LSU ACCT 3221 Chapter 1 | Questions with Verified Answers

LSU ACCT 3221 Chapter 1 | Questions with Verified Answers True/False: The U.S. individual income tax system is an example of a progressive tax rate structure. True True/False: A proportional tax rate structure is a tax where the tax rate remains at the same rate regardless of the tax base. True True/False: Under a flat tax, the marginal tax rate and the average tax rate are different. False True/False: State and local taxes levied on either property or sales are examples of progressive taxes. False True/False: With a regressive tax, the tax rate decreases as the tax base gets larger. True True/False: The marginal tax rate is the total tax liability divided by the taxable income. False True/False: The average tax rate is the total tax liability divided by the taxable income. True True/False: All individual income tax returns follow the structure of the simplified tax formula. True True/False: The average tax rate is always smaller than the marginal tax rate. False True/False: At high levels of taxable income, the average tax rate and the marginal tax rate will be the same. False True/False: Wages, salaries, and tips are compensation for services rendered. However, commissions, bonuses, and severance pay are not taxable. False True/False: Federal unemployment compensation benefits are not taxable. False True/False: A single taxpayer cannot file a Form 1040EZ if she is age 65 or older. True True/False: One of the criteria to file a Form 1040EZ is that the total taxable income of the taxpayer cannot exceed $100,000. True True/False: Employers report wage income to employees on a Form W-3. False True/False: Individuals who file a Form 1040EZ will determine their tax liability with reference to a tax rate schedule. False True/False: Taxpayers normally pay their tax liability when they file their income tax return. False True/False: The amount of tax liability is affected by the filing status of the taxpayer. True True/False: The tax liability of a single individual with taxable income of $31,689 is $4,334. True True/False: Tax liability is calculated using income before permitted deductions. Permitted deductions are then subtracted from the tax liability. False True/False: There are two types of primary tax authority: statutory and judicial. False True/False: Typically, federal tax legislation is introduced in the Senate Finance Committee. False True/False: IRS Regulations are by far the strongest administrative authority. True True/False: A Private Letter Ruling is tax authority only to the taxpayer to whom it is issued. True True/False: One major disadvantage the taxpayer has when filing a petition with the Tax Court is that the IRS's proposed tax assessment must be paid prior to trial. False A tax rate that increases as the tax base increases is an example of what kind of tax rate structure? A. Progressive. B. Proportional. C. Regressive. D. Recessive. A tax rate that remains the same as the tax base increases is an example of what kind of tax rate structure? A. Progressive. B. Proportional. C. Regressive. D. Recessive. A tax rate that increases as the tax base decreases is an example of what kind of tax rate structure? A. Progressive. B. Proportional. C. Regressive. D. Recessive. A tax rate structure where the tax rate remains at the same rate regardless of the tax base is: A. A progressive rate structure. B. A proportional rate structure. C. A regressive rate structure. D. None of the above. Which of the following is an example of a regressive tax? A. Federal income tax. B. State and local taxes levied on property. C. Sales tax. D. Social security tax. The federal income tax is an example of a: A. Progressive rate structure. B. Proportional rate structure. C. Regressive rate structure. D. Flat tax structure Jake earned $15,000 and paid $1,500 of income tax, while Jill earned $40,000 and paid $3,000 of income tax. The structure of the tax their income is subject to is: A. Progressive. B. Proportional. C. Regressive. D. Flat. Jordan and Paul, a married couple, have taxable income of $48,025 which is taxed as follows: $16,700 x 10% = $1670.00 ($48,025 - $16,700) x 15% = $4698.75 Total tax liability = $6368.75 Their marginal tax rate is: A. 0%. B. 10%. C. 13.3%. D. 15%. Jordan and Paul, a married couple, have taxable income of $48,025 which is taxed as follows: $16,700 x 10% = $1670.00 ($48,025 - $16,700) x 15% = $4698.75 Total tax liability = $6368.75 Their average tax rate is: A. 0%. B. 10%. C. 13.3%. D. 15%. Which statement is correct with respect to marginal and average tax rates under a progressive tax structure? A. At very high levels of taxable income, a taxpayer's marginal and average tax rates will be the same. B. At very low levels of taxable income, a taxpayer's marginal and average tax rates will be the same. C. For most taxpayers, the average tax rate is larger than the marginal tax rate. D. Generalizations cannot be made. The question can only be answered with reference to the tax situation of a specific taxpayer. With respect to the income tax formula, which of the following statements is correct? A. The simplified income tax formula is only applicable to taxpayers with taxable income less than $100,000.