, TESTBANK for South-Western Federal Taxation
2024 Individual Income Taxes , 47th Edition James
C. Young
Notes
1- The file is chapter after chapter.
2- We have shown you few pages sample.
3- The file contains all Appendix and Excel
sheet if it exists.
4- We have all what you need, we make
update at every time. There are many new
editions waiting you.
5- If you think you purchased the wrong file
You can contact us at every time, we can
replace it with true one.
Our email:
,Name: Class: Date:
Chapter 01: An Introduction to Taxation and Understanding the Federal Tax Law
True / False
1. Because the law is complicated, most individual taxpayers are not able to complete their Federal income tax returns
without outside assistance.
a. True
b. False
ANSWER: True
2. The ratification of the Sixteenth Amendment to the U.S. Constitution was necessary to validate the Federal income tax
on corporations.
a. True
b. False
ANSWER: False
3. Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals.
a. True
b. False
ANSWER: False
4. The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution) levied tax
rates from a low of 1% to a high of 6%.
a. True
b. False
ANSWER: True
5. The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.
a. True
b. False
ANSWER: True
6. The pay-as-you-go feature of the Federal income tax on individuals conforms to Adam Smith’s canon (principle) of
certainty.
a. True
b. False
ANSWER: False
7. The Medicare component of the FICA tax (1.45% on wages) is progressive since the tax due increases as wages
increase.
a. True
b. False
ANSWER: False
8. The Federal estate and gift taxes are examples of progressive rate taxes.
a. True
b. False
Copyright Cengage Learning. Powered by Cognero. Page 1
,Name: Class: Date:
Chapter 01: An Introduction to Taxation and Understanding the Federal Tax Law
ANSWER: True
9. The Federal excise tax on gasoline has a proportional effect on all taxpayers (that is, neither progressive or regressive).
a. True
b. False
ANSWER: False
10. Currently, the Federal corporate income tax is less progressive than the individual income tax.
a. True
b. False
ANSWER: True
11. Mona inherits her mother’s personal residence, which she converts to a furnished rental house. These changes should
affect the amount of ad valorem property taxes levied on the properties.
a. True
b. False
ANSWER: True
12. A fixture will be subject to the ad valorem tax on personalty rather than the ad valorem tax on realty.
a. True
b. False
ANSWER: False
13. Even if property tax rates are not changed, the amount of ad valorem taxes imposed on realty may not remain the
same.
a. True
b. False
ANSWER: True
14. The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business
use personalty.
a. True
b. False
ANSWER: True
15. An excise tax is often used to try to influence behavior.
a. True
b. False
ANSWER: True
16. There is a Federal excise tax on hotel occupancy.
a. True
b. False
ANSWER: False
Copyright Cengage Learning. Powered by Cognero. Page 2
,Name: Class: Date:
Chapter 01: An Introduction to Taxation and Understanding the Federal Tax Law
17. The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the United States.
a. True
b. False
ANSWER: False
18. The amount of the state excise taxes on gasoline varies from state to state.
a. True
b. False
ANSWER: True
19. Not all of the states that impose a general sales tax also have a use tax.
a. True
b. False
ANSWER: False
20. Sales made over the internet are not exempt from the application of a general sales (or use) tax.
a. True
b. False
ANSWER: True
21. Two persons who live in the same state but in different counties may not be subject to the same general sales tax rate.
a. True
b. False
ANSWER: True
22. States impose either a state income tax or a general sales tax, but not both types of taxes.
a. True
b. False
ANSWER: False
23. A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no
such taxes.
a. True
b. False
ANSWER: False
24. On transfers by death, the Federal government relies on an estate tax, while states may impose an estate tax, an
inheritance tax, both taxes, or neither tax.
a. True
b. False
ANSWER: True
25. An inheritance tax is a tax on a decedent’s right to pass property at death.
a. True
b. False
Copyright Cengage Learning. Powered by Cognero. Page 3
,Name: Class: Date:
Chapter 01: An Introduction to Taxation and Understanding the Federal Tax Law
ANSWER: False
26. One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from
being accumulated within a family unit.
a. True
b. False
ANSWER: True
27. Under Clint’s will, all of his property passes to either the Lutheran Church or to his wife. No Federal estate tax will be
due on Clint’s death.
a. True
b. False
ANSWER: True
28. Under the usual state inheritance tax, two heirs, a cousin and a son of the deceased, would not be taxed at the same
rate.
a. True
b. False
ANSWER: True
29. The annual exclusion, currently $17,000, is available for gift and estate tax purposes.
a. True
b. False
ANSWER: False
30. In 2023, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has not
made a taxable gift.
a. True
b. False
ANSWER: False
31. Julius, a married taxpayer, makes gifts to each of his six children. A maximum of twelve annual exclusions could be
allowed as to these gifts.
a. True
b. False
ANSWER: True
32. One of the motivations for making a gift is to save on income taxes.
a. True
b. False
ANSWER: True
33. The formula for the Federal income tax on corporations is the same as that applicable to individuals.
a. True
b. False
Copyright Cengage Learning. Powered by Cognero. Page 4
,Name: Class: Date:
Chapter 01: An Introduction to Taxation and Understanding the Federal Tax Law
ANSWER: False
34. A state income tax can be imposed on nonresident taxpayers who earn income within the state on an itinerant basis.
a. True
b. False
ANSWER: True
35. For state income tax purposes, some states allow a credit for dependents rather than a deduction.
a. True
b. False
ANSWER: True
36. Some states use their state income tax return as a means of collecting unpaid use tax.
a. True
b. False
ANSWER: True
37. No state may offer an income tax amnesty program more than once.
a. True
b. False
ANSWER: False
38. For Federal income tax purposes, there never has been a general amnesty period.
a. True
b. False
ANSWER: True
39. Under state amnesty programs, all delinquent and unpaid income taxes are forgiven.
a. True
b. False
ANSWER: False
40. When a state decouples from a Federal tax provision, it means that this provision will not apply for state income tax
purposes.
a. True
b. False
ANSWER: True
41. The principal objective of the FUTA tax is to provide some measure of retirement security.
a. True
b. False
ANSWER: False
42. Currently, the tax base for the Social Security component of the FICA is not limited to a dollar amount.
a. True
Copyright Cengage Learning. Powered by Cognero. Page 5
,Name: Class: Date:
Chapter 01: An Introduction to Taxation and Understanding the Federal Tax Law
b. False
ANSWER: False
43. A parent employs her twin daughters, age 17, in her sole proprietorship. The daughters are not subject to FICA
coverage.
a. True
b. False
ANSWER: True
44. Unlike FICA, FUTA requires that employers comply with state as well as Federal rules.
a. True
b. False
ANSWER: True
45. A major advantage of a flat tax type of income tax is its simplicity.
a. True
b. False
ANSWER: True
46. The value added tax (VAT) has not had wide acceptance in the international community.
a. True
b. False
ANSWER: False
47. If more IRS audits are producing a higher number of no change results, this indicates increased compliance on the part
of taxpayers.
a. True
b. False
ANSWER: False
48. The amount of a taxpayer’s itemized deductions will increase the chance of being audited by the IRS.
a. True
b. False
ANSWER: True
49. An office audit by the IRS takes place at the office of the taxpayer.
a. True
b. False
ANSWER: False
50. The IRS agent auditing the return will issue an RAR even if the taxpayer owes no additional taxes.
a. True
b. False
ANSWER: True
Copyright Cengage Learning. Powered by Cognero. Page 6
,Name: Class: Date:
Chapter 01: An Introduction to Taxation and Understanding the Federal Tax Law
51. If a special agent becomes involved in the audit of a return, this indicates that the IRS suspects that fraud is involved.
a. True
b. False
ANSWER: True
52. If a taxpayer files early (i.e., before the due date of the return), the statute of limitations on assessments begins on the
date the return is filed.
a. True
b. False
ANSWER: False
53. For omissions from gross income in excess of 25% of that reported, there is no statute of limitations on additional
income tax assessments by the IRS.
a. True
b. False
ANSWER: False
54. If an income tax return is not filed by a taxpayer, there is no statute of limitations on assessments of tax by the IRS.
a. True
b. False
ANSWER: True
55. If fraud is involved, there is no time limit on the assessment of a deficiency by the IRS.
a. True
b. False
ANSWER: True
56. The IRS is required to redetermine the interest rate on underpayments and overpayments once a year.
a. True
b. False
ANSWER: False
57. A calendar year taxpayer files his 2022 Federal income tax return on March 4, 2023. The return reflects an
overpayment of $6,000, and the taxpayer requests a refund of this amount. The refund is paid on May 16, 2023. The
refund need not include interest.
a. True
b. False
ANSWER: True
58. For individual taxpayers, the interest rate for income tax refunds (overpayments) is the same as that applicable to
assessments (underpayments).
a. True
b. False
ANSWER: True
Copyright Cengage Learning. Powered by Cognero. Page 7
, Name: Class: Date:
Chapter 01: An Introduction to Taxation and Understanding the Federal Tax Law
59. During any month in which both the failure to file penalty and the failure to pay penalty apply, the failure to file
penalty is increased by the amount of the failure to pay penalty.
a. True
b. False
ANSWER: False
60. When interest is charged on a deficiency, any part of a month counts as a full month.
a. True
b. False
ANSWER: False
61. For the negligence penalty to apply, the underpayment must be caused by intentional disregard of rules and
regulations without intent to defraud.
a. True
b. False
ANSWER: True
62. Upon audit by the IRS, Faith is assessed a deficiency of $40,000 of which $25,000 is attributable to negligence. The
20% negligence penalty will apply to $25,000.
a. True
b. False
ANSWER: True
63. If a tax deficiency is attributable to fraud, the negligence penalty will not be imposed.
a. True
b. False
ANSWER: True
64. The civil fraud penalty can entail large fines and possible incarceration.
a. True
b. False
ANSWER: False
65. Even though a client refuses to correct an error on a past return, it may be possible for a practitioner to continue to
prepare returns for the client.
a. True
b. False
ANSWER: True
66. In preparing an income tax return, the use of a client’s estimates is not permitted.
a. True
b. False
ANSWER: False
67. In preparing a tax return, all questions on the return must be answered.
Copyright Cengage Learning. Powered by Cognero. Page 8
2024 Individual Income Taxes , 47th Edition James
C. Young
Notes
1- The file is chapter after chapter.
2- We have shown you few pages sample.
3- The file contains all Appendix and Excel
sheet if it exists.
4- We have all what you need, we make
update at every time. There are many new
editions waiting you.
5- If you think you purchased the wrong file
You can contact us at every time, we can
replace it with true one.
Our email:
,Name: Class: Date:
Chapter 01: An Introduction to Taxation and Understanding the Federal Tax Law
True / False
1. Because the law is complicated, most individual taxpayers are not able to complete their Federal income tax returns
without outside assistance.
a. True
b. False
ANSWER: True
2. The ratification of the Sixteenth Amendment to the U.S. Constitution was necessary to validate the Federal income tax
on corporations.
a. True
b. False
ANSWER: False
3. Before the Sixteenth Amendment to the Constitution was ratified, there was no valid Federal income tax on individuals.
a. True
b. False
ANSWER: False
4. The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution) levied tax
rates from a low of 1% to a high of 6%.
a. True
b. False
ANSWER: True
5. The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.
a. True
b. False
ANSWER: True
6. The pay-as-you-go feature of the Federal income tax on individuals conforms to Adam Smith’s canon (principle) of
certainty.
a. True
b. False
ANSWER: False
7. The Medicare component of the FICA tax (1.45% on wages) is progressive since the tax due increases as wages
increase.
a. True
b. False
ANSWER: False
8. The Federal estate and gift taxes are examples of progressive rate taxes.
a. True
b. False
Copyright Cengage Learning. Powered by Cognero. Page 1
,Name: Class: Date:
Chapter 01: An Introduction to Taxation and Understanding the Federal Tax Law
ANSWER: True
9. The Federal excise tax on gasoline has a proportional effect on all taxpayers (that is, neither progressive or regressive).
a. True
b. False
ANSWER: False
10. Currently, the Federal corporate income tax is less progressive than the individual income tax.
a. True
b. False
ANSWER: True
11. Mona inherits her mother’s personal residence, which she converts to a furnished rental house. These changes should
affect the amount of ad valorem property taxes levied on the properties.
a. True
b. False
ANSWER: True
12. A fixture will be subject to the ad valorem tax on personalty rather than the ad valorem tax on realty.
a. True
b. False
ANSWER: False
13. Even if property tax rates are not changed, the amount of ad valorem taxes imposed on realty may not remain the
same.
a. True
b. False
ANSWER: True
14. The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business
use personalty.
a. True
b. False
ANSWER: True
15. An excise tax is often used to try to influence behavior.
a. True
b. False
ANSWER: True
16. There is a Federal excise tax on hotel occupancy.
a. True
b. False
ANSWER: False
Copyright Cengage Learning. Powered by Cognero. Page 2
,Name: Class: Date:
Chapter 01: An Introduction to Taxation and Understanding the Federal Tax Law
17. The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the United States.
a. True
b. False
ANSWER: False
18. The amount of the state excise taxes on gasoline varies from state to state.
a. True
b. False
ANSWER: True
19. Not all of the states that impose a general sales tax also have a use tax.
a. True
b. False
ANSWER: False
20. Sales made over the internet are not exempt from the application of a general sales (or use) tax.
a. True
b. False
ANSWER: True
21. Two persons who live in the same state but in different counties may not be subject to the same general sales tax rate.
a. True
b. False
ANSWER: True
22. States impose either a state income tax or a general sales tax, but not both types of taxes.
a. True
b. False
ANSWER: False
23. A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no
such taxes.
a. True
b. False
ANSWER: False
24. On transfers by death, the Federal government relies on an estate tax, while states may impose an estate tax, an
inheritance tax, both taxes, or neither tax.
a. True
b. False
ANSWER: True
25. An inheritance tax is a tax on a decedent’s right to pass property at death.
a. True
b. False
Copyright Cengage Learning. Powered by Cognero. Page 3
,Name: Class: Date:
Chapter 01: An Introduction to Taxation and Understanding the Federal Tax Law
ANSWER: False
26. One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from
being accumulated within a family unit.
a. True
b. False
ANSWER: True
27. Under Clint’s will, all of his property passes to either the Lutheran Church or to his wife. No Federal estate tax will be
due on Clint’s death.
a. True
b. False
ANSWER: True
28. Under the usual state inheritance tax, two heirs, a cousin and a son of the deceased, would not be taxed at the same
rate.
a. True
b. False
ANSWER: True
29. The annual exclusion, currently $17,000, is available for gift and estate tax purposes.
a. True
b. False
ANSWER: False
30. In 2023, José, a widower, sells land (fair market value of $100,000) to his daughter, Linda, for $50,000. José has not
made a taxable gift.
a. True
b. False
ANSWER: False
31. Julius, a married taxpayer, makes gifts to each of his six children. A maximum of twelve annual exclusions could be
allowed as to these gifts.
a. True
b. False
ANSWER: True
32. One of the motivations for making a gift is to save on income taxes.
a. True
b. False
ANSWER: True
33. The formula for the Federal income tax on corporations is the same as that applicable to individuals.
a. True
b. False
Copyright Cengage Learning. Powered by Cognero. Page 4
,Name: Class: Date:
Chapter 01: An Introduction to Taxation and Understanding the Federal Tax Law
ANSWER: False
34. A state income tax can be imposed on nonresident taxpayers who earn income within the state on an itinerant basis.
a. True
b. False
ANSWER: True
35. For state income tax purposes, some states allow a credit for dependents rather than a deduction.
a. True
b. False
ANSWER: True
36. Some states use their state income tax return as a means of collecting unpaid use tax.
a. True
b. False
ANSWER: True
37. No state may offer an income tax amnesty program more than once.
a. True
b. False
ANSWER: False
38. For Federal income tax purposes, there never has been a general amnesty period.
a. True
b. False
ANSWER: True
39. Under state amnesty programs, all delinquent and unpaid income taxes are forgiven.
a. True
b. False
ANSWER: False
40. When a state decouples from a Federal tax provision, it means that this provision will not apply for state income tax
purposes.
a. True
b. False
ANSWER: True
41. The principal objective of the FUTA tax is to provide some measure of retirement security.
a. True
b. False
ANSWER: False
42. Currently, the tax base for the Social Security component of the FICA is not limited to a dollar amount.
a. True
Copyright Cengage Learning. Powered by Cognero. Page 5
,Name: Class: Date:
Chapter 01: An Introduction to Taxation and Understanding the Federal Tax Law
b. False
ANSWER: False
43. A parent employs her twin daughters, age 17, in her sole proprietorship. The daughters are not subject to FICA
coverage.
a. True
b. False
ANSWER: True
44. Unlike FICA, FUTA requires that employers comply with state as well as Federal rules.
a. True
b. False
ANSWER: True
45. A major advantage of a flat tax type of income tax is its simplicity.
a. True
b. False
ANSWER: True
46. The value added tax (VAT) has not had wide acceptance in the international community.
a. True
b. False
ANSWER: False
47. If more IRS audits are producing a higher number of no change results, this indicates increased compliance on the part
of taxpayers.
a. True
b. False
ANSWER: False
48. The amount of a taxpayer’s itemized deductions will increase the chance of being audited by the IRS.
a. True
b. False
ANSWER: True
49. An office audit by the IRS takes place at the office of the taxpayer.
a. True
b. False
ANSWER: False
50. The IRS agent auditing the return will issue an RAR even if the taxpayer owes no additional taxes.
a. True
b. False
ANSWER: True
Copyright Cengage Learning. Powered by Cognero. Page 6
,Name: Class: Date:
Chapter 01: An Introduction to Taxation and Understanding the Federal Tax Law
51. If a special agent becomes involved in the audit of a return, this indicates that the IRS suspects that fraud is involved.
a. True
b. False
ANSWER: True
52. If a taxpayer files early (i.e., before the due date of the return), the statute of limitations on assessments begins on the
date the return is filed.
a. True
b. False
ANSWER: False
53. For omissions from gross income in excess of 25% of that reported, there is no statute of limitations on additional
income tax assessments by the IRS.
a. True
b. False
ANSWER: False
54. If an income tax return is not filed by a taxpayer, there is no statute of limitations on assessments of tax by the IRS.
a. True
b. False
ANSWER: True
55. If fraud is involved, there is no time limit on the assessment of a deficiency by the IRS.
a. True
b. False
ANSWER: True
56. The IRS is required to redetermine the interest rate on underpayments and overpayments once a year.
a. True
b. False
ANSWER: False
57. A calendar year taxpayer files his 2022 Federal income tax return on March 4, 2023. The return reflects an
overpayment of $6,000, and the taxpayer requests a refund of this amount. The refund is paid on May 16, 2023. The
refund need not include interest.
a. True
b. False
ANSWER: True
58. For individual taxpayers, the interest rate for income tax refunds (overpayments) is the same as that applicable to
assessments (underpayments).
a. True
b. False
ANSWER: True
Copyright Cengage Learning. Powered by Cognero. Page 7
, Name: Class: Date:
Chapter 01: An Introduction to Taxation and Understanding the Federal Tax Law
59. During any month in which both the failure to file penalty and the failure to pay penalty apply, the failure to file
penalty is increased by the amount of the failure to pay penalty.
a. True
b. False
ANSWER: False
60. When interest is charged on a deficiency, any part of a month counts as a full month.
a. True
b. False
ANSWER: False
61. For the negligence penalty to apply, the underpayment must be caused by intentional disregard of rules and
regulations without intent to defraud.
a. True
b. False
ANSWER: True
62. Upon audit by the IRS, Faith is assessed a deficiency of $40,000 of which $25,000 is attributable to negligence. The
20% negligence penalty will apply to $25,000.
a. True
b. False
ANSWER: True
63. If a tax deficiency is attributable to fraud, the negligence penalty will not be imposed.
a. True
b. False
ANSWER: True
64. The civil fraud penalty can entail large fines and possible incarceration.
a. True
b. False
ANSWER: False
65. Even though a client refuses to correct an error on a past return, it may be possible for a practitioner to continue to
prepare returns for the client.
a. True
b. False
ANSWER: True
66. In preparing an income tax return, the use of a client’s estimates is not permitted.
a. True
b. False
ANSWER: False
67. In preparing a tax return, all questions on the return must be answered.
Copyright Cengage Learning. Powered by Cognero. Page 8
