Solutions for South-Western Federal Taxation 2025 Individual Income Taxes, 45th Edition Young.pdf

TEST BANK FOR
m m


South-Western Federal Taxation 2025 Individual Income Taxes, 45th Edition
m m m m m m m m

Chapterm1-20

Name: Class: Date:

chapter m1



Indicatemwhethermthemstatementmismtruemormfalse.

1. If mamspecialmagentmbecomesminvolvedmin mthemauditmofmamreturn,mthismindicatesmthatmthemIRSmsuspectsmthatmfraud misminvolved.
a. True
b. False

2. To mlessen mormeliminatemthemeffectmofmmultiplemtaxation,mamtaxpayermwhomismsubjectmto mbothmforeignmandmU.S.mincomem
taxesmon mthemsamemincome mismallowed meithermamdeduction mormamcreditmformthemforeign mtax mpaid.
a. True
b. False

3. On moccasion,mCongressmhasmtomenactmlegislation mthatmclarifiesmthemtaxmlawmin mordermtomchange mamresultmreachedmby mthe
mU.S. mSupreme mCourt.

a. True
b. False

4. No mstatemmay mofferman mincomemtax mamnesty mprogrammmoremthan monce.
a. True
b. False

5. When minterestmismcharged mon mamdeficiency, many mpartmof mammonth mcountsmasmamfullmmonth.
a. True
b. False

6. Stealth mtaxesmhavemthemeffectmof mgeneratingmadditionalmtaxesmfrommallmtaxpayers.
a. True
b. False

7. Themamountmof mamtaxpayer’smitemized mdeductionsmwillmincrease mthemchancemof mbeingmaudited mby mthemIRS.
a. True
b. False

8. Themmajority mof mIRSmauditsmaremhandled mby mcorrespondence.
a. True
b. False

9. Amsafemand measymwaymformamtaxpayermtomavoid mlocalmandmstatemsalesmtaxesmismto mmakemthempurchasemin mamstatemthatmlev
iesmno msuch mtaxes.
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, a. True
b. False

10. Themcivilmfraud mpenalty mcan mentailmlargemfinesmand mpossible mincarceration.
a. True
b. False

11. Asmammattermofmadministrativemconvenience,mthemIRSmwould mprefermto mhavemCongressmdecrease m(rathermthanmincrease
)mthemamountmof mthemstandard mdeduction mallowed mto mindividualmtaxpayers.
a. True
b. False

12. To mmitigatemthemeffectmofmthemannualmaccountingmperiod mconcept,mthemtaxmlawmpermitsmthemcarryforwardmofmex
cessmcharitable mcontributionsmof mamparticularmyearmto mothermyears.
a. True
b. False

13. TheremismamFederalmexcisemtax mon mhotelmoccupancy.
a. True
b. False

14. Currently,mthemtax mbasemformthemSocialmSecurity mcomponentmof mthemFICAmismnotmlimited mto mamdollarmamount.
a. True
b. False

15. Currently,mthemFederalmcorporate mincome mtax mismlessmprogressive mthan mthemindividualmincomemtax.
a. True
b. False

16. ThemFederalmexcisemtax mon mgasolinemisman mexample mof mamproportionalmtax.
a. True
b. False

17. Themtax mlawmprovidesmvariousmtaxmcredits,mdeductions,mand mexclusionsmthatmaremdesignedmtomencouragemtaxpayersmto mo
btain madditionalmeducation.mThese mprovisionsmcan mbemjustified mon mboth meconomic mand mequity mgrounds.
a. True
b. False

18. If mmoremIRSmauditsmaremproducingmamhighermnumbermofmnomchangemresults,mthismindicatesmincreased mcompliancemon mthe
mpartmof mtaxpayers.

a. True
b. False

19. In mpreparingmamtax mreturn,mallmquestionsmon mthemreturn mmustmbemanswered.
a. True
b. False

20. If mamtaxpayermfilesmearlym(i.e.,mbeforemthemduemdatemofmthemreturn),mthemstatutemofmlimitationsmonmassessmentsmbeginsmo
n mthemdatemthemreturn mismfiled.

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, a. True
b. False

21. Even mthough mamclientmrefusesmto mcorrectman merrormon mampastmreturn,mitmmay mbempossiblemformampractitionermto mconti
nuemto mprepare mreturnsmformthemclient.
a. True
b. False

22. ThemformulamformthemFederalmincome mtax mon mcorporationsmismthemsamemasmthatmapplicable mto mindividuals.
a. True
b. False

23. Themannualmexclusion, mcurrently m$15,000,mismavailable mformgiftmand mestatemtax mpurposes.
a. True
b. False

24. Onemof mthemmajormreasonsmformthemenactmentmofmthemFederalmestatemtax mwasmto mpreventmlargemamountsmofmwealthm
frommbeingmaccumulated mwithin mamfamily munit.
a. True
b. False

25. Undermstatemamnesty mprograms,mallmdelinquentmand munpaid mincome mtaxesmaremforgiven.
a. True
b. False

26. Formstatemincomemtax mpurposes, mammajority mof mstatesmallowmamdeduction mformFederalmincome mtaxes.
a. True
b. False

27. ThemIRSmismrequired mto mredetermine mtheminterestmratemon munderpaymentsmand moverpaymentsmoncemamyear.
a. True
b. False

28. Amstatemincome mtaxmcanmbemimposedmonmnonresidentmtaxpayersmwho mearn mincome mwithin mthemstatemon man mitinerantmbasis.
a. True
b. False

29. Ammajormadvantage mof mamflatmtax mtypemof mincome mtax mismitsmsimplicity.
a. True
b. False

30. Variousmtaxmprovisionsmencouragemthemcreationmofmcertain mtypesmofmretirementmplans.mSuch mprovisionsmcan mbemjustifie
d mon mboth meconomic mand msocialmgrounds.
a. True
b. False

31. Onemof mthemmotivationsmformmakingmamgiftmismto msavemon mincome mtaxes.
a. True
b. False
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, 32. Somemstatesmusemtheirmstatemincomemtax mreturn masmammeansmof mcollectingmunpaid msalesmand musemtaxes.
a. True
b. False

33. Amcalendarmyearmtaxpayermfilesmhism2019mFederalmincomemtax mreturn mon mMarchm4,m2020.mThemreturn mreflectsman
moverpaymentmofm$6,000,mandmthe mtaxpayermrequests ma mrefundmofmthismamount. mThe mrefund mismpaid mon mMaym16, m202

0.mThemrefund mneed mnotminclude minterest.
a. True
b. False

34. When mamstatemdecouplesmfrommamFederalmtax mprovision,mitmmeansmthatmthismprovisionmwillmnotmapplymformstatemincom
emtax mpurposes.
a. True
b. False

35. Formthemnegligence mpenaltymto mapply,mthemunderpaymentmmustmbemcaused mbymintentionalmdisregard mofmrulesm
and mregulationsmwithoutmintentmto mdefraud.
a. True
b. False

36. AmCPAmfirmmin mCaliforniamsendsmmany mofmitsmlessmcomplexmtaxmreturnsmtombemprepared mbymamgroup mofmaccountantsmin m
India.mIf mcertain mproceduresmaremfollowed,mthismoutsourcingmof mtax mreturn mpreparation mismproper.
a. True
b. False

37. Themamountmof mthemstatemexcise mtaxesmon mgasoline mvariesmfrommstatemto mstate.
a. True
b. False

38. Amprovisionmin mthemlawmthatmcompelsmaccrualmbasismtaxpayersmto mpay mamtax mon mprepaid mincomemin mthemyearmreceived mand
notmwhen mearned mismconsistentmwith mgenerally maccepted maccountingmprinciples.
a. True
b. False

39. An moffice mauditmby mthemIRSmtakesmplacematmthemofficemof mthemtaxpayer.
a. True
b. False

40. Themad mvaloremmtaxmonmpersonalmusempersonalty mismmoremoften mavoided mbymtaxpayersmthanmthemad mvaloremmtax monmbus
inessmusempersonalty.
a. True
b. False

41. Themvaluemadded mtax m(VAT)mhasmnotmhad mwidemacceptance min mtheminternationalmcommunity.
a. True
b. False

42. Jason’smbusinessmwarehousemismdestroyedmbymfire.mBecausemtheminsurancemproceedsmexceedmthembasismofmthemproperty,
ma mgain mresults. mIfmJason mshortlymreinvests mthe mproceeds minma mnew mwarehouse, mnomgainmismrecognizedmdue mto mthemapplicatio


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