,TESTBANK South-Western Federal Taxation 2024
Corporations, Partnerships, Estates and Trusts
47th Edition William A. Raabe
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: Understanding and Working with the Federal Tax Law
True / False
1. Many states have balanced budgets because laws or constitutional amendments preclude deficit spending.
a. True
b. False
ANSWER: True
2. The U.S. Federal government has a provision in the Constitution that precludes deficit spending.
a. True
b. False
ANSWER: False
3. Revenue-neutral tax laws reduce deficits.
a. True
b. False
ANSWER: False
4. Longer class lives for depreciable property and the required use of the straight-line method of depreciation would likely
dampen the tax incentive for purchasing capital assets.
a. True
b. False
ANSWER: True
5. The Internal Revenue Code is a compilation of Federal tax legislation that appears in Title 26 of the United States
Code.
a. True
b. False
ANSWER: True
6. The favorable treatment of research and development expenses is one means of controlling the economy.
a. True
b. False
ANSWER: False
7. The encouragement of private-sector pension plans can be justified under the encouragement of certain industries.
a. True
b. False
ANSWER: False
8. One Internal Revenue Code section enables shareholders in a small business corporation to obtain an ordinary
deduction for any loss recognized on a stock investment.
a. True
b. False
ANSWER: True
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,Name: Class: Date:
Chapter 01: Understanding and Working with the Federal Tax Law
9. One of the justifications for the enactment of the tax law governing corporate reorganizations was the economic benefit
it would provide businesses (including making them more efficient).
a. True
b. False
ANSWER: True
10. Although a corporation is subject to a Federal income tax, a partnership is not.
a. True
b. False
ANSWER: True
11. The Federal income tax law allows a taxpayer to claim a deduction for state and local income taxes but limits all state
taxes to a maximum of $10,000.
a. True
b. False
ANSWER: True
12. Alabama and South Carolina are community property states.
a. True
b. False
ANSWER: False
13. A tax bill cannot originate in the Senate Finance Committee.
a. True
b. False
ANSWER: False
14. Taxpayers may read Committee Reports to determine the intent of Congress.
a. True
b. False
ANSWER: True
15. These Internal Revenue Code citations are incorrect: § 212(1) and § 1221(1).
a. True
b. False
ANSWER: False
16. Internal Revenue Code § 6 involves gross income and § 7 outlines itemized deductions.
a. True
b. False
ANSWER: False
17. Subchapter P refers to the subchapter in the Internal Revenue Code that deals with partners and partnerships.
a. True
b. False
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,Name: Class: Date:
Chapter 01: Understanding and Working with the Federal Tax Law
ANSWER: False
18. Regulations are arranged in a different sequence than the Internal Revenue Code.
a. True
b. False
ANSWER: False
19. Proposed Regulations have the force and effect of law.
a. True
b. False
ANSWER: False
20. Temporary Regulations have the same authoritative value as Final Regulations for four years.
a. True
b. False
ANSWER: False
21. Proposed Regulations are published in the Federal Register.
a. True
b. False
ANSWER: True
22. Regulations are issued by the Treasury Department.
a. True
b. False
ANSWER: True
23. Revenue Rulings carry the same legal force and effect as Regulations.
a. True
b. False
ANSWER: False
24. A Revenue Ruling is a legislative source of Federal tax law.
a. True
b. False
ANSWER: False
25. Revenue Procedures deal with the internal management practices and procedures of the IRS.
a. True
b. False
ANSWER: True
26. Treasury Decisions are issued by the Treasury Department to promulgate new Regulations.
a. True
b. False
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,Name: Class: Date:
Chapter 01: Understanding and Working with the Federal Tax Law
ANSWER: True
27. Determination letters usually involve proposed transactions.
a. True
b. False
ANSWER: False
28. Letter rulings are issued by the National Office of the IRS.
a. True
b. False
ANSWER: True
29. A taxpayer must pay any tax deficiency assessed by the IRS and sue for a refund to bring suit in the U.S. District
Court.
a. True
b. False
ANSWER: True
30. In a U.S. District Court, a jury can decide both questions of fact and questions of law.
a. True
b. False
ANSWER: False
31. A U.S. District Court must abide by the precedents set by the U.S. Court of Appeals of its jurisdiction.
a. True
b. False
ANSWER: True
32. Appeals from the U.S. Court of Federal Claims go to the U.S. Supreme Court.
a. True
b. False
ANSWER: False
33. A jury trial is available when a case is heard by a U.S. Court of Appeals.
a. True
b. False
ANSWER: False
34. Only one judge hears a trial in a U.S. District Court.
a. True
b. False
ANSWER: True
35. The Golsen rule no longer applies to the U.S. Tax Court.
a. True
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,Name: Class: Date:
Chapter 01: Understanding and Working with the Federal Tax Law
b. False
ANSWER: False
36. When there is a direct conflict between an Internal Revenue Code section and a treaty provision, the most recent item
takes precedence.
a. True
b. False
ANSWER: True
37. “Legislative" regulations carry more weight than “interpretative” regulations.
a. True
b. False
ANSWER: True
38. The U.S. national debt is around $15 trillion.
a. True
b. False
ANSWER: False
39. A change in the individual tax rate has an almost immediate impact on the economy.
a. True
b. False
ANSWER: True
40. The like-kind tax free exchange treatment is an example of the wherewithal to pay concept.
a. True
b. False
ANSWER: True
41. Indexation of various income tax components was eliminated by the Tax Cuts and Jobs Act of 2017.
a. True
b. False
ANSWER: False
42. When there is a direct conflict between a tax treaty and the Internal Revenue Code, the Internal Revenue Code takes
precedence.
a. True
b. False
ANSWER: False
43. The Standard Federal Tax Reporter is published by Research Institute of America.
a. True
b. False
ANSWER: False
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,Name: Class: Date:
Chapter 01: Understanding and Working with the Federal Tax Law
44. The annual gift tax exclusion in 2023 is $15,000.
a. True
b. False
ANSWER: False
45. Internal Revenue Code Section 318, which deals with the definition of related parties with respect to stock
redemptions, includes brothers and sisters in the related-party definition.
a. True
b. False
ANSWER: False
46. Complete avoidance of a capital gain tax occurs when the owner of appreciated property transfers it by death.
a. True
b. False
ANSWER: True
47. The taxation part of the CPA exam (REG) is one-third essay.
a. True
b. False
ANSWER: False
Multiple Choice
48. Which provision could best be justified as a means of controlling the economy?
a. Write-off of research and development expenditures.
b. The § 179 immediate expensing of depreciable capital expenditures.
c. Amortization of pollution control facilities.
d. The rehabilitation tax credit.
ANSWER: b
49. Which provision could best be justified as encouraging small business?
a. Ordinary loss allowed on § 1244 stock.
b. Percentage depletion.
c. Charitable contributions deduction.
d. Interest deduction on home mortgage.
ANSWER: a
50. Which provision is not justified by social considerations?
a. Refundable earned income credit.
b. Adoption tax credit.
c. Like-kind exchange treatment.
d. Disallowance of illegal kickbacks.
ANSWER: c
51. Which state is not a community property state?
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,Name: Class: Date:
Chapter 01: Understanding and Working with the Federal Tax Law
a. Arizona.
b. Texas.
c. New Mexico.
d. Virginia.
ANSWER: d
52. Douglas and Sue, related parties, are landlord and tenant as to certain business property. If the IRS questions the
amount of rent Sue is paying to Douglas, this is an illustration of the:
a. Arm’s length concept.
b. Continuity of interest concept.
c. Tax benefit rule.
d. Substance over form concept.
ANSWER: a
53. Federal tax legislation generally originates in what committee?
a. House Budget Committee.
b. Senate Finance Committee.
c. House Ways and Means Committee.
d. House Taxation Committee.
ANSWER: c
54. Regulations are first published in:
a. Federal Register.
b. Cumulative Bulletin.
c. Internal Revenue Bulletin.
d. I.R.S. Digest.
ANSWER: a
55. Which citation is considered to be a statutory (legislative) citation?
a. Ltr. Rul. 199952058.
b. Ann. 94-5, 1994-2 I.R.B. 39.
c. Reg. § 1.1014-1(c)(1).
d. § 351.
ANSWER: d
56. A Technical Advice Memorandum is issued by:
a. Treasury Department.
b. National Office of the IRS.
c. Office of Chief Council.
d. Area Director.
ANSWER: b
57. Revenue Procedures are published in the:
a. Congressional Record.
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, Name: Class: Date:
Chapter 01: Understanding and Working with the Federal Tax Law
b. Federal Revenue Bulletin.
c. Internal Revenue Bulletin.
d. I.R.S. Digest.
ANSWER: c
58. Determine the incorrect citation:
a. TAM 20002704.
b. George W. Guill, 112 T.C.__, No. 22 (1999).
c. John H. Wong, T.C. Summary Opinion 2009-152.
d. Rev. Rul. 98-32, 1998-25 I.R.B. 4.
ANSWER: a
59. Regarding Technical Advice Memoranda, which statement is incorrect?
a. Issued by the National Office of IRS.
b. Most often deal with a completed transaction.
c. May be cited and used as precedent.
d. Issued with multi-digit file numbers.
ANSWER: c
60. Which of the following sources has the highest tax authority?
a. Treasury Regulation.
b. Revenue Procedure.
c. Internal Revenue Code.
d. Temporary Regulation.
ANSWER: c
61. Which of the following is an administrative source of tax law?
a. Rev. Rul. 2010-19.
b. Joint Conference Committee Report.
c. Section 12(a) of the Internal Revenue Code.
d. All of these.
ANSWER: a
62. A decision in which of the following courts carries the lowest tax authority?
a. U.S. Court of Appeals for the Federal Circuit.
b. U.S. Court of Appeals for the Second Circuit.
c. U.S. District Court.
d. U.S. Supreme Court.
ANSWER: c
63. In Forty-Four Cigar Co., 2 B.T.A. 1156, the 1156 stands for:
a. The volume number.
b. The year of the decision.
c. The paragraph number.
Copyright Cengage Learning. Powered by Cognero. Page 8
Corporations, Partnerships, Estates and Trusts
47th Edition William A. Raabe
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: Understanding and Working with the Federal Tax Law
True / False
1. Many states have balanced budgets because laws or constitutional amendments preclude deficit spending.
a. True
b. False
ANSWER: True
2. The U.S. Federal government has a provision in the Constitution that precludes deficit spending.
a. True
b. False
ANSWER: False
3. Revenue-neutral tax laws reduce deficits.
a. True
b. False
ANSWER: False
4. Longer class lives for depreciable property and the required use of the straight-line method of depreciation would likely
dampen the tax incentive for purchasing capital assets.
a. True
b. False
ANSWER: True
5. The Internal Revenue Code is a compilation of Federal tax legislation that appears in Title 26 of the United States
Code.
a. True
b. False
ANSWER: True
6. The favorable treatment of research and development expenses is one means of controlling the economy.
a. True
b. False
ANSWER: False
7. The encouragement of private-sector pension plans can be justified under the encouragement of certain industries.
a. True
b. False
ANSWER: False
8. One Internal Revenue Code section enables shareholders in a small business corporation to obtain an ordinary
deduction for any loss recognized on a stock investment.
a. True
b. False
ANSWER: True
Copyright Cengage Learning. Powered by Cognero. Page 1
,Name: Class: Date:
Chapter 01: Understanding and Working with the Federal Tax Law
9. One of the justifications for the enactment of the tax law governing corporate reorganizations was the economic benefit
it would provide businesses (including making them more efficient).
a. True
b. False
ANSWER: True
10. Although a corporation is subject to a Federal income tax, a partnership is not.
a. True
b. False
ANSWER: True
11. The Federal income tax law allows a taxpayer to claim a deduction for state and local income taxes but limits all state
taxes to a maximum of $10,000.
a. True
b. False
ANSWER: True
12. Alabama and South Carolina are community property states.
a. True
b. False
ANSWER: False
13. A tax bill cannot originate in the Senate Finance Committee.
a. True
b. False
ANSWER: False
14. Taxpayers may read Committee Reports to determine the intent of Congress.
a. True
b. False
ANSWER: True
15. These Internal Revenue Code citations are incorrect: § 212(1) and § 1221(1).
a. True
b. False
ANSWER: False
16. Internal Revenue Code § 6 involves gross income and § 7 outlines itemized deductions.
a. True
b. False
ANSWER: False
17. Subchapter P refers to the subchapter in the Internal Revenue Code that deals with partners and partnerships.
a. True
b. False
Copyright Cengage Learning. Powered by Cognero. Page 2
,Name: Class: Date:
Chapter 01: Understanding and Working with the Federal Tax Law
ANSWER: False
18. Regulations are arranged in a different sequence than the Internal Revenue Code.
a. True
b. False
ANSWER: False
19. Proposed Regulations have the force and effect of law.
a. True
b. False
ANSWER: False
20. Temporary Regulations have the same authoritative value as Final Regulations for four years.
a. True
b. False
ANSWER: False
21. Proposed Regulations are published in the Federal Register.
a. True
b. False
ANSWER: True
22. Regulations are issued by the Treasury Department.
a. True
b. False
ANSWER: True
23. Revenue Rulings carry the same legal force and effect as Regulations.
a. True
b. False
ANSWER: False
24. A Revenue Ruling is a legislative source of Federal tax law.
a. True
b. False
ANSWER: False
25. Revenue Procedures deal with the internal management practices and procedures of the IRS.
a. True
b. False
ANSWER: True
26. Treasury Decisions are issued by the Treasury Department to promulgate new Regulations.
a. True
b. False
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,Name: Class: Date:
Chapter 01: Understanding and Working with the Federal Tax Law
ANSWER: True
27. Determination letters usually involve proposed transactions.
a. True
b. False
ANSWER: False
28. Letter rulings are issued by the National Office of the IRS.
a. True
b. False
ANSWER: True
29. A taxpayer must pay any tax deficiency assessed by the IRS and sue for a refund to bring suit in the U.S. District
Court.
a. True
b. False
ANSWER: True
30. In a U.S. District Court, a jury can decide both questions of fact and questions of law.
a. True
b. False
ANSWER: False
31. A U.S. District Court must abide by the precedents set by the U.S. Court of Appeals of its jurisdiction.
a. True
b. False
ANSWER: True
32. Appeals from the U.S. Court of Federal Claims go to the U.S. Supreme Court.
a. True
b. False
ANSWER: False
33. A jury trial is available when a case is heard by a U.S. Court of Appeals.
a. True
b. False
ANSWER: False
34. Only one judge hears a trial in a U.S. District Court.
a. True
b. False
ANSWER: True
35. The Golsen rule no longer applies to the U.S. Tax Court.
a. True
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,Name: Class: Date:
Chapter 01: Understanding and Working with the Federal Tax Law
b. False
ANSWER: False
36. When there is a direct conflict between an Internal Revenue Code section and a treaty provision, the most recent item
takes precedence.
a. True
b. False
ANSWER: True
37. “Legislative" regulations carry more weight than “interpretative” regulations.
a. True
b. False
ANSWER: True
38. The U.S. national debt is around $15 trillion.
a. True
b. False
ANSWER: False
39. A change in the individual tax rate has an almost immediate impact on the economy.
a. True
b. False
ANSWER: True
40. The like-kind tax free exchange treatment is an example of the wherewithal to pay concept.
a. True
b. False
ANSWER: True
41. Indexation of various income tax components was eliminated by the Tax Cuts and Jobs Act of 2017.
a. True
b. False
ANSWER: False
42. When there is a direct conflict between a tax treaty and the Internal Revenue Code, the Internal Revenue Code takes
precedence.
a. True
b. False
ANSWER: False
43. The Standard Federal Tax Reporter is published by Research Institute of America.
a. True
b. False
ANSWER: False
Copyright Cengage Learning. Powered by Cognero. Page 5
,Name: Class: Date:
Chapter 01: Understanding and Working with the Federal Tax Law
44. The annual gift tax exclusion in 2023 is $15,000.
a. True
b. False
ANSWER: False
45. Internal Revenue Code Section 318, which deals with the definition of related parties with respect to stock
redemptions, includes brothers and sisters in the related-party definition.
a. True
b. False
ANSWER: False
46. Complete avoidance of a capital gain tax occurs when the owner of appreciated property transfers it by death.
a. True
b. False
ANSWER: True
47. The taxation part of the CPA exam (REG) is one-third essay.
a. True
b. False
ANSWER: False
Multiple Choice
48. Which provision could best be justified as a means of controlling the economy?
a. Write-off of research and development expenditures.
b. The § 179 immediate expensing of depreciable capital expenditures.
c. Amortization of pollution control facilities.
d. The rehabilitation tax credit.
ANSWER: b
49. Which provision could best be justified as encouraging small business?
a. Ordinary loss allowed on § 1244 stock.
b. Percentage depletion.
c. Charitable contributions deduction.
d. Interest deduction on home mortgage.
ANSWER: a
50. Which provision is not justified by social considerations?
a. Refundable earned income credit.
b. Adoption tax credit.
c. Like-kind exchange treatment.
d. Disallowance of illegal kickbacks.
ANSWER: c
51. Which state is not a community property state?
Copyright Cengage Learning. Powered by Cognero. Page 6
,Name: Class: Date:
Chapter 01: Understanding and Working with the Federal Tax Law
a. Arizona.
b. Texas.
c. New Mexico.
d. Virginia.
ANSWER: d
52. Douglas and Sue, related parties, are landlord and tenant as to certain business property. If the IRS questions the
amount of rent Sue is paying to Douglas, this is an illustration of the:
a. Arm’s length concept.
b. Continuity of interest concept.
c. Tax benefit rule.
d. Substance over form concept.
ANSWER: a
53. Federal tax legislation generally originates in what committee?
a. House Budget Committee.
b. Senate Finance Committee.
c. House Ways and Means Committee.
d. House Taxation Committee.
ANSWER: c
54. Regulations are first published in:
a. Federal Register.
b. Cumulative Bulletin.
c. Internal Revenue Bulletin.
d. I.R.S. Digest.
ANSWER: a
55. Which citation is considered to be a statutory (legislative) citation?
a. Ltr. Rul. 199952058.
b. Ann. 94-5, 1994-2 I.R.B. 39.
c. Reg. § 1.1014-1(c)(1).
d. § 351.
ANSWER: d
56. A Technical Advice Memorandum is issued by:
a. Treasury Department.
b. National Office of the IRS.
c. Office of Chief Council.
d. Area Director.
ANSWER: b
57. Revenue Procedures are published in the:
a. Congressional Record.
Copyright Cengage Learning. Powered by Cognero. Page 7
, Name: Class: Date:
Chapter 01: Understanding and Working with the Federal Tax Law
b. Federal Revenue Bulletin.
c. Internal Revenue Bulletin.
d. I.R.S. Digest.
ANSWER: c
58. Determine the incorrect citation:
a. TAM 20002704.
b. George W. Guill, 112 T.C.__, No. 22 (1999).
c. John H. Wong, T.C. Summary Opinion 2009-152.
d. Rev. Rul. 98-32, 1998-25 I.R.B. 4.
ANSWER: a
59. Regarding Technical Advice Memoranda, which statement is incorrect?
a. Issued by the National Office of IRS.
b. Most often deal with a completed transaction.
c. May be cited and used as precedent.
d. Issued with multi-digit file numbers.
ANSWER: c
60. Which of the following sources has the highest tax authority?
a. Treasury Regulation.
b. Revenue Procedure.
c. Internal Revenue Code.
d. Temporary Regulation.
ANSWER: c
61. Which of the following is an administrative source of tax law?
a. Rev. Rul. 2010-19.
b. Joint Conference Committee Report.
c. Section 12(a) of the Internal Revenue Code.
d. All of these.
ANSWER: a
62. A decision in which of the following courts carries the lowest tax authority?
a. U.S. Court of Appeals for the Federal Circuit.
b. U.S. Court of Appeals for the Second Circuit.
c. U.S. District Court.
d. U.S. Supreme Court.
ANSWER: c
63. In Forty-Four Cigar Co., 2 B.T.A. 1156, the 1156 stands for:
a. The volume number.
b. The year of the decision.
c. The paragraph number.
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