University of Nevada, Las Vegas ACC 602 Introduction to Taxation Test Bank

1. Chapter 1 - Introduction To Taxation Question TF #1
The FICA tax (Medicare component) on wages is progressive since the taxdue increases as wages
increase.

a. True
*b. False


2. Chapter 1 - Introduction To Taxation Question TF #2
The Federal estate and gift taxes are examples of progressive taxes.

*a. True
b. False


3. Chapter 1 - Introduction To Taxation Question TF #3

The Federal excise tax on cigarettes is an example of a proportional
tax.


*a. True
b. False


4. Chapter 1 - Introduction To Taxation Question TF #4
Currently, the Federal income tax is more progressive than it ever hasbeen in the past.

a. True
*b. False


5. Chapter 1 - Introduction To Taxation Question TF #5Federal excise tax is
no longer imposed on jewelry.

*a. True
b. False


6. Chapter 1 - Introduction To Taxation Question TF #6
The tax on hotel occupancy is subject to both Federal and state excisetaxes.

a. True
*b. False


7. Chapter 1 - Introduction To Taxation Question TF #7
The Federal gas-guzzler tax applies only to automobiles manufacturedoverseas and imported into the U.S.

, a. True
*b. False


8. Chapter 1 - Introduction To Taxation Question TF #8
Like the Federal counterpart, the amount of the state excise taxes ongasoline do not vary from state to
state.

a. True
*b. False


9. Chapter 1 - Introduction To Taxation Question TF #9
The states that impose a general sales tax also have a use tax.

*a. True
b. False


10. Chapter 1 - Introduction To Taxation Question TF #10
Sales made by mail order are not exempt from the application of ageneral sales (or use) tax.

*a. True
b. False


11. Chapter 1 - Introduction To Taxation Question TF #11
Two persons who live in the same state but in different counties maynot be subject to the same general
sales tax rate.

*a. True
b. False


12. Chapter 1 - Introduction To Taxation Question TF #12
States impose either a state income tax or a general sales tax, but notboth types of taxes.

a. True
*b. False


13. Chapter 1 - Introduction To Taxation Question TF #13
A safe and easy way for a taxpayer to avoid local and state sales taxes is to have the purchase sent to an
address in another state that leviesno such taxes.

a. True
*b. False


14. Chapter 1 - Introduction To Taxation Question TF #14
The principal objective of the FICA tax is to provide some measure of

,retirement security.

*a. True
b. False


15. Chapter 1 - Introduction To Taxation Question TF #15
Currently, the tax base for the Medicare component of the FICA is not
limited to a dollar amount.

*a. True
b. False


16. Chapter 1 - Introduction To Taxation Question TF #16A parent employs his
twin daughters, age 19, in his sole
proprietorship. The daughters are not subject to FICA coverage.

a. True
*b. False


17. Chapter 1 - Introduction To Taxation Question TF #17
Unlike FICA, FUTA requires that employers comply with state as well asFederal rules.

*a. True
b. False


18. Chapter 1 - Introduction To Taxation Question TF #18
On transfers by death, the Federal government relies on an estate tax,while states use only an inheritance
tax.

a. True
*b. False


19. Chapter 1 - Introduction To Taxation Question TF #19
An inheritance tax is a tax on a decedent’s right to pass property atdeath.

a. True
*b. False


20. Chapter 1 - Introduction To Taxation Question TF #20
One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of
wealth from being accumulated withinthe family unit.

*a. True
b. False

, 21. Chapter 1 - Introduction To Taxation Question TF #21
Under Clint’s will, all of his property passes to either the LutheranChurch or to his wife. No Federal estate
tax will be due on Clint’s death in 2011.

*a. True
b. False


22. Chapter 1 - Introduction To Taxation Question TF #22
Under a state inheritance tax, two heirs, a cousin and a son of thedeceased, would be taxed at the same
rate.

a. True
*b. False


23. Chapter 1 - Introduction To Taxation Question TF #23
The annual exclusion, currently $13,000, is available for gift but notestate tax purposes.

*a. True
b. False


24. Chapter 1 - Introduction To Taxation Question TF #24
In 2011, José, a widower, sells land (fair market value of $100,000) tohis daughter, Linda, for $50,000.
José has made a taxable gift of
$37,000.

*a. True
b. False


25. Chapter 1 - Introduction To Taxation Question TF #25
Julius, a married taxpayer, makes gifts to each of his six children. Amaximum of six annual exclusions
could be allowed as to these gifts.

a. True
*b. False


26. Chapter 1 - Introduction To Taxation Question TF #26
One of the motivations for making a gift is to save on income taxes.

*a. True
b. False


27. Chapter 1 - Introduction To Taxation Question TF #27
Mona inherits her mother’s personal residence, which she converts to afurnished rent house. These
changes should affect the amount of ad