ACCOUNTING
Midterm exam
Taxes and Decision Making
Spring 2022
A
Name: _______________________
To get partial credit you must show
algebraic calculations.
1
, 1. Tax planning is legal. Tax evasion is illegal.
Circle: True False
2. Transferring ownership of an asset to a high tax rate taxpayer that
generates accelerated depreciation deductions that result in an asset being
written down in value faster than its actual decline in economic value is
not an example of tax planning.
Circle: True False
3. It is generally not optimal to invest in assets that bear high explicit tax rates
in either Roth 401k or Ordinary 401k plans.
Circle: True False
4. From a tax standpoint, taxpayers with 0% income tax rate are always better
off making investments in assets that are subject to high implicit tax rates.
Circle: True False
5. The tax average tax burden of an individual can be only imperfectly
estimated using the individual’s average tax rate. This is true in part
because of the presence of implicit taxes.
Circle: True False
2
Midterm exam
Taxes and Decision Making
Spring 2022
A
Name: _______________________
To get partial credit you must show
algebraic calculations.
1
, 1. Tax planning is legal. Tax evasion is illegal.
Circle: True False
2. Transferring ownership of an asset to a high tax rate taxpayer that
generates accelerated depreciation deductions that result in an asset being
written down in value faster than its actual decline in economic value is
not an example of tax planning.
Circle: True False
3. It is generally not optimal to invest in assets that bear high explicit tax rates
in either Roth 401k or Ordinary 401k plans.
Circle: True False
4. From a tax standpoint, taxpayers with 0% income tax rate are always better
off making investments in assets that are subject to high implicit tax rates.
Circle: True False
5. The tax average tax burden of an individual can be only imperfectly
estimated using the individual’s average tax rate. This is true in part
because of the presence of implicit taxes.
Circle: True False
2
