Tax Exam 1 With Complete Solutions 2024

Tax Exam 1 With Complete Solutions 2024what decisions to businesses consider in regards to taxes - correct answer-organizational form, location, acquisition structures, employee compensation, capital structure, rent or ownership of property and equipment, distribution of profits why do politicians care about taxes - correct answer-distinguishing feature, voters must have basic knowledge why do individuals care about taxes - correct answer-tax deductions for home owning, retirement planning what is a tax - correct answer-a payment required by a government that is unrelated to any specific benefit or service received from the government key components of a tax - correct answer-payment required, payment imposed by government agency, payment not tied directly to benefit received by the taxpayer is a payment for a drivers license a tax - correct answer-no is a payment for required (by government) house appraisal a tax - correct answer-no is a payment for hotel use of 1% of bill to pay for city projects a tax - correct answer-yes is a payment for rental car use of 3% of bill to pay for the roads a tax - correct answer-yes tax rate - correct answer-level of taxes imposed on the tax base and is usually expressed as a percentage tax base - correct answer-defines what is actually taxed and is usually expressed in monetary terms tax calculation equation - correct answer-tax = tax base x tax rate marginal tax rate - correct answer-the tax rate that applies to the next additional increment of a taxpayer's taxable income average tax rate - correct answer-the taxpayer's average level of taxation on each dollar of taxable income effective tax rate - correct answer-the taxpayer's average rate of taxation on each dollar of total income (both taxable and nontaxable) proportional tax rate (flat tax) - correct answer-imposes a constant tax rate throughout the tax base progressive tax rate - correct answer-imposes an increasing marginal tax rate as the tax base increases regressive tax rate - correct answer-imposes a decreasing marginal tax rate as the tax base increases types of taxes - correct answer-federal, state and local, implicit federal taxes - correct answer-income, employment and unemployment, excise, transfer state and local taxes - correct answer-sales and use, property, income, excise income taxes (federal) - correct answer-represent approximately 56.5% of all tax revenues collected in the US; levied on individuals, corporations, estates, and trusts employment and unemployment taxes - correct answer-second largest group of taxes imposed by the US government employment taxes - correct answer-include the OASDI (social security tax) and the MHI tax (Medicare tax) unemployment taxes - correct answer-fund temporary unemployment benefits for individuals terminated from their jobs without cause excise taxes (federal) - correct answer-third largest group of taxes imposed by the US government; levied on the quantity of products sold estate and gift taxes - correct answer-levied on the fair market values of wealth transfers upon death or by gift sales and use taxes - correct answer-tax base for sales tax is the retail sales of goods and some services; tax base for the use tax is the retail price of goods owned, possessed, or consumed within a state that were not purchased within the state property taxes - correct answer-ad valorem taxes; real property taxes consists of taxes on land and structures permanently attached to land; personal property taxes includes taxes on all other types of property, both tangible and intangibe ad valorem tax - correct answer-tax base is the fair market value of the property income taxes (state) - correct answer-calculations largely conform to the federal taxable income calculations