C237 - Sec 01 - Federal Taxation Exam
Questions & Answers (Grade A+)
Why was pay-as-you-go withholding needed in 1943? -
correct answer ✅The pay-as-you-go withholding was needed in
1943 to avoid significant tax collection problems as the tax base
broadened from 6% of the population in 1939 to 74% in 1945. Pay-
as-you-go permitted the federal government to deduct taxes
directly out of an employee's wages.
Is it possible for the government to raise taxes without raising tax
rates? -
correct answer ✅Yes, it is possible because there are two
components in computing a taxpayer's tax, the tax base and the tax
rate. Taxes can be raised by increasing either component. Thus,
even though the Governor proclaimed that tax rates have remained
at the same level, adjustments to the tax base, such as the
elimination of deductions, result in tax increases which can be as
much, or more, as increases in tax rates.
Property Taxes -
correct answer ✅Are primarily used by local government(s) and
include both real property taxes and personal property taxes.
Excise Taxes -
correct answer ✅Are primarily used by the federalgovernment(s)
,C237 - Sec 01 - Federal Taxation Exam
Questions & Answers (Grade A+)
and are imposed on items such as alcohol, tobacco, telephone
usage, and other goods.
Sales Taxes -
correct answer ✅Are primarily used by state and local
government(s) and constitute a major revenue source.
Income Taxes -
correct answer ✅Are the primary domain of the federal and state
government(s) and constitute a major revenue source.
Employment Taxes -
correct answer ✅Are primarily used by the federal and state
government(s) and constitute a major revenue source.
Importance of thorough knowledge of sources of tax law -
correct answer ✅Due to the vast volume of tax law sources, it is
impossible for any person to have recall knowledge of the tax law.
Thus, the ability to understand what the relevant sources of tax law
are, their relative importance, and where to find the sources are
vital to a person working in the tax area.
, C237 - Sec 01 - Federal Taxation Exam
Questions & Answers (Grade A+)
Why is there a need for administrative rulings and court decisions?
-
correct answer ✅The Code contains general language and does
not address the many specific situations and transactions that
occur. To resolve tax questions concerning specific situations,
administrative rulings and court decisions are an integral part of the
income tax law.
Three Congressional Committees for New Tax Bill -
correct answer ✅1. Ways and Means Committee
2. Senate Finance Committee
3. Joint Conference Committee
Importance of Congressional committee reports to tax practitioners
-
correct answer ✅1. To explain the intent of Congress for passing
the new law.
2. To explain the new law before the Treasury Department drafts
regulations on the tax law changes.
The Principal Goal of Tax Planning -
correct answer ✅To maximize a taxpayer's after-tax cash flow, not
just the minimization of taxes due.
Questions & Answers (Grade A+)
Why was pay-as-you-go withholding needed in 1943? -
correct answer ✅The pay-as-you-go withholding was needed in
1943 to avoid significant tax collection problems as the tax base
broadened from 6% of the population in 1939 to 74% in 1945. Pay-
as-you-go permitted the federal government to deduct taxes
directly out of an employee's wages.
Is it possible for the government to raise taxes without raising tax
rates? -
correct answer ✅Yes, it is possible because there are two
components in computing a taxpayer's tax, the tax base and the tax
rate. Taxes can be raised by increasing either component. Thus,
even though the Governor proclaimed that tax rates have remained
at the same level, adjustments to the tax base, such as the
elimination of deductions, result in tax increases which can be as
much, or more, as increases in tax rates.
Property Taxes -
correct answer ✅Are primarily used by local government(s) and
include both real property taxes and personal property taxes.
Excise Taxes -
correct answer ✅Are primarily used by the federalgovernment(s)
,C237 - Sec 01 - Federal Taxation Exam
Questions & Answers (Grade A+)
and are imposed on items such as alcohol, tobacco, telephone
usage, and other goods.
Sales Taxes -
correct answer ✅Are primarily used by state and local
government(s) and constitute a major revenue source.
Income Taxes -
correct answer ✅Are the primary domain of the federal and state
government(s) and constitute a major revenue source.
Employment Taxes -
correct answer ✅Are primarily used by the federal and state
government(s) and constitute a major revenue source.
Importance of thorough knowledge of sources of tax law -
correct answer ✅Due to the vast volume of tax law sources, it is
impossible for any person to have recall knowledge of the tax law.
Thus, the ability to understand what the relevant sources of tax law
are, their relative importance, and where to find the sources are
vital to a person working in the tax area.
, C237 - Sec 01 - Federal Taxation Exam
Questions & Answers (Grade A+)
Why is there a need for administrative rulings and court decisions?
-
correct answer ✅The Code contains general language and does
not address the many specific situations and transactions that
occur. To resolve tax questions concerning specific situations,
administrative rulings and court decisions are an integral part of the
income tax law.
Three Congressional Committees for New Tax Bill -
correct answer ✅1. Ways and Means Committee
2. Senate Finance Committee
3. Joint Conference Committee
Importance of Congressional committee reports to tax practitioners
-
correct answer ✅1. To explain the intent of Congress for passing
the new law.
2. To explain the new law before the Treasury Department drafts
regulations on the tax law changes.
The Principal Goal of Tax Planning -
correct answer ✅To maximize a taxpayer's after-tax cash flow, not
just the minimization of taxes due.
