SOUTH WESTERN FEDERAL TAXATION
EXAM STUDY GUIDE QUESTIONS AND
SOLUTIONS 100 PERCENT CORRECT
VERIFIED ANSWERS
●● Is it possible for the government to raise taxes without raising tax
rates?
Answer: Yes, it is possible because there are two components in
computing a taxpayer's tax, the tax base and the tax rate. Taxes can be
raised by increasing either component. Thus, even though the Governor
proclaimed that tax rates have remained at the same level, adjustments to
the tax base, such as the elimination of deductions, result in tax increases
which can be as much, or more, as increases in tax rates.
●● Property Taxes
Answer: Are primarily used by local government(s) and include both
real property taxes and personal property taxes.
●● Excise Taxes
Answer: Are primarily used by the federalgovernment(s) and are
imposed on items such as alcohol, tobacco, telephone usage, and other
goods.
●● Sales Taxes
, Answer: Are primarily used by state and local government(s) and
constitute a major revenue source.
●● Income Taxes
Answer: Are the primary domain of the federal and state government(s)
and constitute a major revenue source.
●● Employment Taxes
Answer: Are primarily used by the federal and state
government(s) and constitute a major revenue source.
●● Importance of thorough knowledge of sources of tax law
Answer: Due to the vast volume of tax law sources, it is impossible for
any person to have recall knowledge of the tax law. Thus, the ability to
understand what the relevant sources of tax law are, their relative
importance, and where to find the sources are vital to a person working
in the tax area.
●● Why is there a need for administrative rulings and court decisions?
Answer: The Code contains general language and does not address the
many specific situations and transactions that occur. To resolve tax
questions concerning specific situations, administrative rulings and court
decisions are an integral part of the income tax law.
EXAM STUDY GUIDE QUESTIONS AND
SOLUTIONS 100 PERCENT CORRECT
VERIFIED ANSWERS
●● Is it possible for the government to raise taxes without raising tax
rates?
Answer: Yes, it is possible because there are two components in
computing a taxpayer's tax, the tax base and the tax rate. Taxes can be
raised by increasing either component. Thus, even though the Governor
proclaimed that tax rates have remained at the same level, adjustments to
the tax base, such as the elimination of deductions, result in tax increases
which can be as much, or more, as increases in tax rates.
●● Property Taxes
Answer: Are primarily used by local government(s) and include both
real property taxes and personal property taxes.
●● Excise Taxes
Answer: Are primarily used by the federalgovernment(s) and are
imposed on items such as alcohol, tobacco, telephone usage, and other
goods.
●● Sales Taxes
, Answer: Are primarily used by state and local government(s) and
constitute a major revenue source.
●● Income Taxes
Answer: Are the primary domain of the federal and state government(s)
and constitute a major revenue source.
●● Employment Taxes
Answer: Are primarily used by the federal and state
government(s) and constitute a major revenue source.
●● Importance of thorough knowledge of sources of tax law
Answer: Due to the vast volume of tax law sources, it is impossible for
any person to have recall knowledge of the tax law. Thus, the ability to
understand what the relevant sources of tax law are, their relative
importance, and where to find the sources are vital to a person working
in the tax area.
●● Why is there a need for administrative rulings and court decisions?
Answer: The Code contains general language and does not address the
many specific situations and transactions that occur. To resolve tax
questions concerning specific situations, administrative rulings and court
decisions are an integral part of the income tax law.
