mx mx mx mx jc mx mx mx mx mx mx mx mx mx mx mx mx mx
ment of $6,000, and the taxpayer requests a refund of this amount. The refund is paid on May 16, 2024.The refund need
mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx
not includ e interest.
mx mx jc
a. True
b. False
9. A tax2cut enacted by Congress that contains a sunset provision will make the tax cut temporary.
mx mx jc mx mx mx mx mx mx mx mx mx mx mx mx mx
a. True
b. False
Page 3 jcmx
, Name: Class: Date: mx
Chapter 01 2025 Individuals
mx mx mx
10. For Federal income tax purposes, there never has been a general amnesty period
mx mx mx mx mx mx mx mx mx mx mx mx mx
. a. True
b. False
11.To lessen or eliminate the effect of multiple taxation, a taxpayer who is subject to both foreign and U.S. income taxe s on
mx mx mx mx jc jc mx mx mx jc mx mx jc mx jc mx mx mx mx mx mx mx
the2same income is allowed either a deduction or a credit for the foreign tax paid.
mx mx mx mx mx mx mx mx mx mx mx mx mx mx jc
a. True
b. False
12. Because it is consistent with the wherewithal to pay concept, the tax law requires a seller to recognize a gain inthe ye
mx jc mx mx mx mx mx mx jc mx mx mx mx mx jc mx mx mx mx mx mx mx
ar the installment sale occurs.
mx mx mx mx mx
a. True
b. False
13. The2amount of a taxpayer’s itemized deductions will increase the chance of being audited by the IRS.
mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx
a. True
b. False
14. In 2024, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has not2
mx mx mx mx mx mx jc mx mx jc jc mx mx mx mx mx mx mx mx mx mx m x m
a de a taxable gift.
mx mx mx mx
a. True
b. False
15. For omissions from gross income in excess of 25% of that reported, there is no2statute of limitations on ad diti
mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx
onal income tax assessments by the IRS.
mx mx mx mx mx mx jc
a. True
b. False
16. Stealth taxes have2the effect2of generating additional taxes from all taxpayers.
mx mx mx mx mx jc mx mx mx mx
a. True
b. False
17. Jason’s business warehouse is destroyed by fire. Because the insurance proceeds exceed the basis of the propert y, a g
jc mx mx mx mx mx mx mx mx mx jc mx mx jc mx jc jc mx mx
ain results. If Jason shortly reinvests the proceeds in a new warehouse, no gain is recognized due2to the application of t he w
mx mx mx mx mx mx jc mx jc mx mx mx mx mx mx mx mx mx mx mx mx mx mx
her ewithal to pay concept.
mx mx mx mx
a. True
b. False
18. An inheritance tax is a tax2on a decedent’s right to pass property at death.
mx mx mx mx jc mx mx mx jc jc mx jc mx jc
a. True
b. False
19. When interest is charged on a deficiency, any part of a month counts as a full month.
mx mx mx jc mx mx mx mx mx mx mx mx mx jc mx mx mx
Page 4 jcmx
jcmx
,TABLEOFCONTENTS
Chapter1:AnIntroductiontoTaxationandUnderstandingtheFederalTaxLaw Chapter2: WorkingwiththeTa mx mx
xLawjc
Chapter03:Tax FormulaandTax Determination Chapter 04:GrossInco
m
x xm mx m
x m
x mx mx mx
me:ConceptsandInclusions Chapter05:G rossIncome:Exclusions m
x mx mx
Chapter06:DeductionsandLosses:InGeneral
Chapter 07: Deductions and Losses: Certain Business Expenses Chapter
mx mx mx mx mx mx mx m x mx
08: Depreciation, Cost Recovery, Amortization, and Depletion Chapter 09: D
mx mx mx mx mx mx mx mx mx
eductions: Employee and Self-Employed-
mx mx mx
Related Expense Chapter 10: Deductions and Losses: Certain Itemized De
mx mx mx mx mx mx mx mx mx mx
ductions Chapter11:InvestorLosses Chapter12:AlternativeMinimumT
m
x m x
ax Chapter13:Tax CreditsandPayment Procedures
mx 2 2
Chapter14:PropertyTransactions:DeterminationofGainorLoss and jc m x m x Chap m
x ter 15: Property Transactions: Nontaxable Exchanges
mx mx mx mx mx
Chapter 16: Property Transactions: Capital Gains and Losses Chapter 1
mx mx mx mx mx mx mx mx mx
7:Property Transactions: 1231and Recapture Provisions Chapter18
mx mx mx mx mx
:AccountingPeriodsandMethods Chapter19:DeferredC jc mx
ompensation Chapter 20:Corporations and Partnerships
mx mx mx mx
Page 2
jcmx
, Chapter 01 2025 Individuals
mx mx mx
Answers2at2the2end2of2each2chapter
Indicate whether the statement is2 true or false.
jc mx mx mx m x mx mx
1. Sales made over the internet are not exempt from the application of a general sales (or use) tax.
mx mx mx mx mx mx mx mx mx mx jc mx mx jc mx mx mx mx
a. True
b. False
2. Upon auditby the IRS,Faith is assessed adeficiency of $40,000 of which $25,000 is attributableto negligence.
mx jc mx jc mx jc mx mx mx mx mx mx mx jc jc
The 20% negligence penalty will applyto$25,000.
mx mx jc mx jc
a. True
b. False
3.Ultimately,mosttaxes are paid byindividuals. jc jc jc
a. True
b. False
4. Even if property tax rates are not changed, the amount of ad valorem taxes imposed on realty may not remainthe same.
mx mx mx mx jc jc mx mx mx mx jc mx mx mx mx mx mx mx mx jc mx
a. True
b. False
5. The principal objective of the FUTA2tax is to provide some measure of retirement security.
mx mx mx mx mx mx m x jc jc mx jc mx mx jc
a. True
b. False
6. If more IRS audits are producing a higher number of no change results, this indicates increased compliance onthe
mx mx mx jc mx mx mx mx mx mx mx jc mx mx mx mx mx mx m x p
a rt of taxpayers.
mx mx mx
a. True
b. False
7. A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state thatlev ies n
mx jc mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx jc mx jc jc mx mx mx mx mx
o such taxes.
mx mx
a. True
b. False
m 8. A2calendar year taxpayer files his 2023 Federal income tax return on March 4, 2024. The return reflects an overpay
x mx mx mx mx mx mx jc mx mx mx mx mx mx mx mx mx mx mx mx mx
ment of $6,000, and the taxpayer requests a refund of this amount. The refund is paid on May 16, 2024.The refund need
mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx
not includ e interest.
mx mx jc
a. True
b. False
9. A tax2cut enacted by Congress that contains a sunset provision will make the tax cut temporary.
mx mx jc mx mx mx mx mx mx mx mx mx mx mx mx mx
a. True
b. False
Page 3 jcmx
, Name: Class: Date: mx
Chapter 01 2025 Individuals
mx mx mx
10. For Federal income tax purposes, there never has been a general amnesty period
mx mx mx mx mx mx mx mx mx mx mx mx mx
. a. True
b. False
11.To lessen or eliminate the effect of multiple taxation, a taxpayer who is subject to both foreign and U.S. income taxe s on
mx mx mx mx jc jc mx mx mx jc mx mx jc mx jc mx mx mx mx mx mx mx
the2same income is allowed either a deduction or a credit for the foreign tax paid.
mx mx mx mx mx mx mx mx mx mx mx mx mx mx jc
a. True
b. False
12. Because it is consistent with the wherewithal to pay concept, the tax law requires a seller to recognize a gain inthe ye
mx jc mx mx mx mx mx mx jc mx mx mx mx mx jc mx mx mx mx mx mx mx
ar the installment sale occurs.
mx mx mx mx mx
a. True
b. False
13. The2amount of a taxpayer’s itemized deductions will increase the chance of being audited by the IRS.
mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx
a. True
b. False
14. In 2024, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has not2
mx mx mx mx mx mx jc mx mx jc jc mx mx mx mx mx mx mx mx mx mx m x m
a de a taxable gift.
mx mx mx mx
a. True
b. False
15. For omissions from gross income in excess of 25% of that reported, there is no2statute of limitations on ad diti
mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx mx
onal income tax assessments by the IRS.
mx mx mx mx mx mx jc
a. True
b. False
16. Stealth taxes have2the effect2of generating additional taxes from all taxpayers.
mx mx mx mx mx jc mx mx mx mx
a. True
b. False
17. Jason’s business warehouse is destroyed by fire. Because the insurance proceeds exceed the basis of the propert y, a g
jc mx mx mx mx mx mx mx mx mx jc mx mx jc mx jc jc mx mx
ain results. If Jason shortly reinvests the proceeds in a new warehouse, no gain is recognized due2to the application of t he w
mx mx mx mx mx mx jc mx jc mx mx mx mx mx mx mx mx mx mx mx mx mx mx
her ewithal to pay concept.
mx mx mx mx
a. True
b. False
18. An inheritance tax is a tax2on a decedent’s right to pass property at death.
mx mx mx mx jc mx mx mx jc jc mx jc mx jc
a. True
b. False
19. When interest is charged on a deficiency, any part of a month counts as a full month.
mx mx mx jc mx mx mx mx mx mx mx mx mx jc mx mx mx
Page 4 jcmx
