DOWNLOAD THE Test Bank for Pearsons Federal Taxation 2021 Individuals34th E
x x x x x x x x x x x
dition Rupert x
Pearson'sxFederalxTaxationx2021:xComp.,x34ex(Rupert/Anderson)x
ChapterxI1: AnxIntroductionxtoxTaxation
LO1:x HistoryxofxTaxationxinxthexUnitedxStates
1) Thexfederalxincomextaxxisxthexdominantxformxofxtaxationxbyxthexfederalxgovernment.x
Answer:x TRUE
Explanation:x Thexfederalxincomextaxxprovidesxmorexrevenuesxthanxanyxotherxtax.xP
agexRef.:x I:1-2
Objective:x 1
2) ThexSixteenthxAmendmentxtoxthexU.S.xConstitutionxpermitsxthexpassagexofxaxfederalxincomext
axxlaw.
Answer:x TRUE
Explanation:x ThexSixteenthxAmendmentxamendedxthexConstitutionxtoxpermitxtheximpositionxofxan
xincomextax.
PagexRef.:xI:1-
2xObjective:x 1
3) WhenxaxchangexinxthextaxxlawxisxdeemedxnecessaryxbyxCongress,xthexentirexInternalxRevenuexC
odexmustxbexrevised.
Answer:x FALSE
Explanation:x Thexfederalxincomextaxxlawxisxchangedxonxanxincrementalxbasis.xPagex
Ref.:x I:1-3
Objective:x 1
4) Thexlargestxsourcexofxfederalxrevenuesxisxthexcorporatexincomextax.x
Answer:x FALSE
Explanation:x Thexlargestxsourcexisxthexindividualxincomextax.xPag
exRef.:x I:1-3
Objective:x 1
5) Untilxaboutx100xyearsxago,xattemptsxtoximposexaxfederalxincomextaxxwerexruledxunconstitutio
nal.xThexamendmentxtoxthexU.S.xConstitutionxallowingxtheximpositionxofxaxfederalxincomextaxxisxt
he
A) SecondxAmendment.
B) ThirteenthxAmendment.
C) SixteenthxAmendment.
D) NineteenthxAmendment.x
Answer:x C
Explanation:x ThexSixteenthxAmendment,xratifiedxinx1913,xgavexCongressxthexpowerxtoximposexaxfe
deralxincomextax.
PagexRef.:xI:1-
2xObjective:x 1
1
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,DOWNLOAD THE Test Bank for Pearsons Federal Taxation 2021 Individuals34th E
x x x x x x x x x x x
dition Rupert x
6) Thexlargestxsourcexofxrevenuesxforxthexfederalxgovernmentxcomesxfrom
A) individualxincomextaxes.
B) corporatexincomextaxes.
C) SocialxSecurityxandxMedicarextaxesx(FICA).
D) estatexandxgiftxtaxes.
Answer:x A
Explanation:x Thexindividualxincomextaxxhasxprovidedxthexlargestxsourcexofxrevenuesxforxmanyxyears.
PagexRef.:xI:1-
3xObjective:x 1
LO2:x TypesxofxTaxxRatexStructures
1) Axprogressivextaxxratexstructurexisxonexwherexthexratexofxtaxxincreasesxasxthextaxxbasexincreases.x
Answer:x TRUE
Explanation:xUnderxaxprogressivextaxxsystem,xthexratexincreasesxasxthextaxxbasexincreases.xPa
gexRef.:x I:1-4
Objective:x 2
2) Thextermsx"progressivextax"xandx"flatxtax"xarexsynonymous.x
Answer:x FALSE
Explanation:xAxproportional,xnotxprogressive,xtaxxandxflatxtaxxarexsynonymous.xPag
exRef.:x I:1-4
Objective:x 2
3) Axproportionalxtaxxratexisxonexwherexthexratexofxthextaxxisxthexsamexforxallxtaxpayers,xregardlessxo
fxincomexlevels.
Answer:xxx TRUE
Explanation:xAxproportionalxtaxxisxessentiallyxaxflatxtax.x
PagexRef.:x I:1-4
Objective:x 2
4) Regressivextaxxratesxdecreasexasxthextaxxbasexincreases.x
Answer:x TRUE
Explanation:xRegressivexratesxincreasexasxthexbasexdecreases.xPag
exRef.:x I:1-5
Objective:x 2
5) Thexmarginalxtaxxratexisxusefulxinxtaxxplanningxbecausexitxmeasuresxthextaxxeffectxofxaxproposedxtr
ansaction.
Answer:x TRUE
Explanation:xThexmarginalxratexappliesxtoxthexplannedxadditionxtoxincomexorxreductionxtoxincome.
PagexRef.:xI:1-
5xObjective:x 2
2
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,DOWNLOAD THE Test Bank for Pearsons Federal Taxation 2021 Individuals34th E
x x x x x x x x x x x
dition Rupert x
6) Axtaxpayer'sxaveragextaxxratexisxthextaxxratexappliedxtoxanxincrementalxamountxofxtaxablexi
ncomexthatxisxaddedxtoxthextaxxbase.
Answer:x FALSE
Explanation:xThexmarginalxtaxxratexisxthextaxxratexappliedxtoxanxincrementalxamountxofxtaxablexinco
me.
PagexRef.:xI:1-
5xObjective:x 2
7) Ifxaxtaxpayer'sxtotalxtaxxliabilityxisx$30,000,xtaxablexincomexisx$100,000,xandxeconomicxincomexi
sx$120,000,xthexaveragextaxxratexisx30xpercent.
Answer:xxx TRUE
Explanation:x Thexaveragexratexequalsxthextaxxliabilityxdividedxbyxthextaxablexincome.xPag
exRef.:x I:1-5
Objective:x 2
8) Ifxaxtaxpayer'sxtotalxtaxxliabilityxisx$4,000,xtaxablexincomexisx$20,000,xandxtotalxeconomicxi
ncomexisx$40,000,xthenxthexeffectivextaxxratexisx20xpercent.
Answer:x FALSE
Explanation:xThexeffectivexratexwouldxbex$4,000/$40,000x=x10xpercent.xPag
exRef.:x I:1-6
Objective:x 2
9) Arthurxpaysxtaxxofx$5,000xonxtaxablexincomexofx$50,000xwhilextaxpayerxBarbaraxpaysxtaxxof
$12,000xonx$120,000.xThextaxxisxa
A) progressivextax.
B) proportionalxtax.
C) regressivextax.
D) Nonexofxthexabove.
Answer:x B
Explanation:x Thextaxxratexisxproportionalxbecausexthex10%xtaxxratexappliesxtoxbothxtaxpayersxregardle
ssxofxtheirxincomexlevel.
PagexRef.:xI:1-4;xExamplexI:1-
3xObjective:x 2
10) Whichxofxthexfollowingxtaxesxisxprogressive?
A) salesxtax
B) excisextax
C) propertyxtax
D) federalxincomextaxx
Answer:x D
Explanation:x Federalxincomextaxxratesxincreasexasxaxtaxpayer'sxtaxablexincomexrises.xPag
exRef.:x I:1-4;xTopicxReviewxI:1-1
Objective:x 2
3
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, DOWNLOAD THE Test Bank for Pearsons Federal Taxation 2021 Individuals34th E
x x x x x x x x x x x
dition Rupert x
11) Whichxofxthexfollowingxtaxesxisxproportional?
A) giftxtax
B) incomextax
C) salesxtax
D) FederalxInsurancexContributionsxActx(FICA)x
Answer:x C
Explanation:xAxsalesxtaxxisxassessedxatxaxfixedxratexofxthexpurchasexamount,xbasedxonxstatexandxloc
alxlaw.
PagexRef.:xI:1-4;xTopicxReviewxI:1-
1xObjective:x 2
12) Whichxofxthexfollowingxtaxesxisxregressive?
A) FederalxInsurancexContributionsxActx(FICA)
B) excisextax
C) propertyxtax
D) giftxtaxx
Answer:x A
Explanation:x Forxupperxincomexwagexearners,xthexSocialxSecurityxtaxxceasesxatxaxmaximumxwagex
base.xForx2020,xwagesxoverx$137,700xarexnotxsubjectxtoxthexSocialxSecurityxtax.
PagexRef.:xI:1-5;xTopicxReviewxI:1-
1xObjective:x 2
13) Thexcorporatextaxxratexis
A) progressive.
B) regressive.
C) proportional.
D) nonexofxthexabove.
Answer:x C
Explanation:xThexcorporatextaxxratexisxaxflatx21xpercent.xP
agexRef.:x I:1-5
Objective:x 2
14) Sarahxcontributesx$25,000xtoxaxchurch.xSarah'sxmarginalxtaxxratexisx35%xwhilexherxaveragextaxxr
atexisx25%.xAfterxconsideringxherxtaxxsavings,xSarah'sxcontributionxcosts
A)x$6,250.
B)x$8,750.
C)x$16,250.
D)x$18,750.
Answer:xxx C
Explanation:x[$25,000x×x(100%x-
x35%)]x=x$16,250x PagexRef.:x I:1-5;xExamplexI:1-4
Objective:x 2
4
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x x x x x x x x x x x
dition Rupert x
Pearson'sxFederalxTaxationx2021:xComp.,x34ex(Rupert/Anderson)x
ChapterxI1: AnxIntroductionxtoxTaxation
LO1:x HistoryxofxTaxationxinxthexUnitedxStates
1) Thexfederalxincomextaxxisxthexdominantxformxofxtaxationxbyxthexfederalxgovernment.x
Answer:x TRUE
Explanation:x Thexfederalxincomextaxxprovidesxmorexrevenuesxthanxanyxotherxtax.xP
agexRef.:x I:1-2
Objective:x 1
2) ThexSixteenthxAmendmentxtoxthexU.S.xConstitutionxpermitsxthexpassagexofxaxfederalxincomext
axxlaw.
Answer:x TRUE
Explanation:x ThexSixteenthxAmendmentxamendedxthexConstitutionxtoxpermitxtheximpositionxofxan
xincomextax.
PagexRef.:xI:1-
2xObjective:x 1
3) WhenxaxchangexinxthextaxxlawxisxdeemedxnecessaryxbyxCongress,xthexentirexInternalxRevenuexC
odexmustxbexrevised.
Answer:x FALSE
Explanation:x Thexfederalxincomextaxxlawxisxchangedxonxanxincrementalxbasis.xPagex
Ref.:x I:1-3
Objective:x 1
4) Thexlargestxsourcexofxfederalxrevenuesxisxthexcorporatexincomextax.x
Answer:x FALSE
Explanation:x Thexlargestxsourcexisxthexindividualxincomextax.xPag
exRef.:x I:1-3
Objective:x 1
5) Untilxaboutx100xyearsxago,xattemptsxtoximposexaxfederalxincomextaxxwerexruledxunconstitutio
nal.xThexamendmentxtoxthexU.S.xConstitutionxallowingxtheximpositionxofxaxfederalxincomextaxxisxt
he
A) SecondxAmendment.
B) ThirteenthxAmendment.
C) SixteenthxAmendment.
D) NineteenthxAmendment.x
Answer:x C
Explanation:x ThexSixteenthxAmendment,xratifiedxinx1913,xgavexCongressxthexpowerxtoximposexaxfe
deralxincomextax.
PagexRef.:xI:1-
2xObjective:x 1
1
Copyrightx©x2021xPearsonxEducation,xInc.
mynursytest.store
,DOWNLOAD THE Test Bank for Pearsons Federal Taxation 2021 Individuals34th E
x x x x x x x x x x x
dition Rupert x
6) Thexlargestxsourcexofxrevenuesxforxthexfederalxgovernmentxcomesxfrom
A) individualxincomextaxes.
B) corporatexincomextaxes.
C) SocialxSecurityxandxMedicarextaxesx(FICA).
D) estatexandxgiftxtaxes.
Answer:x A
Explanation:x Thexindividualxincomextaxxhasxprovidedxthexlargestxsourcexofxrevenuesxforxmanyxyears.
PagexRef.:xI:1-
3xObjective:x 1
LO2:x TypesxofxTaxxRatexStructures
1) Axprogressivextaxxratexstructurexisxonexwherexthexratexofxtaxxincreasesxasxthextaxxbasexincreases.x
Answer:x TRUE
Explanation:xUnderxaxprogressivextaxxsystem,xthexratexincreasesxasxthextaxxbasexincreases.xPa
gexRef.:x I:1-4
Objective:x 2
2) Thextermsx"progressivextax"xandx"flatxtax"xarexsynonymous.x
Answer:x FALSE
Explanation:xAxproportional,xnotxprogressive,xtaxxandxflatxtaxxarexsynonymous.xPag
exRef.:x I:1-4
Objective:x 2
3) Axproportionalxtaxxratexisxonexwherexthexratexofxthextaxxisxthexsamexforxallxtaxpayers,xregardlessxo
fxincomexlevels.
Answer:xxx TRUE
Explanation:xAxproportionalxtaxxisxessentiallyxaxflatxtax.x
PagexRef.:x I:1-4
Objective:x 2
4) Regressivextaxxratesxdecreasexasxthextaxxbasexincreases.x
Answer:x TRUE
Explanation:xRegressivexratesxincreasexasxthexbasexdecreases.xPag
exRef.:x I:1-5
Objective:x 2
5) Thexmarginalxtaxxratexisxusefulxinxtaxxplanningxbecausexitxmeasuresxthextaxxeffectxofxaxproposedxtr
ansaction.
Answer:x TRUE
Explanation:xThexmarginalxratexappliesxtoxthexplannedxadditionxtoxincomexorxreductionxtoxincome.
PagexRef.:xI:1-
5xObjective:x 2
2
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,DOWNLOAD THE Test Bank for Pearsons Federal Taxation 2021 Individuals34th E
x x x x x x x x x x x
dition Rupert x
6) Axtaxpayer'sxaveragextaxxratexisxthextaxxratexappliedxtoxanxincrementalxamountxofxtaxablexi
ncomexthatxisxaddedxtoxthextaxxbase.
Answer:x FALSE
Explanation:xThexmarginalxtaxxratexisxthextaxxratexappliedxtoxanxincrementalxamountxofxtaxablexinco
me.
PagexRef.:xI:1-
5xObjective:x 2
7) Ifxaxtaxpayer'sxtotalxtaxxliabilityxisx$30,000,xtaxablexincomexisx$100,000,xandxeconomicxincomexi
sx$120,000,xthexaveragextaxxratexisx30xpercent.
Answer:xxx TRUE
Explanation:x Thexaveragexratexequalsxthextaxxliabilityxdividedxbyxthextaxablexincome.xPag
exRef.:x I:1-5
Objective:x 2
8) Ifxaxtaxpayer'sxtotalxtaxxliabilityxisx$4,000,xtaxablexincomexisx$20,000,xandxtotalxeconomicxi
ncomexisx$40,000,xthenxthexeffectivextaxxratexisx20xpercent.
Answer:x FALSE
Explanation:xThexeffectivexratexwouldxbex$4,000/$40,000x=x10xpercent.xPag
exRef.:x I:1-6
Objective:x 2
9) Arthurxpaysxtaxxofx$5,000xonxtaxablexincomexofx$50,000xwhilextaxpayerxBarbaraxpaysxtaxxof
$12,000xonx$120,000.xThextaxxisxa
A) progressivextax.
B) proportionalxtax.
C) regressivextax.
D) Nonexofxthexabove.
Answer:x B
Explanation:x Thextaxxratexisxproportionalxbecausexthex10%xtaxxratexappliesxtoxbothxtaxpayersxregardle
ssxofxtheirxincomexlevel.
PagexRef.:xI:1-4;xExamplexI:1-
3xObjective:x 2
10) Whichxofxthexfollowingxtaxesxisxprogressive?
A) salesxtax
B) excisextax
C) propertyxtax
D) federalxincomextaxx
Answer:x D
Explanation:x Federalxincomextaxxratesxincreasexasxaxtaxpayer'sxtaxablexincomexrises.xPag
exRef.:x I:1-4;xTopicxReviewxI:1-1
Objective:x 2
3
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, DOWNLOAD THE Test Bank for Pearsons Federal Taxation 2021 Individuals34th E
x x x x x x x x x x x
dition Rupert x
11) Whichxofxthexfollowingxtaxesxisxproportional?
A) giftxtax
B) incomextax
C) salesxtax
D) FederalxInsurancexContributionsxActx(FICA)x
Answer:x C
Explanation:xAxsalesxtaxxisxassessedxatxaxfixedxratexofxthexpurchasexamount,xbasedxonxstatexandxloc
alxlaw.
PagexRef.:xI:1-4;xTopicxReviewxI:1-
1xObjective:x 2
12) Whichxofxthexfollowingxtaxesxisxregressive?
A) FederalxInsurancexContributionsxActx(FICA)
B) excisextax
C) propertyxtax
D) giftxtaxx
Answer:x A
Explanation:x Forxupperxincomexwagexearners,xthexSocialxSecurityxtaxxceasesxatxaxmaximumxwagex
base.xForx2020,xwagesxoverx$137,700xarexnotxsubjectxtoxthexSocialxSecurityxtax.
PagexRef.:xI:1-5;xTopicxReviewxI:1-
1xObjective:x 2
13) Thexcorporatextaxxratexis
A) progressive.
B) regressive.
C) proportional.
D) nonexofxthexabove.
Answer:x C
Explanation:xThexcorporatextaxxratexisxaxflatx21xpercent.xP
agexRef.:x I:1-5
Objective:x 2
14) Sarahxcontributesx$25,000xtoxaxchurch.xSarah'sxmarginalxtaxxratexisx35%xwhilexherxaveragextaxxr
atexisx25%.xAfterxconsideringxherxtaxxsavings,xSarah'sxcontributionxcosts
A)x$6,250.
B)x$8,750.
C)x$16,250.
D)x$18,750.
Answer:xxx C
Explanation:x[$25,000x×x(100%x-
x35%)]x=x$16,250x PagexRef.:x I:1-5;xExamplexI:1-4
Objective:x 2
4
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